Tuesday, 26 June 2012
Superannuation Legislation Amendment (Stronger Super) Bill 2012, Superannuation Supervisory Levy Imposition Amendment Bill 2012; Second Reading
As I mentioned to the Senate yesterday, the coalition support this bill. The reason we support this bill is that we support anything that makes our superannuation system more efficient, more transparent and more competitive. Unless we have the most efficient, the most transparent and the most competitive superannuation system possible, investment returns for superannuation fund members across Australia will not be maximised. Ultimately this is what superannuation is all about: giving Australians a vehicle to use to work towards achieving self-funded retirement.
What we are concerned about is that, unlike the good measures which we support that are included in this legislation—even though, as I expressed yesterday, we had some queries around some of the cost recovery arrangements, but leaving that to one side—in many other areas in relation to important and necessary superannuation reform this government in general and the Minister for Financial Services and Superannuation, Minister Shorten, in particular have been very slow and very unenthusiastic to act.
The other thing we need is the highest corporate governance and transparency standards possible. We need genuine competition in the default superannuation market. We need to make sure that Australians who make additional efforts to contribute additional savings to their superannuation do not get disproportionately penalised when they make inadvertent errors by making excess contributions to their superannuation savings. There is a whole range of areas where we need reform and where the minister has been very slow and very unenthusiastic to act.
When it comes to the completely inappropriate closed-job anticompetitive arrangements with which default funds under modern awards are currently selected by Fair Work Australia, we of course understand why the minister has been so unenthusiastic to act: he is clearly conflicted when it comes to doing the right thing in the public interest by ensuring that all Australians can benefit from genuine competition in the default market, because he is very close to the vested interests of one particular segment of the superannuation market. This really is of very significant concern because in the lead-up to the last election even the Labor Party was shamed into making an election commitment, which was a promise, to ensure that there would be a more open, transparent and competitive process to select default funds under modern awards.
In the lead-up to the last election the Labor Party was shamed into the acknowledgement that the current process is inappropriate, that the current process is a closed-shop anticompetitive arrangement that needs to be fixed. But of course here we are, two years since the last election, nearly two years since that commitment was made, and not one single policy, not one single law, has been changed to ensure that all Australians, including those that find themselves in default fund arrangements, can benefit from genuine competition in the default fund market.
In January or February this year Minister Shorten and the former Assistant Treasurer, the short-lived Assistant Treasurer, former senator Mark Arbib, did commission a Productivity Commission inquiry into this whole issue—finally. That inquiry is expected to deliver an interim report shortly and a final report in about September or October. Mr President, I am prepared to bet with you now that this side of the election Minister Shorten will do absolutely nothing to fix the absolutely disgraceful closed-shop anticompetitive arrangements which are inappropriately favouring one segment of the superannuation market right now. He will do absolutely nothing to fix that this side of the election. What we really would like to see is Minister Shorten and the government building on the measure in this particular bill and actually taking a leap forward to ensure that our superannuation system truly is the most efficient, the most transparent and the most competitive possible. I will run through a number of measure that the coalition would pursue in government in a moment.
Before I do, let me bring the attention of the Senate to some research into our super system conducted by the ATO, the Australian Taxation Office. That research found that only 45 per cent of Australians have confidence in their ability to make informed decisions about their super—that is, 55 per cent of Australians do not have sufficient confidence in their ability to make those informed decisions. The ATO research also found that, after more than four years of constant chopping and changing and increased taxes on superannuation by Labor in government, 43 per cent of Australians do not have any interest in super and 69 per cent have no knowledge about the government's latest proposed changes.
I pause here for a moment. Most of you would remember that in the lead-up to the 2007 election, when the member for Griffith was the Leader of the Opposition and was running to become the new Prime Minister, he made a commitment to the Australian people that he would not make any change to superannuation arrangements in Australia—'not one jot, not one tittle', he said. No doubt he thought of the arrangements that had been put in place by the Howard-Costello government, including generous concessional contribution rates and making superannuation returns tax free for anyone who takes out their super after 60 years of age. A whole range of very beneficial changes were made by the Howard-Costello government, and Mr Rudd, the member for Griffith, at the time promised that he would not make any change to the superannuation arrangements—'not one jot, not one tittle'.
