Thursday, 29 November 2012
Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill 2012; First Reading
That this bill may proceed without formalities and be now read a first time.
Question agreed to.
Bill read a first time.
I table the revised explanatory memorandum relating to the bill and move:
That this bill be now read a second time.
I seek leave to have the second reading speech incorporated in Hansard.
The speech read as follows
The Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill 2012 is the third tranche of legislation implementing the Government’s MySuper and governance reforms as part of Stronger Super.
This Bill amends the Superannuation Industry (Supervision) Act 1993, the Superannuation Guarantee Administration Act 1992 the Corporations Act 2001 and the Fair Work Act 2009 to implement the remaining measures relating to MySuper, as well as introduce data collection and publication powers for APRA and disclosure requirements for trustees that were announced as part of Stronger Super.
MySuper is a key part of the Government’s Stronger Super reform package.
Stronger Super also includes reforms to:
MySuper will provide a simple, cost-effective default product that all Australians can rely on.
MySuper will be limited to a common set of features to make it easier for members, employers and other stakeholders to compare performance across MySuper products, placing downward pressure on fees.
The Bill comprises seven schedules.
Schedule 1 has new fee rules for superannuation funds that mean conflicted remuneration, such as commissions, cannot be charged in relation to MySuper products, that ban entry fees and limit exit fees, switching fees and buy/sell spreads to cost recovery in all superannuation funds and imposes parameters that must complied with when a trustee agrees to a performance-based fee with an investment manager in relation to a MySuper product.
These rules ensure that members of MySuper products do not pay unnecessary fees, that a trustee does not enter into performance fee arrangements that are not in the member’s best members and limits certain fees to ensure that they do not unfairly inhibit a member from making active choices.
Schedule 2 covers the insurance arrangements for MySuper products. Trustees will be required to provide members of a MySuper product with life and TPD insurance on an opt-out basis.
This provides an important safety net to members in MySuper that may not actively consider their insurance needs.
Schedule 3 implements new data collection and publication powers for APRA in relation to superannuation and imposes new disclosure obligations on trustees including publishing their full portfolio holdings and a product dashboard on their website.
Transparency of key performance information is crucial to a competitive and efficient superannuation system. For this reason, APRA will have new data collection and publication powers in relation to superannuation.
Members are entitled to information about their investments, therefore, superannuation funds will be required to disclose their full portfolio holdings and a product dashboard to provide key information to members at a glance.
The Government will consider broadening this requirement to other managed investments as part of its response to the parliamentary inquiry into the Trio collapse.
Schedule 4 makes consequential amendments to the Fair Work Act to ensure that only a fund that offers a MySuper product may be nominated in a modern Award or enterprise agreement.
This will ensure that employees that have their contributions directed to a fund nominated in a modern award or an enterprise agreement will benefit from having their contributions placed in a MySuper product if they do not wish to choose another superannuation product.
Schedule 5 exempts defined benefit funds and defined benefit arrangements from the requirements of the MySuper regime. This will allow defined benefit funds to continue to be used as a default fund by employers.
Defined benefit members are entitled to benefits that are not altered by the charging of fees or the investment strategy adopted. Therefore, the MySuper regime is not designed to apply to defined benefit arrangements.
Schedule 6 requires trustees of superannuation funds to transfer the accrued default amounts of members to a MySuper product by 1 July 2017.
Moving existing balances to MySuper will ensure that members are able to obtain the benefits of MySuper, in particular a ban on commissions, for their existing superannuation balance as well as for future contributions.
I am aware that there are some concerns with the definition of the amounts that must be transferred to MySuper.
However, the Government’s approach is consistent with the recommendations of the Cooper Review and will allow many funds to simply convert their existing default investment options to a MySuper product.
Treasury estimate that the definition in the Bill could result in $90 billion more being moved to MySuper than the approach suggested by stakeholders. Based on the assumptions of the Cooper review, this translates to approximately $100 million per annum in fees being saved.
Further, all members will be notified before a transfer occurs and will have the right to opt-out of the transfer. Therefore, no member is forced to transfer their balance to MySuper if they do not want to. Trustees will have up to four years to communicate with members about their options.
Schedule 7 introduces new authorisation requirements for eligible rollover funds.
This will ensure that APRA is able to assess that eligible rollover funds are meeting their intended objective of reconnecting members with their lost superannuation and are promoting the financial interests of members.
Full details of the Bill are contained in the explanatory memorandum.
The Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill 2012 is another case study on how this government can seriously mishandle something that is actually a pretty good idea in principle. The concept of legislating basic consumer protection requirements that are important for superannuation products for people who have not made active choices in relation to superannuation arrangements is appropriate. The coalition have supported it in principle for some time. But of course with matters superannuation the devil is always in the detail. If you do not get your set-up right, it can have pretty devastating and significant consequences and significant implications for Australians who are saving for their retirement.
The Cooper review recommended the creation of a legislated default superannuation product, which the government has called MySuper. So far, so good. We have been critical in the past of the disjointed nature in which the government has pursued this pretty significant reform. Rather than introduce one package in one go so that we can assess the merits of this particular change as a whole package, we have had tranche after tranche after tranche dealing with various bits. Some of the bits in this tranche are pretty significant, certainly in the way the bill was initially introduced.
We are talking here of a bill which is more than 100 pages long and it will make some pretty fundamental and, in parts, controversial changes to Australia's superannuation retirement system. The Minister for Financial Services and Superannuation introduced a bill initially, which was in terrible shape and which included provisions which would have had some terribly devastating consequences for people in superannuation funds across Australia. For example, more than one million Australians would have been exposed to an automatic transfer of their superannuation funds—about $43 billion worth of superannuation savings—out of their chosen fund, into the government's legislated MySuper default fund product, without being asked for their prior approval.
That is of course entirely inappropriate. No government should be able to shift people's money out of their chosen superannuation fund into a legislated MySuper default fund without, in particular, seeking people's prior approval, given some of the costly adverse consequences that can flow from that.
Just to start at the end, yesterday in the House of Representatives Minister Shorten completely and totally backed down from the most controversial change in this legislation, which the coalition criticised from the outset, which was the proposal to force super fund trustees to shift people's superannuation savings, including out of funds where they had exercised active choice, into legislated MySuper default fund products without seeking people's prior approval. He totally backed down. He moved a comprehensive amendment which protected the interests of those Australians, an amendment which had been sought by the coalition as a condition for us not opposing this legislation.
But why did Minister Shorten get it so fundamentally wrong? Minister Shorten got it so fundamentally wrong for a range of reasons. Firstly, there is his general ideological blind spot, which means that he does not see straight when it comes to superannuation. He takes advice from one segment of the superannuation market when he puts these things together initially and then, when things come apart, he is forced to fix things up as he goes.
But let me talk through the lack of process here, because we have the Minister for Finance and Deregulation in the chamber here. One of the areas of responsibility that Minister Wong has relates to the Office of Best Practice Regulation. One reason why Minister Shorten gets things wrong, whether it is with FoFA, with MySuper or with a range of other things, is that he does not follow proper process.
I will give you one example: whenever there is a significant regulatory change that is unlikely to pass the government's procedural requirements around regulatory impact assessments, what does he do? He seeks an exemption from the regulatory impact assessment process. Whenever there is a piece of legislation that imposes inappropriate excessive red tape, inappropriate excessive costs, inappropriate and excessive adverse consequences for people across Australia, which should be scrutinised through a proper regulatory impact assessment and a proper cost-benefit analysis, what does Minister Shorten do? He writes to the Prime Minister: 'Can you please give me an exemption from having to submit this piece of legislation through the process that we promised the Australian people we would go through'—and this bit is not written—'because, essentially, I don't think this legislation would pass that sort of scrutiny.'
Minister Shorten introduces flawed legislation. If he had gone through proper consultation with appropriate and representative organisations—not just his friends in the union-dominated industry super funds movement but across the board—and if he had sought proper advice in an unbiased fashion, then he would have been able to pick up some of those flaws much earlier.
