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 make a contribution this evening in the cognate debate, but I would like to make my remarks specifically on the Treasury Laws Amendment (Your Future, Your Super) Bill 2021. As everyone in this parliament and in communities throughout Australia would know, Labor built the superannuation system in this country. It is a proud legacy of Labor. It is a system which seeks to ensure that hardworking Australians can have a decent retirement, but it also provides a huge national saving pool that can be reinvested in our economy to provide jobs and incomes to workers today. It's a system which does need constant improvement to maximise returns for workers, the fund contributors. One obvious improvement would be to increase the superannuation guarantee over time and as originally intended. However, sadly, as we are all acutely aware in this place, it is successive Liberal governments that have sought to stymie this long overdue increase: first the Howard government, then the Abbott government, then the Turnbull government and now the Morrison government.
Every time the Liberals try to tinker with the superannuation system in this country, they seek to do so not to improve outcomes for workers—not in the best interests of working people, their jobs and their life after paid work—but rather with vested interests at heart. Ultimately, their proposed solutions lead to worse retirement outcomes for workers, because, when reasonable suggestions are put forward to fix clearly inherent flaws in their legislation, they reject them. This is what we are seeing here yet again this evening. It is the Liberal Party returning to type. True to form, they are going after the hip pockets of working people and undermining the strength of the superannuation system, set up to provide for workers' retirement.
It is clear that these bills in the cognate debate we're having here today—but specifically this bill, the Treasury Laws Amendment (Your Future, Your Super) Bill 2021—have many flaws. Many of these problems were identified through the inquiry into the bill by the Senate Standing Committee on Economics. In a dissenting report on the bill, Labor senators outlined in detail the reservations that we on this side of the chamber have with this bill. There are a great many flaws in this legislation, and many of them with the potential to cause significant harm—harm, in a broader sense, to the Australian economy and, more specifically, harm to superannuation fund member right across Australia. Put simply, that means harm to working people and their families.
That is why Labor cannot support the bill in its current form. We have put forward in good faith to the government that they need to review and reconsider the issues that have been raised directly with them and canvassed through the Senate Standing Committee on Economics in the inquiry on the bill so that the bill can be improved and actually deliver on the stated intent. Only after the legislation has been revised, amended, should the bill be returned to parliament. In its current form it simply is not good enough.
Let's consider some of the serious flaws that were identified through the inquiry process. Firstly, there's the political override power. This bill includes an extraordinary power that would allow the Treasurer to personally override any investment decision or payment decision made by a superannuation trustee. Why? How could this possibly be necessary? It's an absolute overreach. It clearly goes too far, and it must be reconsidered or knocked out in this place.
Now let's come to the provisions on stapling to underperforming funds. The implementation of the stapling mechanism would cause up to three million Australians to be stapled to underperforming funds. How can that be good for workers or fund contributors? In terms of stapling, we have heard that Your Future, Your Super, according to APRA, also contains many occupational exclusions. This is a really important point, because some of the most hazardous jobs are excluded from insurance coverage from particular superannuation funds. I will go through some of the occupations that we're talking about—some of the most hazardous occupations that need coverage that are excluded by some funds. This goes to the point that people need to be very careful about the fund that they join—which again goes to this stapling to underperforming funds and the fact that, according to APRA, three million Australians will be stapled to underperforming funds. Some of those commonly excluded occupations include boilermakers, bricklayers, carpenters, concreters, dogmen, fitter and turners, labourers, painters, plasterers, plumbers, electricians, riggers, scaffolders and welders.
People may not be aware, those that are assigned to these super funds, that AMP, for example, have specific exclusions. At AMP, bricklayers, concreters, dogmen, labourers, plasterers, plumbers, those who work on roofs, electricians, electric linesmen, riggers and scaffolders cannot get total and permanent disability cover. They're totally excluded. At MLC the total and permanent disability cover completely excludes farm labourers and railway workers—they're excluded. So if you don't know that you're excluded then by stapling a worker who is new to a hazardous occupation to one of these funds—and I have to say that there are others—we'll see a member paying premiums for no cover: a fee for no service, if you like.
We all know in this place that the most serious and hazardous occupations are around the building industry. There are around 2.7 million people who work in the riskiest quintile of Australian occupations, which includes many of those I've already spoken about—there are miners as well—and there are over 34,000 new entries into the construction workforce annually. Many start out as apprentices, often well below the age of 25. Insurance is especially important for young blue-collar building and construction workers as they are more than twice as likely to require insurance than the general population of the same age. Today, only seven funds nationwide continue to offer default opt-out cover to under 25s. The government forced the rest to switch it off in 2020. That's what this government did—switched it off in 2020. It means that a hazardous occupation apprentice or young worker will not get default cover at particular funds. So this is a very important part of this legislation, and it goes too far. Clearly, it needs to be reconsidered.
As I was saying, the implementation of the stapling mechanism would cause up to three million Australians to be stapled to underperforming funds. Quite frankly, we all know that that cannot be good for workers or their funds—it can't. Put simply, up to three million Australians will be left worse off in retirement because of this provision. The whole point of making changes to super should be to improve the retirement incomes of workers, not worsen them.
And what about the impact on insurance? As I've already mentioned, Australian workers in certain industries will be left without adequate insurance as a result of this bill. This will leave working people with less-than-adequate insurance coverage. It hardly sounds like an item on the tick list for a government that's genuine about improving the way that superannuation works for workers. And what about the bill's failure to cover all APRA regulated funds? This bill explicitly excludes up to one-third of all superannuation funds regulated by APRA from the performance measure. We know that the performance measure is critical to ensuring that funds always seek to get the best possible returns in their members' interests. Why should certain funds be excluded from this critical feature?
That brings me to the flawed performance measure. Stakeholders have identified numerous flaws in the performance benchmarks originally proposed by the government, including the exclusion of administrative fees and the potential to discourage investment in Australian assets. There's no reason to exclude these basic fees. And I would have thought that the very last thing the government should seek to do is to discourage reinvestment in our Australian assets. Notably, investment by funds here at home have added the benefit of growing our local economy and providing more jobs in our local communities.
And what about the administrative burden on funds included within this bill? The drafting of the proposed best financial interest duty provisions could place undue administrative costs on superannuation funds, which will be passed on to members in the form of higher costs. That's a big cross: higher costs to members equal lower returns on investment. It's the wrong way: go back and redraft it. But, no, not this government. And, of course, the administrative burden on employers, which is proposed by the start date of this bill, 1 July, could have significant impacts on employers, who will be required to implement changes to payroll processes in an extremely short period of time. This is another flaw which could be easily fixed.
The issues identified by Labor senators in the dissenting report are not only issues identified by stakeholders in relation to the bill; many of these issues have been identified in chapter 2 of the chair's report on the bill. It is for these reasons and more that Labor believe this bill is in need of a serious rewrite. Improving superannuation for fund members is the objective of the bill. I will just say that again: improving superannuation outcomes for fund members is the objective of the bill. Labor support that objective. We always have and always will. But we cannot support a bill which fundamentally and manifestly fails to deliver on that objective without needed improvements to address these serious concerns. I just want to say again that Labor support any move to improve superannuation outcomes for fund members, as is the stated objective of this bill. That is, as I've said, what we always have done. But of course this bill does not do that. It won't deliver on that objective—not without serious improvements to address these serious issues that have been raised by Labor.