That was important because one of the things that Australians are sick and tired of is this constant chopping and changing in taxation arrangements in relation to superannuation. We have had a lot of that from this bad government. We have had a lot that from the high-taxing government currently sitting on the benches opposite. For example, they have progressively reduced concessional contribution caps, from $50,000 and $100,000 all the way down to $25,000. What people often do not realise is that that $25,000 concessional contribution cap also includes the compulsory superannuation component, which of course means that people who are working multiple jobs can quite easily inadvertently breach that cap. And quite a number of people have breached non-concessional contribution caps, with very disproportionate penalties imposed by the ATO as a result. I am led to believe, and I think the minister has conceded this point publicly, that even the minister has been caught up by, I assume inadvertently, breaching contribution caps. So it is an issue that he should have a lot of personal knowledge about and an issue that he should have fixed long ago.
The coalition's view is that Australians who are doing the right thing, who are doing everything they can to work towards achieving self-funded retirement and making sacrifices to achieve that goal, should not be penalised disproportionately when they make clearly inadvertent errors. Errors are also sometimes made because of circumstances beyond people's control—for example, because employers make a mistake, because super funds make a mistake or because, in the context of multiple employers, people have lost sight of what each individual employer is contributing.
The point I am making is that there are a lot of areas in superannuation that need to be fixed. The minister ought to be congratulated for this legislation. It is legislation that has our bipartisan support right from the outset because we support any measure that improves transparency and efficiency in the superannuation market. But we do think there is a whole range of other areas that need fixing—in particular the closed shop anti-competitive arrangements in the default fund market; the corporate governance and transparency standards, which Minister Shorten has been very slow to act on, despite recommendations from the Cooper review; and this whole issue of excess contributions. With those few words on behalf of the coalition, I commend the bill to the Senate.
I rise to speak on the Superannuation Legislation Amendment (Stronger Super) Bill 2012 and the Superannuation Supervisory Levy Imposition Bill 2012. Twenty years ago, the Keating Labor government introduced one of the greatest and most far-reaching economic reforms in our history—nine per cent superannuation for every Australian worker. Australia's superannuation pool continues to grow, and today Australia's super funds hold $1.4 trillion in superannuation savings. As a result of this fundamental change by the Keating Labor government, Australia has the world's fourth largest pool of privately managed funds, thanks to our superannuation system. I remember that, when we first tried to introduce superannuation reforms, the coalition ran a pretty intense doom and gloom campaign, so I find it amazing that the previous speaker tried to claim credit.
Our superannuation process is a retirement savings system that is the envy of the world. Of course, in developing superannuation industry reforms, the Australian government's number one aim is to maximise the benefits of superannuation for Australian workers. That is why in May 2009 we commissioned a comprehensive review of Australia's superannuation system, chaired by Jeremy Cooper. The Cooper review handed its report to government on 30 June 2010, and we released our response on 16 December of the same year. In our response, the government indicated direct or in principle support for 139 of the Cooper review's 177 recommendations.
The Stronger Super reforms are projected to add an additional $60 billion to Australia's retirement savings by 2035—that is roughly $40,000 more superannuation for a worker aged 30 on full-time average wages when they retire at 65. This money will add to the retirement savings of Australian workers and over time will flow into the pockets of Australian retirees. It will take pressure off the age-pension system and pressure off ordinary workers in securing a comfortable and dignified retirement. These reforms complement the government's increase to the superannuation guarantee from 9 per cent to 12 per cent, which will boost the average savings for a worker aged 30 by more than $100,000. Key elements of the Strong Super reforms include: introducing a simple, low-cost default superannuation product called MySuper that has no unnecessary fees or charges and simple features that will make it easier to compare fund performance; raising the bar for those managing our superannuation system, particularly for those managing default superannuation funds in which the majority of Australians invest; providing APRA, ASIC and the tax office with the tools they need to improve their oversight of superannuation; and making the processing of everyday transactions easier, cheaper and faster through the SuperStream reforms. The two bills currently before the Senate are focused on the last element of these reforms. The Superannuation Legislation Amendment (Stronger Super) Bill 2012 amends the Superannuation Industry (Supervision) Act 1993 and the Retirement Savings Accounts Act 1997. It is to introduce a framework to support the implementation of superannuation data and payment regulations and standards. This measure will improve the administration and management of super accounts, making the processing of everyday transactions easier, cheaper and faster for members and employers.