This whole MySuper process has been going on for years. But then Minister Shorten introduced the third tranche of this legislation back in October. Initially, he did not want to have any parliamentary inquiry into it. Initially, he said, 'There is no need for an inquiry.' When we wanted to refer it to the Parliamentary Joint Committee on Corporations and Financial Services he did not want that to happen. When it did happen then, all of a sudden, the Labor members on that committee did not want to have a hearing. They wanted to have it all done within a week.
We had to suggest to them that, if there was not a proper hearing, we would report that to the parliament and seek the support of the crossbenchers to judge the merits of this legislation as a result—and that changed their mind. In the end they rolled over on that. In the end the PJC had a half-day hearing where we were able to hear from very important witnesses like the Financial Services Council and others for just 30 minutes each. There were half a dozen people wanting to ask questions about a bill that is making substantial changes to people's superannuation arrangements, with significant consequences for the way their retirement savings develop into the future, and we had 30 minutes per witness in a half-day hearing. It was completely and inappropriately rushed.
It gets worse. This is all on the public record. Labor members of the committee in their majority report said, 'Just pass the bill.' It came down to coalition members of the Parliamentary Joint Committee on Corporations and Financial Services to identify the many and serious flaws that needed fixing. Yesterday, at the last possible minute, the government rolled over and made the sorts of changes that we were after. This was a significant policy victory for us on behalf of Australians who are planning for their retirement and were at risk of having their savings transferred automatically and without their prior approval to a government legislated MySuper account.
This bill, the Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill, requires that trustees transfer so-called accrued default amounts to a MySuper product. These are supposed to be retirement savings where a member has not exercised choice, but the bill as originally drafted went much further than that. It would have changed the investment strategy of many Australians by forcing the transfer of potentially large amounts of money from funds where individuals had made a clear and active choice about their superannuation to a MySuper default product without the need for prior approval from the individual concerned.
Yesterday in the House of Representatives, the coalition secured comprehensive amendments from the government to resolve this and other issues. Why didn't Labor members on the Parliamentary Joint Committee on Corporations and Financial Services see the overwhelming evidence that there were serious flaws in this legislation? Why didn't Senator Thistlethwaite look at the evidence that was before us when we went through this inquiry? Why didn't government members see what we all could see and what the Minister for Financial Services and Superannuation finally had to concede—that what the government was proposing was entirely inappropriate?
Quite frankly, if an individual Australian has made any sort of choice in relation to their super fund arrangements, it is none of the government's business to force transfer of their superannuation savings into any other account without seeking people's prior approval. The only exception to that that the parliament has agreed to in the past is in relation to very small amount accounts—accounts of less than $1,000—where, of course, the issue of fees and so on arises and where there is a public benefit in merging people's accounts in order to minimise the level of fees. But, as a general rule, if in the past somebody has been contributing, year in, year out, with their superannuation contributions paid by their employers into a superannuation fund that they have chosen specifically, it is none of the government's business to interfere with that.
In our view, the truth of the matter is that Bill Shorten has shown once again that he is not on top of his portfolio. Maybe he has too much on his plate. He is the minister for unions and the minister for union dominated super funds. Then, of course, he is the minister who has to run the occasional defence for the Prime Minister and who has to do a whole series of other political things as he continues to climb that Labor ladder of opportunity. He fought against having any inquiry into this bill when the coalition tried to have it referred to the corporations and financial services committee. Despite the rushed inquiry, coalition members on the PJC identified serious flaws which the government now has had to acknowledge and act upon with significant last minute amendments. Bill Shorten should have done his homework from the start. Labor members of the parliamentary joint committee should have recognised that the evidence about massive flaws in Mr Shorten's initial MySuper bill was overwhelming. Minister Shorten had seven weeks from the time the committee reported to draft his amendments. Instead, he has waited until the second last day of sitting for the year to start consulting with industry about an actual government amendment. So there was quite a flurry of activity yesterday to get the amendment right. Why did it take so long? This process has been going on for years. At the last minute, having rejected the need for an inquiry, he has completely and utterly rolled over and fully accepted all of the coalition's sensible and very constructive recommendations to fix this bill, as set out in our dissenting inquiry report.
This is no way to run a portfolio, especially a portfolio that deals with the retirement savings of Australians. Without the changes secured by the coalition, many Australians with superannuation in affected accounts would have faced costly adverse consequences, including being exposed to transaction costs and fees as assets had to be sold and repurchased in the new fund as the forced transfer was happening, potentially being placed into a fund with lower returns or higher fees, potentially being placed into a fund with a higher risk investment profile, and being exposed to the risk of losing life and/or total and permanent disability insurance.
The coalition succeeded yesterday in forcing the government to amend this bill and so the bill that is before the Senate now is the amended bill, as amended by the House of Representatives, so that a member who has previously exercised choice cannot be automatically transferred into a MySuper product by having previous contributions defined as an accrued default amount. The coalition has also achieved amendments to the legislation to avoid a potentially serious constitutional issue.
The bill as drafted did have the potential to break existing contractual arrangements and there was potential for legal challenge for breaching section 51 of the Constitution, the section that deals with the acquisition of property on just terms. Whilst the government has seen sense at the very last minute, this mess could have been avoided by proper process and proper consideration before the legislation was put before the parliament. It again shows, as I said at the beginning, that Bill Shorten's approach to running his portfolio is rather shambolic and disorganised, and that is why he has to keep fixing things on the run.
There is, of course, another problem with this bill. The government is introducing this MySuper default product but says at the same time—and it was said yesterday by the government in the debate about the changes to the Fair Work Act—that these products are not good enough as default products. I see Senator Thistlethwaite over there looking a bit intrigued and concerned about the fact that somebody on the government side would have said that, but that is exactly what Senator Jacinta Collins said yesterday. She said that to allow employers to choose any MySuper product as a default product for their employees would actually expose those employees to the risk that the employer would not act in the best interests of the employees in the MySuper product of their choosing.
Our argument here is that we support the creation of this default fund product, legislated as we are progressing it here today. But we think any product that qualifies for registration as a MySuper default fund product, because it complies with all the consumer protection requirements the government thought were necessary and that have hence been included in this legislation, should be able to compete freely in the default fund market. There is no need for an additional level of red tape, for an additional level of government intervention on top of that.
If the government believe they got this legislation right, if the government believe that this legislation has in it all the consumer protection requirements that are necessary for a default fund product, then why are they scared of competition between any such product that qualifies for registration as such a default fund product? And of course the reason is very clear. It is because the process the government put in place when the Fair Work Act was first established is a process that inappropriately favours union dominated industry super funds. It is a widely discredited process through Fair Work Australia that is anti-competitive and closed-shop. It is a process that is littered with inherent conflicts, with conflicted parties who act at the same time as delegates for unions for employer bodies and as super fund trustees in the super funds listed on the modern awards.
Even the government, in the lead-up to the last election, had to concede that it was an inappropriate process, which is why they made a promise, in August 2010—and Senator Thistlethwaite, I encourage you to have a look at the Labor Party's superannuation policy in the last election—in the lead-up to the last election that they would change it. They recognised that the system, the way it was, was broken and inappropriate and that there was a need for an open, transparent and competitive process for selection of default funds on the modern awards and other relevant industrial instruments, and that they would do that. It took Minister Shorten forever, but eventually he got around to calling a Productivity Commission review. But of course, as the Productivity Commission was halfway through their process, he intervened and made sure that the Productivity Commission understood that free and open competition was not an option. He stopped them in their tracks after they recommended genuine competition in the interim report. He responded to the review before it had finally reported in order to prevent the opening up of default super fund arrangements to genuine competition.
That is why the coalition will move amendments again here today to ensure that any MySuper product can compete freely in the default super fund market. It is because, strangely, the coalition has more confidence in the MySuper product structure than the Labor Party seems to have. The Labor Party seems to think that Fair Work Australia has to do another check on the MySuper products that are registered under this legislation. It is just a ridiculous proposition, which is why we are moving our amendments.
