Wednesday, 16 June 2021
Treasury Laws Amendment (More Flexible Superannuation) Bill 2020, Treasury Laws Amendment (Self Managed Superannuation Funds) Bill 2020, Treasury Laws Amendment (Your Future, Your Super) Bill 2021; Second Reading
I rise to speak on the Treasury Laws Amendment (Your Future, Your Super) Bill 2021 and associated bills. Australia's income retirement system is the envy of the rest of the world, as a great legacy of the Keating government. Compulsory superannuation has seen a $3 trillion nest egg grow. These savings provide a boost to our national economy. They can go into infrastructure investment, which can go into strengthening our national sovereignty. That is something that should be applauded and celebrated by those opposite. Instead of that, we have this ill-conceived legislation before the Senate. We know that a dirty deal was done today. We heard from Senator Watt that the vested interest of Senator Hanson has been on full display, so I can't wait to hear her contribution.
The Liberals have never believed in universal super. They opposed it at the beginning, and they continue to undermine it each and every chance that they get. This bill implements the government's 2021 budget measure Your Future, Your Super. The government claims these measures will enhance the performance of superannuation funds and reduce the number of duplicate accounts in the system. We welcome the government's late commitment to action on serious issues such as multiple accounts and underperforming superannuation funds. However, this bill, as written, will not deliver better outcomes for Australian superannuation members. The evidence provided to the inquiry on this legislation makes it clear that the government's proposed approach to superannuation would damage retirement outcomes for ordinary Australians and subject our superannuation system to considerable risk.
They may have removed some elements of this bill, but we still cannot accept this legislation. The first schedule introduces a new system for stapling individual members to a single superannuation account, replacing the existing industrially determined superannuation default account system for any member who has a previous existing super account. The retail super funds are happy with this bill, as they usually get people first when they're 16 and in their first jobs. However, this could have unwarranted consequences. It could staple members to an underperforming fund, or it could mean that some employees will not receive insurance appropriate to their profession.
The second element of this bill introduces a new measure that will assess the performance of certain superannuation funds against benchmarks determined by the regulations and prevent funds that fail to meet those benchmarks from accepting new members. Labor strongly supports the implementation of a performance measure. However, the proposed measure in schedule 2 is significantly flawed. Some stakeholders have indicated that the government's proposed performance measures could reward underperforming funds, incentivise funds to increase administration fees or drive investment away from Australia's unlisted assets. The bill also ignores admin fees in the performance benchmarks. It just ignores them. It gives a green light to bad funds to increase their administration charges at the expense of members' accumulation.
The government's proposed benchmarks for its performance measures may actively penalise funds for investing in unlisted Australian assets, such as venture capital, private equity or infrastructure assets. These indexes will risk local investment. I can't emphasise that enough: this bill will put at risk local investment and, with it, local jobs and wages. So not only are they not doing anything in this bill that is really going to be beneficial for ordinary Australians but they are, in fact, putting at risk local investment, local jobs and wages. Does that sound familiar? I think it does to Senator Urquhart and Senator Brown, because it's in the Liberals' DNA. Whenever they can have a go at superannuation, that's where they'll be: first in line to have a go. If there's an opportunity to have a go at ordinary workers, again this government will be first in line.
Research from the Conexus Institute demonstrates that, if trustees of super funds design portfolios to explicitly account for Your Future, Your Super performance tests, many funds would need to significantly alter their investment strategy. The results of this research highlight the conflict trustees will face between managing for best member outcomes and prioritising the Your Future, Your Super performance test. David Bell, Executive Director of the Conexus Institute, has claimed:
If trustees continue with their current investment strategy, they expose themselves to a reasonable likelihood of failing the performance test at some point, simply through the short-term randomness of returns.
He went on to say:
These trustees would also face the prospect of having to modify their investment strategy in response to short-term performance, creating transaction costs while inadvertently reducing their ability to invest for the long-term.
As I said earlier, we do support performance measures, but, while the performance mechanisms proposed in schedule 2 will prevent new members from joining underperforming funds, they do nothing to assist members already in underperforming funds. It is pretty important, I would have thought, to protect those people as well. According to Treasury, this affects up to three million Australians and could potentially cost Australians tens of thousands of dollars in retirement savings. So they're putting at risk local investment, local jobs and local wages for Australian workers, and it could potentially cost Australian workers tens of thousands of dollars in retirement savings.