The superannuation industry is currently dominated by paper based transactions and clearly this is not an efficient way to operate in a modern digital world. Not only does it create inefficiencies for the funds themselves but it creates inefficiencies for employers who are contributing on behalf of their workers. The superannuation data and payment standards will allow participants in the superannuation system to communicate by using standardised business terms in a consistent and reliable format. Electronic transmission, using agreed transport and security protocols, will allow for more automated and timely processing of transactions with fewer errors.
A number of benefits will flow from these standards: for superannuation funds, for employers and ultimately for fund members. There will be an improved efficiency in transactions, including the processing of superannuation contributions and rollovers by superannuation entities. Moving to electronic transactions will result in productivity gains for superannuation funds and for the employers making contributions on behalf of their workers. Not only are electronic transactions faster and cheaper than paper based transactions but automating these processes will mean fewer errors. For fund members the benefits will include lower transaction costs, which should lead to lower fund management fees, and more timely payments into their superannuation accounts. It will also reduce the likelihood that member accounts will be lost due to inaccurate or incomplete information. So we are expecting lower transaction costs, lower fund management fees and more timely payments into super accounts, and hopefully the number of accounts lost, inaccurate or incomplete will reduce. Fund members will be able to more easily look up and keep track of their superannuation and check if their contributions have been paid. As a former union official, let me say that I came across a few cases where funds were not paid at all, so I think it is very important that employees are able to check that their contributions have been paid. Large superannuation accounts belonging to the same member can be consolidated more easily and low-value, inactive accounts will be consolidated automatically. The superannuation industry processes an estimated 100 million transactions each year. This costs the industry $3.5 billion, meaning the average cost of each transaction is around $35. Certainly in my book, $35 is too much for one transaction. So you can see the importance of this government's reforms to make superannuation funds become better at how they manage their members' money.
Industry submissions to the Cooper review estimated that savings of up to $1 billion are achievable by implementing the SuperStream reforms: $1 billion that will be better off going into the superannuation accounts of Australian workers. The data and e-commerce standards have been developed by the SuperStream working group. By passing this legislation now, we will ensure that the superannuation industry has adequate time to implement the necessary changes to their information technology systems and processes before the data and e-commerce standards become mandated for superannuation funds from 1 July 2013. The government will extend the data and e-commerce standards to large and medium sized employers from 1 July 2014.
The Commissioner of Taxation and the Australian Prudential Regulation Authority will be responsible for regulating compliance with the new data and payment standards. They will ensure compliance through assistance and education and will have some flexibility in dealing with breaches of the standards. The government will incur some costs associated with the implementation of the SuperStream reforms. It is our intention to finance these costs through the introduction of a temporary levy on the industry, the Superannuation Supervisory Levy. The government has projected that we will collect $467 million through the levy from 2012-13 to 2017-18, resulting in a nil overall cost to the government for the implementation of the SuperStream reforms. This is a comparatively small amount compared to the savings I outlined earlier that the industry is expected to reap as a result of these reforms.
Amendments to the Australian Prudential Regulation Authority Act 1998 will enable the costs associated with implementation of the SuperStream measures to be included in the determination specifying the amount of the levy that is payable to the Commonwealth. The Superannuation Supervisory Levy Imposition Amendment Bill 2012 will provide the Treasurer with the ability to make a subsequent determination, for a financial year, of the restricted and unrestricted levy percentages and the superannuation entity levy base. The purpose of this bill is to give the government some flexibility in determining the costs that are to be included in the levy.
These two bills together represent an important plank in the implementation of the Australian government's Stronger Super reform package. It is a reform that is better for superannuation funds, better for employers and better for fund members. All the stakeholders in the superannuation industry want to see less money going into transaction costs and more money going into the retirement savings of Australian workers. A more secure retirement for ordinary Australian workers goes to the very core of Labor's ideals. That is why it was a Labor government that introduced our superannuation system 20 years ago. It is now a Labor government that is proposing, and introducing, the Stronger Super package of reforms. And it is this Labor government that has passed measures to increase the superannuation guarantee from nine per cent to 12 per cent.