It is appropriate that one of the final bills that this Senate debates in the course of this year is a further addition to the government's reforms to superannuation. This bill, the Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill 2012, is the third tranche in a series of reforms aimed at strengthening our superannuation system, providing greater transparency, accountability, efficiency and ultimately productivity for members and funds throughout the country. Before this, the Senate approved the Superannuation Legislation Amendment (MySuper Core Provisions) Bill and the Superannuation Legislation Amendment (Trustee Obligations and Prudential Standards) Bill. Each of these two bills includes elements to implement the Stronger Super arrangements, to implement a low-cost and simple superannuation product that will replace the existing default superannuation funds.
This bill introduces a number of very important reforms to superannuation, particularly in relation to the abolition of fees relating to commission payments and the establishment of the rules for intrafund advice and for collection of disclosure of information by APRA and greater information for members.
In respect of fees relating to commission payments, an applicant for a registered superannuation entity applying to offer a MySuper product must elect that they will not charge any member a fee regarding the MySuper product, that relates directly or indirectly to conflicted remuneration to a financial service licensee. Importantly, there is a second part of that election, and that requires the applicant to prohibit a registered superannuation entity licensee from paying premiums on insurance policies that have embedded commissions.
In respect of performance based fees this law sets five criteria that must be contained in the terms of an arrangement the fund has with an investment manager. Those criteria include that fees are appropriate to the investment to which they relate, measured by performance of a similar investment product; are determined on an after-cost or after-tax basis; and include disincentives for poor performance.
In respect of intrafund advice—this is advice which is dispensed to members for which the cost can be covered across the full membership of the fund—restrictions on the types of personal advice that superannuation trustees can charge across the membership are introduced. A trustee is not able to charge across membership for personal advice if the person has not acquired a beneficial interest in the fund or the advice relates to a product other than a pension fund or a cash management facility, or the advice relates to consolidation, or if the advice relates to ongoing personal advice.
Collective charging for advice is allowed if it is related to a pension fund, a related insurance product or a cash management facility. Built into these laws are regulations for further circumstances to be added with respect to intrafund advice. So, again, we are tightening up the criteria for the charging of intrafund advice so that members of superannuation funds are not burdened with unnecessary costs.
General fees can only be charged in respect of an advice fee, an activity fee and an insurance fee. But all must be charged on a cost-recovery basis. Entry fees, under this legislation, will be banned and certain buy-sell spreads, switching fees and exit fees can only be charged on a cost-recovery basis. The bill also, importantly, deals with insurance in relation to MySuper products, and it stipulates that the trustee must provide MySuper members with death and permanent incapacity insurance to a minimum level unless the member opts out or the fund permits a lower level of life insurance.
One of the highlights and strengths of this bill is greater disclosure and collection powers for APRA with respect to information that relates to super fund members. Superannuation is a compulsory system of retirement savings, so it is entirely appropriate that superannuation licensees do everything that they reasonably can to ensure that there is complete transparency for financial product members in respect of the fund that they have an equitable interest in. To achieve this, APRA will be given additional powers to collect additional data from superannuation licensees. And APRA will be required to publish this data on a quarterly basis on their website and ensure that information relating to returns, fees and costs of all MySuper products is available to the public.
The bill also introduces the notion of a product dashboard—an easy, simple to understand, publicly available portal that superannuation funds must provide to their members and members of the public. The information that will be required to be provided on the product dashboard will include the investment return target, the number of times the current target has been met in the last 10 years for the particular fund, the level of investment risk, the statement of liquidity of the fund and the average amount of fees and other costs. Funds will also have to disclose the remuneration of directions and executive officers of the fund.
So, once again, we are improving the amount of information and the transparency associated with the management of the fund for members. The bill deals with the listing of particular MySuper funds in modern awards. Senator Cormann has made some comments about this and the fact that the opposition still cannot get over the fact that industry super funds offer better value for money, lower fees, better net investment returns and lower commissions for members.
This has been proven over many years, and when the coalition sought to introduce choice of superannuation fund legislation they believed that there would be an exodus from superannuation funds that were managed by industry bodies and those that involved joint management, but again they were wrong. In fact, people tended to move to industry funds because of their superior performance.
What the government has done with respect to modern awards in this bill is adopt the recommendations of the Productivity Commission. In conjunction with the reforms that have been passed by the Senate relating to the Fair Work Act, that will provide for default funds to be listed in awards that must be authorised to provide a MySuper product.
The point that Senator Cormann fails to recognise and disclose to the Senate is the fact that every employee has the choice of which fund they pay their superannuation into. When anyone begins a job these days they get two forms—an employment declaration form relating to a tax file number and a choice of superannuation fund. Even when we begin as senators here we get a choice as to which superannuation fund we contribute. It is a choice all Australian employees have. Employees have the choice as to which fund they pay into; it just happens to be the fact that most employees choose to pay into industry based funds because of their superior performance.
The bill also deals with defined benefit funds, and exempts certain employers from making contributions into MySuper funds if their employees are being looked after in terms of their contributions being made into a defined benefit fund.
Importantly, the bill also deals with the process of transition from current default funds into the MySuper regime. These transitional provisions ensure that by 1 July 2017 all employees in default superannuation funds have made the transition into a lower cost, more competitive and efficient MySuper product. The amounts that are transferred are referred to as 'accrued default amounts'. The amounts that will be transferred as accrued default amounts will be amounts where a member has not exercised investment choice or amounts held in a default investment option for the fund.
As Senator Cormann has mentioned, the government has agreed in the House of Representatives to amendments to the original legislation that would exclude funds held in cash, in particular funds where the member has directed the fund to hold those funds in cash for whatever period. Of course a member can opt out of the transfer process in writing at any time. The provisions also deal with eligible rollover funds and their basis as a temporary repository for the interests of members who have lost connection with their superannuation accounts. Schedule 7 of the bill amends the SI(S) Act to require trustees to obtain authorisation from APRA to operate an eligible rollover fund.
That is a summary of the provisions of the bill. Again, they deliver on this government's commitment to make superannuation in this country simpler, more affordable, more efficient and easy to understand. It is part of the government's commitment to providing a stronger superannuation system; to ensuring that as our population ages, as it places more and more pressure on our social security system, we are growing the nest egg of retirement savings, but we are also doing that in a manner that is fair for employees and provides greater efficiency for members of superannuation funds and, indeed, the business community as a pool of investment funds. I commend this very important bill to the Senate, and I congratulate Minister Bill Shorten for his excellent stewardship of the government's MySuper reforms over the course of this year.
I was about to congratulate Senator Cormann for his ability to fix the legislation that was so poorly put together by Minister Shorten in the first place. We have, yet again, a piece of incompetent legislation. The only thing we can say about this legislation is that in the form it is now in, with the coalition's amendments to it accepted, it is a far better attempt at legislation than the unclaimed moneys legislation was.
But I would like firstly to look at a couple of the points that Senator Thistlethwaite made. As I pointed out, this bill in its original draft would have changed the investment strategy of many Australians by forcing the transfer of potentially very large amounts of money from funds where individuals had made a clear and active choice about their superannuation to a MySuper default product without the need for prior approval from the individual concerned. The coalition has now got some amendments to resolve this and other issues.
As for congratulating Minister Shorten, we need to keep in mind that this legislation, Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill, was originally introduced in September this year into the House of Representatives. It was only that Minister Shorten was forced to look at how bizarre some of his suggestions were, how anti-competitive they were and how they were quite likely to lead to constitutional challenges that forced him, finally, to have a look at the amendments that we were suggesting. We have a timetable on this legislation, the stronger superannuation legislation, of which this is the third tranche, which started with regulatory impact statements being done in September 2011. Long before any of the final versions of the legislation were available, some aspects of the legislation were quite deliberately exempted from the regulatory impact statement. The Office of Best Practice Regulation points out:
The Prime Minister granted exemptions from the requirements for regulatory impact analysis in relation to the ability of funds to offer tailored MySuper products to employees with more than 500 employees, and extension to the date by which trustees will be required to have transferred the balance of existing default funds into MySuper products.
