Wednesday, 6 December 2017
Treasury Laws Amendment (Putting Consumers First — Establishment of the Australian Financial Complaints Authority) Bill 2017; In Committee
Firstly, I table a supplementary explanatory memorandum relating to the government amendments to be moved to this bill. I seek leave to move government amendments on sheet HU180 together.
I move government amendments (1) to (16) on sheet HU180:
(1) Clause 2, page 2 (table item 3, column 1), omit "33", substitute "32".
(2) Schedule 1, item 2, page 8 (after line 18), after paragraph 1051(3) (d), insert:
(da) the operator's constitution provides that the Chair of the board of the operator must be an independent person; and
(3) Schedule 1, item 2, page 19 (after line 28), after section 1054B, insert:
1054BA Power to give directions
(1) AFCA may, in connection with, or as part of the process of, determining a superannuation complaint:
(a) give directions prohibiting or restricting the disclosure of documents or information relating to the complaint; and
(b) give directions as to who may be present at any meeting held by AFCA relating to the complaint.
(2) In giving directions, AFCA must have regard to the wishes of the parties in relation to the complaint and the need to protect their privacy.
(3) Directions may be made in writing or orally.
(4) A person must not refuse or fail to comply with a direction under this section.
Penalty: 30 penalty units.
(4) Schedule 1, item 2, page 22 (line 4), at the end of paragraph 1055(6) (c), add:
or (iv) cancel the complainant's membership of the life policy fund or of any sub-plan of the fund;
(5) Schedule 1, item 2, page 24 (line 8), omit "the payment of".
(6) Schedule 1, item 2, page 24 (line 12), omit "the person received, from the decision-maker,", substitute "the decision-maker gave the person".
(7) Schedule 1, item 2, page 24 (line 16), omit "receiving", substitute "being given".
(8) Schedule 1, item 2, page 24 (line 18), omit "receiving", substitute "being given".
(9) Schedule 1, item 2, page 24 (line 20), omit "the person received, from the decision-maker,", substitute "the decision-maker gave the person".
(10) Schedule 1, item 2, page 24 (line 24), omit "receiving", substitute "being given".
(11) Schedule 1, item 2, page 24 (line 26), omit "receiving", substitute "being given".
(12) Schedule 1, item 2, page 24 (line 27), omit "received", substitute "been given".
(13) Schedule 1, item 2, page 24 (line 32), omit "the payment of".
(14) Schedule 1, item 2, page 24 (line 34), omit "receive", substitute "be given".
(15) Schedule 1, item 2, page 25 (line 11), omit "the payment of".
(16) Schedule 1, item 2, page 25 (line 18), omit "receives", substitute "is given".
I advise the chamber that this set of amendments makes a series of non-controversial technical amendments to the bill. It also addresses concerns raised by key stakeholders about the bill's initial draft. The government is proposing these amendments particularly in response to the inquiry into the bill by the Senate Economics Legislation Committee. They will provide additional certainty and clarity around aspects of the Australian Financial Complaints Authority's operations to ensure that it operates as effectively as possible. As I have indicated, the amendments are of a technical nature and respond to key concerns raised by superannuation and consumer stakeholders.
I indicate that we are not inclined to support these amendments. We believe that the amendments that we have put forward on sheet 8284 would be the appropriate way to deal with this. The amendments on sheet 8284 would maintain the Superannuation Complaints Tribunal in its current form, separate from the proposed AFCA ombudsman body. In October last year, under pressure to call a banking royal commission, the Prime Minister promised to establish a new tribunal to deal with financial service complaints and disputes, but this bill does not create a tribunal. We know that the AFCA is not a tribunal like the Prime Minister promised. It's not even a government authority at all. The word 'authority' in AFCA's name is a misnomer. AFCA is just another ombudsman scheme, in the form of a private company, limited by guarantee. It's another FOS and another CIO. Instead of creating a tribunal, this legislation actually abolishes a tribunal already in place.