The increase to the superannuation guarantee is an important reform and an example of how Labor is spreading the benefits of the mining boom to the benefit of all in society. It is a reform that was, shamefully, opposed by the federal opposition. Bizarrely, the opposition supported the 12 per cent superannuation publicly but opposed the Minerals Resource Rent Tax, the measure that would fund it. This brings into question whether those opposite are truly committed to strengthening the retirement savings of Australian workers. If they are truly serious about supporting a 12 per cent superannuation guarantee then they need to demonstrate that seriousness by explaining how they will fund the measure. Given that the opposition continue to oppose the MRRT, they need to come clean with the Australian people. What new tax are they going to introduce? What programs are they going to cut to meet the costs to the Commonwealth of raising the superannuation guarantee? The truth is we have a Liberal-National coalition who have never been truly committed to Australia's superannuation system but have had to reluctantly concede that it has the overwhelming support of the Australian public.
The coalition, as I said, ran doom-and-gloom campaigns when we first proposed the introduction of superannuation, but it is a reform that now has the overwhelming support of the community. So I invite the coalition to get on board with our changes to the superannuation guarantee by explaining how they would fund it were they to form government. They need to either explain their alternative funding mechanism or support the MRRT. Through our Stronger Super reforms, and through the increase to the super guarantee, we have demonstrated that Labor is committed to strengthening the retirement savings of Australian workers. On that note, I commend the bills to the Senate.
In rising to talk specifically about the Superannuation Legislation Amendment (Stronger Super) Bill 2012 and the Superannuation Supervisory Levy Imposition Amendment Bill 2012 I cannot let go unchallenged what Senator Bilyk just said about funding additional superannuation from the Minerals Resource Rent Tax, which is basically a tax on the most successful industry we have in this country at the moment—or the one that has been the least damaged by this terrible government. What Senator Bilyk fails to recognise—which is not surprising, considering she has never worked in private enterprise or run a small business or actually been responsible herself for other people's welfare—
Thank you, Mr Deputy President. Spurious points of order in order to defend one's lack of credibility does not go a long way! Senator Bilyk is maintaining that she has run her own business and that she has employed people. Well, she neglected to remind herself, then, that the employer is responsible for paying the superannuation of the employees. It is not the government that is responsible, it is not the Minerals Resource Rent Tax that is responsible; it is the employers that are responsible for it. If Senator Bilyk had any idea about running a profitable and effective business, she would know that—but clearly she does not. It just goes to show that what is said by the senators on the other side bears little resemblance to reality. It is taking a departure from common sense. Those people who take risks with their own money to provide jobs for other people should be able to benefit from the rewards of that. That is a principle that is lost entirely on those on the other side.
When those opposite talk about increasing taxes: increasing taxes is just a cover-up for an inefficient and ineffective government. It is a cover-up for a government that has spent too much money, that has mortgaged the future of our children, that has borrowed over $150 billion in four years—which will take decades to pay back. And when the government puts up taxes, it is not supporting the Australian people; it is stifling enterprise, stifling creativity, stifling the spirit of entrepreneurialism that has built this country and hitherto made it such a successful one. But, unfortunately, the Australian people have lost confidence. They have lost the confidence in their ability to back themselves, because they know their government does not back them. Their government is the obstacle to success in this country. This government is an obstacle and a barrier to productivity growth; it is a barrier for the children who have been born and for those yet to be born, because they will unfortunately be lumbered with the legacy of the worst two governments—the Rudd and the Gillard governments—in the history of this country. And that is almost undisputed by the more informed commentators.
Let me return specifically to these bills. The coalition supports these bills. It supports them because we do support more efficient, more transparent and more competitive superannuation in this country. It means that we want consumers to clearly understand what they are entering into in relation to the tax environment and the investment environment that superannuation provides, because it is not an investment in itself—I will come to that in a moment. We want to see consumers' returns maximised through the removal of inefficiencies which, hopefully, will correspond with a reduction not only in the fees charged by the superannuation funds themselves but in the ancillary and compliance costs that are attached. That should form the essence of it.