So we have the regulatory impact statements in September 2011, long before original legislation of any type was available—particularly in relation to this third tranche. This bill was brought into the House of Representatives on 19 September 2012 and now, on the last day of sitting, we have bills being gagged so that Minister Shorten can get this piece of legislation through to please his friends in the industry funds.
I do not think any of that is a matter for congratulations. Nor is the fact that, as deputy chair of the Parliamentary Joint Committee on Corporations and Financial Services, there was an attempt made for an inquiry not to be held into this legislation on the basis that we had already had lots of inquiries into Stronger Super. Every time a new piece of legislation with new requirements in it is brought to this house, I believe that the corporations and financial services committee, which has in the main had a long and proud reputation of examining legislation in a bipartisan way, should review it.
Certainly our review of this legislation, very brief as it was given the highly truncated reporting period that Minister Shorten allowed on the bill, found serious flaws, which finally the government has acknowledged and has now acted on with these five to midnight amendments. At least they are earlier than the 10 past midnight changes that need to occur with the unclaimed money bill. Minister Shorten should have done his homework from the start. This is a mess.
I was somewhat displeased to hear Senator Thistlethwaite doing a free advertisement for industry funds and recreate the fable around the cheapness, efficiency et cetera of industry funds. He probably belled the cat in terms of the fact that this government would love to force everyone into industry funds. That would be their optimum way of proceeding, because that way there would be so much more money available for unions to conduct business however they like, not what is in the best interests of employees or employers—or in fact the economy of the country.
The mistake that was going to come through under the original 'accrued default amount' definition in this legislation was that all existing default fund accounts, as well as the balances of individuals who had previously exercised choice of fund but who remained in the default investment option of their chosen fund, would be swept up into the new default MySuper product. Minister Shorten and others initially claimed that this is because this is what the Cooper review has said. But the Financial Services Council submission to the very brief inquiry that the Corporations and Financial Services Committee held pointed out that in fact what the government was proposing had gone way past what was proposed in the Cooper review. I quote from the FSC submission:
Through the Cooper Review and the Stronger Super … consultation in 2011, it was not contemplated at any time that choice superannuation funds would be subject to default/MySuper transitional arrangements.
According to the Cooper Review:
The major difference in the choice architecture model is the clear distinction to be made between MySuper and choice products, as either may be offered by large APRA funds. The Panel's broad starting point in relation to the choice architecture model is that, as far as is reasonably possible, if the trustee of a large APRA fund does not wish for a product to comply with MySuper or ERF criteria, the product should continue to operate much as it currently does.
We are talking about APRA approved funds. The FSC submission continued:
A choice product trustee would be able to determine the extent to which it differs from a MySuper product in relation to the offer of investment choices, intra-fund advice or retirement products, among other features. This is appropriate and will allow the creation of a competitive choice sector.
Well, the last thing this government wants is competition in this area or for people to have the ability to make their own choices about where their superannuation goes. It is just obscene the efforts that are being put into forcing as much of employees' superannuation funds as possible into the industry funds and therefore into the supporters of the Labor government.
We only need to look at some of the current cases to suggest why this is not a good idea. For example, we have the CFMEU telling Cbus, CFMEU's superannuation vehicle, that if they do not stop investing in Grocon the CFMEU will go and find a different superannuation provider. Well! Every individual shareholder in Australia has the right to look at the ethics of the investment strategy of the body that they are involved in and choose to pull out their funds. But it is quite a different matter when a union attempts to blackmail an industry fund because of what they choose to invest in. It is quite fine for a shareholder to look at the ethical propositions put in terms of investment by a superannuation fund or any other body, but only to look at the ethical framework, not to start saying, 'If you invest in company A or company B we will pull our money out.' Of course, the CFMEU directing that all their members' funds come out and an individual shareholder pulling out of a company are quite different.
It is one of the many, many reasons that we currently need far better legislation to look at industry funds and look at the way they are regulated—and to consider that in fact they should have the same need to be overseen as public boards. It is a really serious problem that we currently have in this area. It just adds to the concerns that are raised by other problems that have developed within the Health Services Union and the AWU in recent weeks that suggest that we really do need to have a full judicial inquiry into the way the unions and industry funds run their association at the present time. There is just too much room there for corruption and for lack of transparency.
This government legislation, before it was amended, certainly was in no way assisting in developing transparency; it was only designed to assist the growth of industry funds and to do it—believe it or not—without even the approval of individuals being sought when their superannuation was moved out of one fund into another. It is beyond belief that the government thought they would get away with this.
Some people have suggested that this is very rushed legislation on Minister Shorten's part. I think in fact it was quite a deliberate strategy that he hoped no-one would pick up. I am pleased to say that he was completely wrong in that and that there has been a lot of concern, particularly about the constitutionality of what he initially proposed in this area.
Sitting suspended from 18:30 to 19: 00
Thank you, Madam Acting Deputy President Boyce. Could I just take this opportunity before I start talking on the bill to wish you and all the other senators a very merry Christmas and all the best for next year. Could I also mention the staff, not only the staff who work so hard for the senators in this place but also the Senate staff, those who help with the operation of this establishment, who really work hard. It has been a great learning experience for me in my 4½ years, coming from the farm and small business and so on, always having the attitude of, 'Oh, public servants. They do nothing.' That was until I came to this place and saw them walk in at seven in the morning and walking out at 11 pm and midnight. They are also so professional in their work, and I would like to thank the Clerk and all associated staff for the wonderful work they do here in the Senate.
The Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill 2012 is the third tranche of legislation implementing a recommendation of the Cooper review into Australia's superannuation system to introduce a new, low-cost superannuation product known as MySuper to replace existing default superannuation fund products. I will commend the Labor government for introducing superannuation many years ago, and, of course, following governments for maintaining it. I believe we are now heading towards $1.4 trillion put away in superannuation—a huge amount of money. Sadly, after the global financial crisis set in in 2007-08, with the crash of the stock market the value of that superannuation went down enormously.
Hopefully, with good times ahead, good government, and a return to success in the private sector we will see those shares return to some of their higher levels. No doubt by the time those who are very young—20, 21 and 22—come to retire at the age of—who knows: 67, 70—they will have a good stack of money put away to get them through their retirement and relieve the burden from the taxpayer. We know now of the shortage of government money. We see the government debt. We see, sadly, lack of business confidence in Australia. This is largely a result of many of the things this government has done, but hopefully that business confidence will return. Even growth has been forecast for next year and the year after, according to Westpac's economists. Hopefully we will return to those days of growth where people could fulfil their life's dream of owning their own home, putting enough away in their super and retiring where they could be financially secure without relying on the fellow taxpayers of our nation.
It is quite alarming, I know, being in small business and employing people. Super does cost. Of course, when it was phased in, workers did sacrifice wage increases to get their super in line. I want to make a point here about the talk of raising super from nine to 12 per cent and, even as former Prime Minster Paul Keating suggests, to 15 per cent. The former Prime Minister is suggesting a two-phase superannuation system, with phase 1 there to support those of the ages from 60 to 80 in retirement and phase 2 going from 12 per cent to 15 per cent, where three per cent of that money will be put into a government backed longevity fund to help pay for the needs of the over-80s. I have some serious reservations about that.
People work and put their super together. Who is going to pay for it to rise to 15 per cent under former Prime Minister Keating's plan? You cannot make business pay. Already we are seeing too many businesses in Australia trying to compete against overseas businesses where the labour is very cheap—places like China and other parts of Asia, as well as Africa, where we have a high Australian dollar which has been brought by money pouring into our country and being invested in Treasury bonds to finance the $253 billion gross debt that this government has built up. We see money coming here as our Reserve Bank cash rate is still over three per cent, when many of the official cash rates around the world are zero or just a bit above. So investors see Australia as somewhere they can get a good return, hence the market of the Australian dollar. The sentiment has been bullish for many years now and we have seen the Australian dollar trading by parity, making it very hard for people in rural and regional Australia who rely on income from exports, whether it be the grains industries, the export beef market or even the dairy industry, which produces some nine billion litres of milk each year. In Australia we only consume around 4½ billion litres a year, so we rely heavily on exports and that high Australian dollar is hurting us.