The third measure introduces a requirement that super fund trustees must act in the best financial interests of members, as opposed to the current requirement, which merely asks that they act in the best interests of members. Labor thinks superannuation trustees must also act in the best interests of their members, not the best interests of parent entities. We are glad that the government removed the regulatory kill switch from the bill, but there is still significant government overreach in the form of consequences for performance tests.
The measures proposed by the Morrison government are seriously flawed, and much of the detail has been left to regulations, which is becoming a habit of this government. Senator Carr, I and others have spoken about that numerous times in this chamber. This government is prone to leaving everything to regulation. I might add, by the way, that these are regulations which have not been finalised or set. Who knows what's actually going to be included? That is why you need to always read the fine print or look into what isn't in the bill, because this government cannot be trusted when it comes to superannuation and protecting Australian workers.
They are also limiting coverage of measures. The performance measures proposed do not extend to all choice products and will initially cover only MySuper products. The vast majority of underperforming funds are concentrated in the choice sector.
The government's bill will take effect from 1 July 2021, requiring Australian employers to scramble to implement the new system in less than a month. That is why Labor will be moving a series of amendments to fix the bill. We are not here to sink it. We're here to fix it, which is what we find we have to do on countless pieces of legislation. This is critical legislation and it must be fixed. But, if the government can't accept these simple fixes, we'll protect the interests of Australian workers by voting this poorly drafted bill down.
It is abundantly clear that the Liberals cannot be trusted with superannuation. They wanted to allow Australians to have early access to their super accounts so they could buy a house, a nonsensical idea as the supply of housing is relatively inelastic, meaning that, if you increase the demand for housing by allowing people early access to super, it will only drive up the cost. We must address the housing affordability crisis in Australia, but it must be done by addressing supply-side shortages. This is just basic economics 101.
Those opposite also allowed Australians to raid their super funds during the pandemic instead of giving them timely access to support. This meant that people were robbing their own futures when we should be encouraging people to put more money into their superannuation. We now have 600,000 people who will be left with zero—zero!—in their superannuation fund account, because the government refused to provide them with other support. People in casual work, and in particular young people, were encouraged to take money out of their superannuation because of the compound interest. It will have a large, negative impact on their retirement income. Not only that, it will also make a significant difference to our national economy, placing a greater burden on future budgets. Added to that, the number of people who accessed their super was twice what was predicted. It begs the question, was this responsible policy? Did anyone access their super who didn't need to, or were they not properly informed of the consequences of early withdrawal? These are very basic questions that I don't believe were put to people.
Wages have effectively been frozen for eight years under the Liberal government, and, as was revealed in the budget, over the next four years they're going to go down. Yet, what is the government's argument about superannuation and wages? The Liberals seem to have no problem suppressing our economy with their own inaction during the last eight years. We have had stagnant wages, and at the same time those opposite have held off and broken commitments they took to the 2013, the 2016 and the 2019 elections—that is, they would not freeze super. We are now on the eve of the next federal election, but we know that they're opposed to the increase of superannuation up to 12 per cent—a measure that would place less of a burden on future taxpayers to fund Australians in retirement. Let's be realistic. The Morrison government, this Liberal government, are not interested in improving outcomes for Australian superannuation members. They're interested only in their own political advancement at the cost of the national economy. We know the Prime Minister is only interested in one job, and that's his own job. He reinforces that day in, day out with his broken promises and his loose-with-the-truth comments that he makes and commitments that he gives to the Australian people.
Superannuation was delivered by the Keating government, by a Labor government, to give ordinary Australians the benefit of professional management of their money. It's important to ensure quality of life in retirement, to support the national economy into the future, and it is a legacy that I am very proud of. I am very proud of superannuation and a great defender of it, because we already know that women in this country will not retire on the same money as our male colleagues. They're not going to have the same retirement. We will always speak up and we will always work for a better, a decent retirement for all Australians. We will fight tooth and nail because it's in the best interests of all Australians to have a dignified retirement, where they will no longer have to rely on future budgets and future taxpayers to fund pensions going forward. This government, instead of making changes that are going to be beneficial and encouraging people to put more money in their super, are out to attack superannuation and ordinary everyday Australian workers. It's in their DNA. (Time expired)