Unfortunately, superannuation in this country has been tinkered with far too much by successive governments. I regret enormously the dislocation that so many people feel as a result of the current government's tinkering. I think Senator Cormann eloquently discussed the contribution—or lack thereof, I guess—of this government to the superannuation area. If we are a nation that is trying to encourage people to save—and I understand we have over $1 trillion in superannuation at the moment—for the long term and to prepare for their retirements, which I think all people in this chamber would agree is in our national interest and our individual interests, we need to provide the individual with a tax-effective environment in which they can invest, to give them an incentive to save for the longer term; but we need to give them some sort of certainty that the conditions in which they invest today will not be radically changed in the future. Unfortunately, successive governments—but most notably this one—have, I think, tinkered far too much in a negative sense. People say to me quite often, and I hear it in my conversations with many in the industry, that the rules continue to change. These rule changes make it difficult for people to know exactly what circumstances they will face in the future. So we need to provide not only efficiencies and transparencies but certainty in the superannuation environment.
I would like to pick up on another point Senator Cormann made, which is the lowering of the concessional contribution threshold. This is a particular concern—the fact that $25,000 is the most that people can concessionally contribute to superannuation as a result of the regulations passed by this government. I say that because that includes the superannuation contribution guarantee, which of course is being increased over the coming years. The superannuation guarantee is something everyone has. You do not have an option as to whether you partake in it or not; it is actually there. So if you have two or three jobs or if you happen to earn a significant salary you are then going to be penalised concessionally.
I thought we were in the business of providing people with incentives to save for the future, to delay instant gratification in the hope that tomorrow will be better and they will be able to provide for themselves. Certainly on the conservative side of politics we have been seeking for people to undertake self-reliance in that way. And that is the way governments should be functioning too, quite frankly. They should not try the sugar hit and borrow $10 billion or $50 billion one year simply to prop up some extravagant spending patterns in order to delay the day of reckoning, which has to come. The end result of that is what has happened in Europe, where you have successive governments who simply seek to keep the money-go-round going, hoping that ultimately they will not be the one who has to pay the piper. And when it comes to a halt it comes to a grinding halt, and it is a disaster, as we are seeing in Europe now.
Make no mistake. Australia is pursuing a similar path. In four years we have borrowed, as I have said, over $150 billion. We have turned from a $70 billion net asset position, running a $20 billion budget surplus, to a position where we have a $50 billion deficit. The four highest deficits in the history of this country have been run over the last four years. We have an entitlement mentality, which is being fostered by this government, that if you have any sort of pain or duress, 'Don't worry about tomorrow; we'll fix it today.' The problem with that is that I am worried about tomorrow, as many families are worried about tomorrow: what sort of environment are our kids going to be inheriting?
But with those negatives—and unfortunately this government's track record is a very sad tale—we do support these bills. Notwithstanding the fact that we have some concerns and we think they can be improved, we support them because we support, as I mentioned earlier, more efficient, more transparent and more competitive superannuation. We want to minimise costs. We want to see maximum profits and returns for people.
The first bill comprises a number of schedules. Schedule 1 of the Superannuation Legislation Amendment (Stronger Super) Bill 2012 introduces a framework to support the implementation of superannuation data and payment regulations and standards that will apply to specified superannuation transactions undertaken by superannuation entities, retirement saving account providers and employers. In more detail, it enables superannuation data and payment regulations and standards to be made relating to superannuation entities, RSA providers and employers. It provides the Commissioner of Taxation, whom I will refer to as the commissioner, with the ability to issue mandatory superannuation data and payment standards for superannuation entities, RSA providers and employers. It enables superannuation data and payment regulations and standards to deal with payments and information related to superannuation transactions and reports. Finally, it introduces a new penalty framework to ensure that trustees of superannuation entities, RSA providers and employers comply with the superannuation data and payment regulations and standards.
Schedule 2 amends the Australian Prudential Regulation Authority Act 1998 to enable costs associated with the implementation of the SuperStream measures to be included in the determination specifying the amount of the levy that is payable to the Commonwealth. The cognate bill, the Superannuation Supervisory Levy Imposition Amendment Bill 2012, amends the Superannuation Supervisory Levy Imposition Act 1998 to enable the Treasurer to make more than one determination on the imposition of levies for a financial year.