The point I make is that when we are tinkering with super and talking about increases, we cannot make the businesses pay for it. I remember when I was in small business that I paid my employees' super but I did not have any myself. A lot of people in small business are like that. As they should, they pay award and often above award wages to their workers. But often the owner of the business gets the smallest slice of the cake. They do not receive wages from the business when times are tough and they do not have super. I came into this place at the age of 53 years old with $1,650 worth of super, which is not much when you get to the age of 53. I put $4,000 away in a super fund during the wool boom of the late eighties-early nineties. Then I could not contribute anymore, and that $4,000 just shrunk down with fees until I cashed it in and put the little bit left, $1,650, in with my AGEST super.
Getting back to this legislation. The bill, as originally drafted, would have changed the investment strategy of many Australians by forcing the transfer of potentially large amounts of money from funds where individuals have made a clear and active choice about their superannuation to a MySuper default product, without the need for prior approval from the individual concerned. That is concerning.
However, on this occasion the coalition has scored a significant policy victory for Australians planning for their retirement who were at risk of having their savings transferred automatically, without their prior approval, to a government-legislated MySuper account—just automatically. The coalition has secured amendments from the government to resolve this and other issues.
Minister Bill Shorten wanted to rush this flawed legislation through in early October. But the Parliamentary Joint Committee on Corporations and Financial Services did an inquiry and reported on 9 October. This is one of the huge criticisms I have with this government: rushing things. We look at the stimulus package, and the crazy $42 billion, where money was simply rushed out into the economy. We go back to the $900 handouts, which was to stimulate the economy. Sadly, much of that money went into poker machines or buying things like televisions and luxury items, most of which—in fact, I could say with confidence: all of those electrical items—were made overseas. It was a stimulus package for China; that is what the stimulus package was. And it was rushed, of course, through the school buildings program; with the absolute mess in New South Wales by the previous government managing that school buildings stimulus package. Small buildings, which I would say would be worth about $120,000, were being constructed at a cost of $330,000 and more.
There has been plenty of toing and froing over amendments in this legislation. That is what you get when a minister tries to rush legislation through. It was all too rushed. I ask the question: why rush in the MySuper? Is it about the super funds that the unions are involved with, that seem to be very friendly to the Australian Labor Party? Is that what was behind the original rush of Minister Bill Shorten, when he attempted to bring this legislation in some time back?
The current process for the selection of default funds under modern awards, initiated by this government and run by Fair Work Australia, lacks transparency. It is littered with inherent conflicts and inappropriately favours union dominated industry super funds. And that is a great concern: the union dominated industry super funds. I was a member of a union once—in February 1978. We had a drought in 1977 in South Australia and I went out shearing to pay the bills. It was not long after a state election in South Australia when the then Premier Don Dunstan was re-elected, and his campaign was 'Unionism is not compulsory'. So we were shearing at Carriewerloo Station, 17 miles out of Port Augusta, from memory—in fact, the shearing shed where they made the film Sunday Too Far Away, with Jack Thompson, which I am sure many people have seen. When the rep came in he said to me, 'Have you got a union ticket, mate?' I said no. He said, 'Do you want me to take it out of your wages or do you want to pay me now?' I said, 'The Premier said unionism is not compulsory'. He said, 'Well, it's not compulsory—either buy a ticket or leave the shed; take your pick.'
No, this was compulsory unionism under the Dunstan government. So, anyway, they took the price of a ticket out of my wages and ironically, next shed, they made me the union rep! This bloke came up to me and said, 'I haven't got a ticket; will you get me one?' I said, 'I wouldn't know where to get them, mate; get your own.' That was my 12 months in the Australian Workers Union. I saw how the union movement worked then: it was hold a gun at your head or leave the shearing shed—as simple as that. If you did not join the union, you had to leave your job. It was a terrible situation. Of course, the then Labor Premier Don Dunstan, now the late Don Dunstan—
And of course he was wrong with his election campaign that unionism was not compulsory. I found from personal experience--which is all I have to offer this place at any time—that unionism was compulsory.
We talk about transparency. Remember the last election? This government would be honest, transparent, tell-all, true to the Australian people—I think that during the campaign when we saw the real Ms Julia Gillard. We had seen a few Ms Julia Gillards as the weeks had gone on, and people like Mark Latham were doing a good job in regard to the coalition's campaign; others were leaking here, there and everywhere—and transparency was the big thing.
Union members must ask themselves a question these days: what do they get from their union? I wonder what the lady tonight working in the country hospital cleaning the toilets and the bathrooms, and a member of the Health Services Union, is getting for her union fees. These are the battlers, the essential ones who work in our hospitals. They must be absolutely disgusted with what has been revealed has happened to their funds—absolutely disgusted. And no doubt in the future, if it is not happening now, we will see a mass walk-out of the union movement because of the disgusting and dreadful way that their members are being treated. I won't go onto the Australian Workers Union—I was a member for 12 months, remember. I also remember a bloke telling me, 'You must resign when you are a financial member or they'll sue you.' I said, 'Sue away, you can't get blood out of a stone.'
But back to the legislation. Even Labor has had to finally recognise that, in its 2010 pre-election policy on superannuation, where they promised the introduction of an open, transparent and competitive process to select default funds under modern awards. I take a lot of credence out of what Senate committee reports do—a good part of this place is the Senate committee inquiries into legislation. This piece in the coalition's dissenting report struck me. I will read it out to you, Madam Acting Deputy President. This is from the dissenting report of the coalition senators into the inquiry into this legislation:
Only a half-day hearing was set aside,--
That is how important this legislation is: have a half-a-day hearing for the Senate committee to inquire into it.
with witnesses limited to just 30 minutes for each organisation--
If we talk about the rush, look at how you have rushed the Senate committee inquiry into this. Half a day for the hearing, 30 minutes for witnesses.
meaning the full range of issues has not been publicly canvassed.
It is as simple as that.
Worse still, committee members have only had days in which to assess the very complex evidence presented and draft reports and recommendations.
Transparency? Honesty? Those are words we hear from the Prime Minister at election time. Rush it through with a half-day hearing and 30 minutes for witnesses. It looks to me as though the government did not want this legislation to be scrutinised. That is what I must conclude. Surely, why not a proper Senate committee investigation? This is a big new paradigm we were told we would get when the Greens and the Independents propped up the Labor government. Mr Oakeshott said, 'It's going to be ugly but it's going to be beautiful. It's going to be a wonderful government.' Yes, let's rush things through.
Today, the government gives us just 90 minutes to debate this legislation. There are 76 senators in this place who potentially might wish to speak on this bill. But no, the guillotine will drop in 90 minutes. The bill is 100 pages long, so we are giving 90 minutes to a bill a hundred pages long—that is not even a minute a page.
Forty-five. It has been reduced now. Back to that dissenting report, and I quote:
Given the significant implications of this legislation, including adverse financial consequences for a material number of individual super fund members, Coalition members and senators recommend that:
The government withdraw this bill pending further consultation across the superannuation industry to address the serious flaws identified in this rushed inquiry and to allow for the preparation of a full Regulatory Impact Statement for the whole bill actually before the parliament, which is compliant with the government's own best practice regulation requirements.
But no. It has been a rushed inquiry, half a day of hearings, 30 minutes to witnesses and rush, rush, rush. This was a mess from the start when Minister Shorten tried to rush it through some time back. Luckily, the coalition under the guidance of my colleague Senator Cormann have some sensible alterations to this legislation, sensible amendments that will make a rushed program perhaps a little bit better.