I started by talking about principle. The coalition supports, in principle, any measures that are going to improve efficiency, transparency and competitiveness, whether it be in superannuation or in any other aspect of public spending. But, specifically in regard to superannuation, we want to make the system easier to use for employers. We want to ensure that there are fewer lost accounts, we want to provide a more timely flow of money to super fund members' accounts and we want to deliver savings to employers and to fund members. The benefits of this approach are many and wide. By simply making the system easier for employers, you are going to have employers happier to comply with the sometimes onerous obligations that are attached to maintaining superannuation accounts. Indeed, it may enable employers to provide even greater services to some of their employees, whether through education or through efficiencies being passed on through employer contributions or some sort of in-house incentives as a company becomes more efficient. We want the workers to benefit.
The other thing I mentioned was ensuring that there are fewer lost accounts. This is common sense. We know that, in this modern day, having a single employer or a single job is highly unlikely. We have a very mobile workforce. We have people from all walks of life. When people start work at 14 or 15, they might get their first job in a fast food outlet or something like that and then get into retail and have myriad other jobs and change employers right through their adolescence. Each of their jobs will have a super fund account attached to it, and these accounts can easily get lost in the system. I experienced that both when I participated in the superannuation scheme as a young man and when I was a financial adviser chasing up lost accounts for people. There are, I acknowledge, opportunities for people to chase up their lost super through a number of government schemes, and I would encourage any listeners to this broadcast to consider how they can do so. If you can consolidate your superannuation accounts you get increased efficiencies, and your nest egg can grow a good deal more quickly because the fees are a good deal lower.
I talked previously about the SuperStream proposals: the implementation of changes to data and payment regulations and standards which will allow participants in the super system to communicate by using standardised business terms in a consistent and reliable format. Unless different branches of an organisation—with the modern-day acronyms and jargon they use—can communicate effectively, the organisation is at a decided disadvantage. Electronic transmissions are no different; organisations want to make sure that they have agreed-to transport and security protocols to ensure that data is not only protected but also gets to the other end in the necessary format and by the best method so that it can be applied automatically and processed in a timely manner with many fewer errors. If properly implemented, the SuperStream proposals in these bills would deliver significant efficiency savings to the super industry and employers. I have talked about the benefits there. It has been estimated by the Financial Services Council that the savings would be in the order of $20 billion over 10 years. That is $20 billion, of which a substantial proportion will more than likely be in people's superannuation accounts when they retire—and that will be a win-win for everyone.
Much of the detail of these new data standards will be in regulations, and industry participants consider its presence in regulations appropriate. However, a careful consideration of the impact of the regulations on all stakeholders, including small business employers, is absolutely necessary. Small business is, outside government, the largest employer group in this country. It is where people invest their hopes and their dreams as well as their money, and sometimes it is where they invest their mortgages. They mortgage their homes in order to pursue the dream of a better life for themselves: to make a decent quid and maybe to build a business that they can hand on to their children or sell to fund their retirement. We need to make sure that small businesses are not disadvantaged. I know that there are many different definitions of a small business, but I often reflect on small business as a former small businessman myself. I think that a small business is a business where the owner or the owners and the immediate family—a very small group of people—do everything. They are the payroll officer. They are the compliance officer. They are the occupational health and safety person. They are the person that complies with the superannuation entitlements. It is often said that people in small business spend too much time working in their business rather than working on developing it. The coalition is absolutely committed to enabling people to be able to work on their business by reducing the compliance burdens—the green tape, the red tape and so on—that are really stifling and tying businesspeople and entrepreneurs down because they have to pay for expensive external advisers in order to maintain their compliance rather than be able to maintain their compliance in an economically efficient manner so that they can get on with growing their business and creating jobs. That is one of our concerns, and we believe that it needs to be considered.
There is a significant concern also in the claimed cost of the implementation of the measures proposed in the bills. The government has claimed that the measures will cost $467 million over the next five years, including costs of $121 million in the next financial year. It is proposed that these costs be recovered by a direct levy on all APRA regulated super funds, which means in effect that the burden will be borne by super fund members across Australia through higher fees and administration costs. We are yet to see a full breakdown of estimated expenditure. The government has not, I understand, supplied it, and I think that it needs to so that we can understand exactly where the money will be spent. Also, additional costs will be imposed on super funds and employers to convert to the new system and the new standards.