In conclusion, superannuation is vital. As our population grows, with the baby boomers being the biggest sector of our population, if they cannot fund themselves in retirement it means more drain on the taxpayers—the working people of Australia. Those taxpayers already have enough drain on them because they have one hell of a debt to pay for now, with interest. The shadow Treasurer Joe Hockey says it could be up to $12 billion a year in interest only—$12,000 million must be found before one public servant is paid, before one Australian soldier receives any sort of entitlement, before one age pensioner receives $1. That is the financial stress we have been put under under this government. That is why we need people in the future to be self-sufficient in their retirement. Let us hope that the confidence to the private sector, to the stock market does return. I do feel sorry for those who just gone into retirement claiming their super after the crash of the global financial crisis, brought about by ridiculous, stupid bank lending in the United States.
I am very pleased to contribute to this debate on the Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill 2012. Unfortunately, I will have to curtail my time because I know there are so many of my colleagues who want to make a contribution to what is a very particular piece of legislation, one that requires far more scrutiny than we are able to give it in the very constrained time that has been allowed by the government and the Greens political party.
It is good to see at least that the Greens are in the chamber for the debate. I say to Senator Ludlam that we are constrained in this debate because you and your Labor Party mates have guillotined this and many other bills through the parliament. Senator, I am not sure whether you were here but in the Howard government's time when we, on about five occasions, time-managed a bill we would then have hour-long contributions by the then Senator Brown, your former leader, and, I think, from Senator Ludlam about how awful and how undemocratic it was, and how the world was coming to an end, because the Howard government time-managed two or three bills when those were essential for Australia.
You were here? You were. Well, have a look at the hours spent on Work Choices. Have a look at the hours spent on the Regional Forestry Agreements bill. At any suggestion of curtailment you would have the Greens up one after the other telling the Senate how undemocratic, how awful the coalition was and yet here in this year of the record number of guillotines, have you heard one peep from the Greens? Not one peep! In fact, that is not unusual because they were there providing the majority for the Labor Party.
Why do Australians take no notice of the Labor Party? Because they are led by a Prime Minister—a leader of the Labor Party—who deliberately told untruths to the Australian public before the last election. Why are Australians no longer listening to the Greens?—if you need evidence of that have a look at even the ACT election—because they see the complete hypocrisy of the Greens political party. If the coalition does something, it is bad, evil, the end of the world, but if the Labor Party does exactly the same thing then it is okay and they will support it.
Madam Acting Deputy President, thank you for that. When I was interrupted I was saying this bill is all about MySuper. One element of it is converting more superannuation when people do not know that it is happening to the union super fund. I have not noticed those from the Labor Party who have spoken declare conflicts of interest, I might say. I know at least one senator who was at the top end of town—he sat on the board of directors of these very big insurance companies. And I suspect there are many others. Perhaps during the course of the debate Labor senators will indicate which of them as union officials, for no other reason—none of them had any great expertise in the superannuation or insurance industry—than that they were union bosses, suddenly ended up in the boardrooms of some of the biggest financial companies in Australia. They were all getting quite substantial fees.
How do I know that? Because the wink and nod arrangement was that, if you were a union official who sat on the board of one of these super companies, the only reason you were there—it was not the quota in that instance—
Senator Conroy interjecting—
I can talk about quotas over there. You were only there because you were a union official. The rule was that, if you got $40,000, $50,000, $60,000, $70,000 or $150,000—I do not know what they got—as a director because you were a union official the money was to go into the union. But of course a couple of them—who can blame Mr Thomson—got a little greedy and did not follow the rules. The money they got, and I think in that case—I should not mention it because I am not sure of the facts; I thought it was over $100,000 but it might have been $80,000—
Senator Conroy will have an opportunity later, and I hope he uses that. It seems to me that he is defending Mr Thomson. I do not know whether it is true or not. But Fair Work Australia, which Senator Conroy and his team set up and filled up with ex-union officials, even said Mr Thomson was using lowly paid member's money for brothels and free trips around the world. That is not from me—I would not make those allegations. Fair Work Australia, made up of union officials that Senator Conroy and his mates appointed have determined that, not me. And in the shades of that, this case that I am talking about went to court. The union sued this director of a company because he did not follow the arrangement to put the money into the kit.
It got to an interesting stage in the court case, and then do you know what happened? It was settled. Would you believe that? It was settled.
Senator Conroy interjecting—
So the full facts could not come out, there was not a full-scale court case, and we were never to know what the deal was, who got it. Senator Conroy, if I am wrong on this, please use your opportunity in the debate to tell me this court case that I relate did not happen. You might tell me how it ended up; I do not know, because it just sort of disappeared.
This bill in part of its operations has the impact of favouring the union super funds. I would like to know how many of my colleagues opposite were actually directors of these union super funds.
Mr Shorten was. I do not know that; I take your word, Senator Cormann. I am pretty certain he would have been. I wonder how much he got paid in a top-end-of-town job as a director of a very big insurance company.
Senator Conroy interjecting—
Senator Conroy, you can tell me whether he did the right thing and put his director's fees into whatever union he was representing at the time. I would be interested in that. I think it is relevant to this bill, because since this government has been in power there has been quite a number of pieces of legislation dealing with the superannuation industry and the insurance industry.
In fact, I know all of us, including Labor members, were approached by groups of financial advisors, people who deal in the superannuation industry—honest, God-fearing family men, many of them in small businesses in small country towns like the town where I live—who were offended that the Labor Party were saying they were all crooks. As they brought in this legislation that we are debating now, there was a slur cast on these people, who in many cases I know are pillars of the financial advice industry. They are good people. It was a good industry. They gave good and valuable advice. But the Labor Party, and one can only surmise why, were hell-bent on making the public wary of these small business men and women.
When you see legislation like this, when you see union officials and former senators sitting in the big end of town around the boardroom table getting big director's fees for their involvement in union super funds, you can only wonder about the rash of legislation before us.
I did want to start my contribution by laughing at Senator Thistlewaite's congratulations for Mr Shorten on this bill.
Anything funnier I do not think I have heard, though someone said Julia was honest and I found that pretty funny.
Perhaps I should relate the facts. Here is a leader of the Labor Party who promised hand on heart that there would be no carbon tax under a government that she led and then the first bit of legislation is a carbon tax. If she had not made that promise on the eve of the election, she knows as I know that she would never have been elected. In fact, the Labor Party would have been annihilated. We hear all the comments about how important global warming is, how importance it is that Australia does something and how necessary the carbon tax is. To Senator Conroy, if it is so necessary why did you promise before the last election not to bring it in? I would love to hear an answer to that, even by way of interjection.
Mr Shorten is the architect of this bill, and Senator Thistlethwaite said he has done a great job on it. I only have a few minutes more to speak, unfortunately, but I could spend 20 minutes and then another 20 minutes saying how good Senator Mathias Cormann is. He is in the chamber, sitting at the end of the bench. He was the one who turned this awful piece of legislation into something that is mildly okay. I give credit thanks to Senator Cormann here.
This legislation was amended yesterday. I have a report here from all the Labor Party people, including Senator Thistlethwaite, who said the bill was great as it was. Were there any Greens on that committee? I am told there were. Senator Ludlam, I do not know who it was, but they said that the bill as it stood was a great bill and should be passed. Yet, just yesterday, Mr Shorten accepted Senator Cormann's amendment, the amendment in the coalition's dissenting report that the minister had been alerted to seven months ago.
Sorry, seven weeks ago. I was not on the committee, clearly. So the coalition alerted Mr Shorten to the flaw. Even if you accept the bill, the way it was presented was wrong. The coalition committee members pointed that out. Did the Labor Party or the Greens members on that committee understand or agree? No. 'Pass the bill as it is,' they said. Thankfully, the coalition put in a dissenting report and they persisted. To give credit where credit is due, Madam Acting Deputy President, I think, you were on that committee too. On our side, we have people who actually understand these things, follow them, have a bit of business experience and a very great understanding of the insurance and the superannuation industry. They were able to see through this while the Labor people all said: 'The minister said it is good. Yes, it's good. Put it in the report.' The majority report was supported by the Greens, who said that the bill should be passed as it is. Thanks to Senator Cormann, an evil bill, if I can call it that, has been made mildly okay.