The coalition celebrate the fact that Australia is going to move to a more efficient and effective system, but we are concerned about the costs that will be applied due to these changes by the government. The costs do not appear to have been fully considered either by the government or in the regulatory impact statement. However, the Financial Services Council estimates that the costs to industry would be in the order of $1 billion—and that is supposed to include the cost-recovery measures in these bills. These cost-recovery measures are the reason that these bills were referred to the Parliamentary Joint Committee on Corporations and Financial Services for an inquiry. That inquiry highlighted significant concerns within the superannuation industry about the transparency and accountability of how government agencies, particularly the Australian Taxation Office, will spend the $467 million in funding which will be provided to them through the additional industry levies. As I said before, these levies will ultimately be paid by super fund members through higher fees.
At the risk of labouring the point, I say that we support and celebrate the increased competitiveness, the efficiencies and the more transparent operation of the superannuation system in these bills. We want to provide more certainty for the Australian people so that they can invest with confidence in their retirement. But we wonder why the government implements changes, the costs of which are expected to impact on industry by up to $1 billion. That is $1 billion that is going to come out of the pockets of Australian taxpayers. We not only are concerned for the future of Australian taxpayers but also know that we need to give them every incentive and encouragement to save for the sake of both themselves and our nation. (Time expired)
The foundations for the present strength of the Australian economy were built in the 1980s. Former Prime Minister Paul Keating, then Treasurer in the Hawke government, led the process of the modernisation of the Australian economy. Under his leadership, our nation floated our dollar, making our exchange rate responsive to the strength of our economy and movements in international exchange of currency. We reduced tariffs—a massive reduction in the inefficient protection that had been provided to particular industries in the economy, making them more responsive to market pressures and ultimately more competitive, with a greater ability to survive into the future.
We introduced competition into our banking sector, and that led to a wave of new products with banks establishing in Australia and offering services to Australians and businesses. We made our economy more responsive to market based pressures internationally, which ultimately made the economy more efficient and stronger. Thankfully, that provided the foundations for our economy to withstand the pressures of the global financial crisis and come out the other end in such a strong position with Australians maintaining their jobs whilst in other economies jobs were lost. It maintained growth in our economy whilst in other areas of the world recessions occurred.
A large part of the reform agenda of former Treasurer Paul Keating was the introduction of compulsory superannuation—a wonderful initiative that now provides for the Australian economy the fourth-largest pool of investment funds in the world. It is a pool of investment funds that provides growth, jobs and ultimately higher incomes for the Australian people: $1.3 trillion worth of investment funds in the superannuation accounts of Australians. I am happy to say that, through these reforms, the Gillard government is building on those foundations that were built by the Hawke and Keating governments in the 1980s.
When we came to government in 2007, one of the first actions of the Labor government was to initiate a review of superannuation—the Cooper review. We looked at the fairness, the effectiveness and the efficiency of Australia's superannuation system. Many of the review's recommendations have been picked up by this government and are being implemented as we speak. This suite of reforms to superannuation, the Superannuation Legislation Amendment (Stronger Super) Bill 2012 and the Superannuation Supervisory Levy Imposition Amendment Bill 2012, are part of that overall suite of reforms to strengthen occupational superannuation in this country.
They build upon the strong regulatory framework that administers and manages our superannuation sector. The government's Stronger Super reform package will make our superannuation system more efficient and it will also ensure that we are maximising the retirement incomes of members of superannuation funds. Specifically, the government is creating a simple, low-cost default superannuation product called MySuper, which all APRA-regulated fund providers will have to provide to the market and for members. It will ensure that trustees of superannuation funds are legislated and must act in the best interests of the members of that fund. It will ensure that account balances of superannuation fund members, in particular inactive account balances, cannot be whittled away by unreasonable fees and commissions being paid by members for services that many of them never take up or, indeed, many of them never know that they are paying for.
Through the SuperStream measures, we will be making the processing of everyday transactions—the millions of transactions that occur on a daily basis in superannuation accounts throughout the country—cheaper and faster. We are strengthening the governance, the integrity and regulatory settings of the superannuation system.