We are going to move some amendments. I know that you, Madam Acting Deputy President, and Senator Cormann, amongst others, are very keen to progress those amendments. I hope you can speak quickly because at the rate we are going you are going to have about 30 seconds to move three amendments and explain them to the Senate and to people who might be listening to this as to why these are good amendments and should be adopted.
The Greens and the Labor Party have curtailed this debate. I will be voting for those amendments but, like most senators who will be voting on this, I would like to have them explained because I was not on the committee. I would like to question Senator Cormann when he moves the amendments to find out whether they are good amendments, though I am sure they are, but I would like to satisfy myself of that. I am not going to get that opportunity, am I? Of course not. Thanks to the Greens, who joined with the Labor Party, debate on this very, very important piece of legislation will be curtailed.
I am conscious time is running out. I know my colleagues are very keen to make a contribution. I have pages of material here I would like to contribute to the debate. If I do not do it during the second reading stage, I would like to do it in the committee stage of the bill. Senator Ludlam, will there be a committee stage? No. You and your party have ensured that there will no committee stage. The Greens show all their piousness—'Oh, this has to be looked through.' Not a lot of the senators today were here in the days when the Greens used to spend hours telling us how important committee stages were, how important the Senate was and how important full discussion and accountability was. Yet, when they have the ability to make a difference today, what do they do? They join with their mates in the Labor Party to curtail proper assessment of these important pieces of legislation.
I would to say a few more things, but I know my colleagues are very keen to speak, so I will leave it there and urge the Senate to support the amendments which I think are good, though I am never going to find out for sure. They will be moved by Senator Cormann to try to make this bill better.
I rise to speak on the Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill 2012. As Senator Macdonald has indicated, despite the fact that there is a list of coalition senators who would like to make a contribution on the record about this bill, they will not be able to because earlier the Labor Party in conjunction with their alliance partners, the Greens, voted to ensure that the bills we are debating today in the Senate will be subject to the guillotine. As such, at 8 pm tonight the guillotine will fall and no further debate will be had in the second reading stage on this bill.
This is, as the Senate would be aware, the second superannuation bill that we have dealt with today. The first was the Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012 and again there were many senators on this side who wished to participate in the debate but were unable to because that bill was also guillotined. I listened to my colleague Senator Ian Macdonald's comments on that bill. It was an exceptionally eloquent speech. The one thing he said that really hit home in relation to that particular bill was this: by that legislation the Labor Party had sunk to a whole new depth. They were now legalising theft as a way of paying off their huge deficit in Australia. They have legalised the fact that they can steal Australian taxpayers' money, because they have no other way now of paying off the debt that they themselves have created.
Then we turn to this bill. This bill in its original form highlighted what is the fundamental ideological difference between the Australian Labor Party and their little alliance partners, the Greens, and those on this side of the chamber. As Liberals, our fundamental belief is that we believe in freedom of choice. We believe in the inalienable rights of freedom and of all peoples. Unlike those on the other side, we believe in a lean government that minimises interference in our daily lives and maximises individual and private-sector initiative. Unlike those on the other side, we believe in the individual. We believe on this side of the chamber in offering the individual an ability to make a choice that suits their own circumstances.
The Labor Party's little alliance partners, the Greens, getting littler by the moment—in the ACT they were all but wiped out—are still able to be bought. We cannot forget that the Greens can always be bought. As I said earlier today when I addressed the Senate in relation to the fact that the Greens had clearly been bought on the guillotine motion, we all know that the Greens can be bought because the Greens were the political party that accepted what is now recorded in Australian political history, and that is saying something, as the largest political donation a political party in Australia has ever taken. You can only imagine when they got the phone call from Graeme Wood of wotif and he said, 'Guess what: $1.7 million is coming your way.' You can just imagine all their morals ran out the door. They did not run back to Hansard to see when they had stood up in this place and condemned the Australian Labor Party for taking donations, condemned the coalition for taking donations, because that is bad, apparently—very bad. But when you are the Greens and Mr Graeme Wood offers to buy you for $1.7 million, apparently that is okay.
Madam Acting Deputy President, I raise a point of order. I seek your advice on whether that was a fairly clear impugning of improper motives to the entire Greens Parliamentary team. If it was not, I would like some kind of ruling on how that was not. Accusing the parliamentary team in this place of being bought by donation is a very serious allegation and I call for your ruling on that.
As far as I am aware, Senator Cash was referring to the Greens party organisation. I will take some advice on that. I have now spoken with the Clerk and, as far as I was understanding what Senator Cash were saying, she was referring to a broad organisation, not to the individuals actually elected into this place. But I would ask Senator Cash to ensure that she does not reflect on any of the individuals in this parliament.
Thank you, Madam Acting Deputy President. As I was saying in response to the interjection from Senator David Bushby, a good friend of mine, Senator Bushby, through you, Madam Chair, it was not just a large amount of money—history now records it as the largest political donation ever given to a political party in Australia. So the next time the Australian Greens stand up in this place and seek to condemn a member of the coalition or seek to condemn a member of the Australian Labor Party in relation to the taking of donations, perhaps they need to reflect on the fact that it is they themselves that received $1.7 million from Mr Graeme Wood, the founder of wotif.
As I stated, the first superannuation bill that was discussed by the Senate earlier today, as Senator Ian Macdonald said, was the legalisation of theft. The Labor Party are now just blindly robbing the people of Australia in order to pay off their debt. What they do with this bill here is almost as bad, almost as evil. The bill as originally drafted would have changed the investment strategy of many Australians not by choice but by forcing the transfer of potentially large amounts of money from funds where individuals have made a clear and active choice—so I as an individual have made a choice in relation to where my superannuation is going to go—to a MySuper default product. What is worse is that the way the bill was drafted the Australian government did not have to tell me prior to forcing my superannuation into their fund, an industry fund, that they were doing it. The Labor government wanted to force an Australian citizen who has exercised choice in relation to their superannuation fund to have that money transferred into the MySuper default product, and they did not even have the guts to tell the individual that that is what they were going to do.
I will take that interjection: it is basically theft; that is exactly right. This was also canvassed in the joint committee inquiry that looked into the bill, albeit on a very, very limited basis. The FFC's submission to the corporations and financial services committee inquiry made a strong argument that the government had clearly got it wrong—and not only that. The government initiated the Cooper review and even the Cooper review said, 'Good grief, you can't actually do this; you've gone way too far.' This is what the FFC submission said: 'Through the Cooper review and the Stronger Super Paul Costello consultation in 2011, it was not contemplated at anytime that choice superannuation funds would be subject to default MySuper transitional arrangements'—not 'was contemplated' but 'not contemplated'. But that does not stop the Australian Labor Party. The mere fact that a review has given certain recommendations does not stop the Australian Labor Party from doing the exact opposite of what the review has stated.
I stood up in this place only yesterday in relation to amendments to the Fair Work Act, where again the Australian Labor Party spent $1 million of taxpayers' money putting together a review—they handpicked their own panel and cherry pick their mates to sit on the panel to provide recommendations to them as to how they might improve the Fair Work Act. And yet, when push came to shove, where were the recommendations when the legislation came before the Senate yesterday? Oh, conveniently they just were not there because the Labor Party did not like what the review panel had come back with. It is the same with this. The Labor Party did not like what a review came back with, so they decided to do something entirely different.
One of the other interesting parts of this bill, had Senator Cormann not actually negotiated amendments with Minister Shorten, was this: the bill had potential implications for insurance within superannuation. Many Australians take out all types of insurance, but they do so on the basis of their own personal circumstances. This is what this legislation, had it not been amended by Senator Cormann, would have done: the MySuper death and total and permanent disability cover is likely to be less. This is coming from the party that talks about the better off overall test, remember. 'No Australian can ever be worse off.' But this is exactly what this legislation was going to do in relation to insurance. The cover is likely to be less than that currently enjoyed by a member of a choice default fund. Some people who have been covered within their chosen fund for a long time may not be able to qualify for life insurance—and, remember, the government is doing this to you without actually asking if they can do it to you—or they will only be able to qualify on inferior terms given the changes in their personal circumstances since the original cover was taken out in their existing fund.
Again, the Labor Party was trying to force upon on individual what they wanted the individual to have, regardless of the fact that the individual had exercised a personal choice. But, worse than that, they were doing it by pushing a piece of legislation through the parliament which stated that they would then be able to do that without seeking the individual's prior consent. It was rushed through a committee. Despite the fact that the bill was rushed through a committee, Senator Cormann has been talking to the industry now for over two years. If you can say one thing about Senator Cormann it is that he knows more about superannuation now than do most people in Australia and he certainly knows more about superannuation than does Minister Shorten. Senator Cormann was the one who identified the very serious faults in this bill. Do you know why we know they are serious? It is exactly as Senator MacDonald said. You have got a report that comes out that says the bill is fantastic. The Labor senators, given their instructions by Minister Shorten, say, 'No worries, the bill is fantastic.' The Greens obviously just fall into line; there is no two ways about that; they probably did not read the bill. But that is fine; they also say the bill looks good. But Senator Cormann and the coalition members of the committee put in a dissenting report highlighting certain issues.
It may have ended there, but yesterday you could almost be assured that the Labor Party were told there were serious problems with its bill and they had better go to Senator Cormann and work out a way they can accept this amendment and change this bill. One of the serious flaws of the bill was that it was potentially going to break existing contractual arrangements and face potential legal challenges for breaching section 51(xxxi) of the Constitution. Well done to the Australian Labor Party! They were introducing a bill that may well have seen a legal challenge because it breached the Constitution. But the good news for the Australian people is that Minister Shorten has accepted Senator Cormann's amendments—
He only accepted them yesterday. That is why you know there was a problem with the bill: because the Australian Labor Party could not let the bill go through the other place in its existing form. They also could not tell us that they were going to accept the amendments a few days ago because that would have looked bad. But, at the very last minute, they clearly realised that this was a piece of unworkable legislation and, as such, what was a very, very bad bill was made slightly better. But that was not as a result of anything Minister Shorten, the Australian Labor Party or the Greens did; t was only through the due diligence of those of us on this side of the chamber.
As I commenced my remarks I said the guillotine will fall at 8 pm tonight. On that basis, whilst I have a lot more that I could say about this legislation and the fact that if it had not been amended by the coalition there would have been some extremely detrimental consequences for the people of Australia, I will end my remarks here so that another colleague of mine has a brief time to put some comments on the record.
I rise tonight to talk about the Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill 2012 as my colleagues have done. I thank Senator Cash for drawing my attention to a number of other things to which I should refer, but in leaving some time for Senator Bushby tonight I will not revisit them. They are points which I did not know about and, if we were able to go into a committee session before this bill is ruthlessly guillotined tonight—as Senator Macdonald expressed his frustration earlier—we would be able to flesh out these points so that all the 76 senators in this place were fully aware of what was going on in this important area for all Australians.
While I referred to Senator Macdonald, I wish him all the best for his birthday today, and get that on the record. I congratulate him for his win in the Queensland Senate preselection, which will take him to another term here in this place. He will serve the Queensland people well, as he has done dutifully and faithfully for the last two decades.
It is no surprise that we yet again see another example of Labor bringing defective legislation to the debate at superannuation. It was only earlier today that we saw a number of bills go through; namely, the Wheat Export Marketing Amendment Bill. Without the amendments of many of those in the chamber the government would not have been able to get that one right. In an effort to ensure that we did get that legislation right, everybody except the government banded together, got some reasonable outcomes for the wheat industry and were able to push forward in what would otherwise have been—to use a topical expression for this time of year—a very big mince pie.
This government continues to blunder in its inability to provide for the economic wellbeing of each Australian, which each Australian works so hard to achieve. How much do this government expect this country to face with continued financial decline? We are very lucky in this chamber, and they say that every government is only as good as its opposite number: Minister Shorten is blessed to have Senator Cormann on the other side keeping good governance in place—keeping good policy coming forward. It has been pointed out on numerous occasions during this debate that Senator Cormann has been able to remind Minister Shorten of what good policy is, and save him from what would be very embarrassing legislation.
Most significantly detrimental in this bill is the intention to take away an individual's choice in deciding how to handle their hard-earned savings. The effect of this bill, in introducing a new, low-cost superannuation process known as MySuper, is that without approval from an individual large amounts of money from an individual's choice of fund will be automatically transferred to a MySuper default product.
Earlier today we saw another Treasury bill that went through which takes the automatic transfer of inactive accounts from seven years down to one. Why is that? Why would the government want to transfer or co-opt the money on inactive accounts? It is because it cannot balance its budget. It is because it cannot deliver a surplus. It is a cruel hoax. They say they will deliver a surplus in 2013, and that is unlikely. As our colleague in the House, the member for Longman Wyatt Roy, said recently, Labor has never delivered a surplus in his lifetime. That is so true. It is a disgrace that the Labor Party.
My colleagues on this side today made clear how flawed this piece of legislation is, and I cannot stress enough the damaging consequences guaranteed to flow for individuals and businesses. Without choice an individual is exposed to risks of transaction costs, lower returns, higher fees and, potentially, higher-risk investment profiles. Again, we are seeing the negative impacts of poor Labor decision making. Labor continues to handle poorly the issue that is most important to Australians—their future security.
This government continues to focus on the concerns of everyday Australians, most notably their costs of living. This is people's own money. This is the nine per cent, soon to go to 12 per cent. That is their money, and it is going into accounts. Why is it that it gets transferred? 'We arbitrarily say that. We're from the government; we know what's good for you.' Labor has a list of failed management policies in the Australian economy, and it is by no means brief. One of the government's clear current economic embarrassments is its failure to produce that budget surplus. Now that Labor has run up the four biggest deficits in Australia's history—following on from the Howard government's four biggest surpluses—it has spent $173 billion more than it has raised in revenue.
Prime Minister Gillard's recent announcement of her government reopening another 700 onshore detention beds, plus opening thousands more places for community release, is a clear admission that this government cannot stop the boats and has no viable solution to follow. What is the government's solution? Its solutions of Nauru and Manus Island are full. I raise this because it is another example of not being able to get it right. We on this side have had to go to those opposite and counsel them about how they need to amend this bill so that they can get a good policy—an early Christmas present that Senator Cormann has delivered to Minister Shorten!
And we are getting a little sick and tired of doing it. In the 30 seconds I have left remaining—and I am sorry, Senator Bushby, I have not been able to honour you with some time on this. There is obviously so much going on, that we have to get out of here. We will move on to the gambling bill shortly—it is only a national gambling bill. What are we allowed for that one? An hour to debate the bill, and we will not even get to the committee session. So, Mr Deputy President, I will sit down— (Time expired)
Order! Your time has expired by virtue of the fact that the time allocated for consideration of this bill has expired. The question now is that this bill be read a second time.
Question agreed to.
Bill read a second time.
The question now is that amendments (1) to (3) on sheet 7323, circulated by the opposition, be agreed to:
(1) Schedule 4, item 5, page 54 (line 22), omit "for defined benefit members".
(2) Schedule 4, item 5, page 54 (before line 23), before subsection 149A(1), insert:
(1A) A modern award must include a term that permits an employer covered by the award to make contributions, for the benefit of an employee covered by the award who is a default fund employee, to any superannuation fund that offers a MySuper product.
Note: An employer may make contributions under this term even if the superannuation fund to which the contributions are made is not specified in the modern award.
(3) Schedule 4, item 6, page 55 (line 20), omit "section 149A", substitute "subsection 149A(1)".