Our amendments would protect the tribunal—that is, the Superannuation Complaints Tribunal—that has been there for decades. It's a tribunal that operates effectively when it's properly funded. The government, in our view, hasn't made a case to replace a specialist statutory body with the new AFCA. There are three existing financial sector external dispute resolution bodies. The government is replacing the first two bodies—the Financial Ombudsman Service and the Credit and Investments Ombudsman—with another private company, a limited-by-guarantee ombudsman service. AFCA is a merger and a rebranding. ASIC has confirmed that, aside from potential increases in the value of disputes that can be heard, the new AFCA will not have any new powers to resolve consumer disputes that the first two bodies do not already have. In abolishing the Superannuation Complaints Tribunal, the bill is much more than a rebranding exercise. Labor believes this will weaken protections and outcomes for consumers.
The design of the SCT recognises that superannuation is not just a regular financial service based on a contractual relationship. The design of the SCT recognises that superannuation trustees are custodians of the retirement savings of millions of Australians. They have obligations to all members, unlike the other two bodies. This bill seeks to replace AFCA. The Superannuation Complaints Tribunal was established as a government statutory tribunal with special powers and expertise to deal with superannuation disputes. The reasons that we seek our amendments are as follows—and I know that's not what's before the chair at the moment, but I just want to explain where we are.
Firstly, the Superannuation Complaints Tribunal should remain an independent statutory body. It was established in 1993 and has been effective in resolving disputes within super. Super is not just about another financial product and should not be seen as such. The only real criticism that has been made of the Superannuation Complaints Tribunal is its delays in resolving some disputes. But it is clear that this is the result of a lack of funding and staff cuts, including a 30 per cent reduction in staff under this government. There is nothing significantly wrong with the Superannuation Complaints Tribunal that a suitable funding model wouldn't fix. The SCT has the technical expertise needed for complicated super disputes, as do the adjudicators. This is at risk of being diminished over time with a broad complaints body. The SCT has just under 2,500 complaints in 2016, compared to FOS which has 34,095 complaints. There is a real risk of the superannuation industry cross-subsidising dispute resolution for other parts of the financial services sector, which will affect the hard-earned savings of Australians. The need for a special, standalone superannuation complaints tribunal will become even more important as funds within the superannuation sector continue to grow over time. Submissions to the Senate inquiry and hearings made clear that, despite government's attempts to copy and paste Superannuation Complaints Tribunal powers into the new AFCA body, there are a number of important protections and powers that are missing. Despite potential last-minute government amendments, some of these issues remain outstanding—and we've just received further amendments this morning.
A number of groups, including the Law Council of Australia's Superannuation Committee, the Association of Superannuation Funds of Australia, the Australian Institute of Superannuation Trustees, Industry Super Australia, the Australian Council of Trade Unions, and Chartered Accountants Australia and New Zealand either oppose the abolition of the SCT or have raised concerns about protections that are not included in the new bill or process. Even the SCT chairperson, Helen Davis, told the committee:
I don't think it would be true to say, in relation to super, that it's a rebranding exercise. Arguably, it's quite a significant change for superannuation, specifically in terms of the external dispute resolution. It goes from a statutory body to a non-statutory body. It moved from a specialist body to a one-stop-shop body.
I ask the minister: does the minister agree that this is not a statutory authority?
The government has actually made that point very clear throughout the debate. The government is acting on the independent advice of the expert Ramsay review panel. The Ramsay review recommended an industry dispute resolution scheme as a more flexible and effective model than a tribunal. The overwhelming majority of submissions to the Ramsay review expressed concerns that a statutory tribunal would be legalistic, inflexible and costly, delivering worse outcomes for consumers. Key consumer groups, including the Consumer Action Law Centre, the Financial Rights Legal Centre and Financial Counselling Australia, have indicated that their primary position remains that the best framework for dispute resolution in the financial system is a single industry ombudsman scheme for all disputes, including superannuation disputes. The government's approach will establish a one-stop shop that meets all of the criteria that proponents of a banking tribunal are calling for. AFCA will result in disputes being resolved fairly and efficiently in a less legalistic forum than a court, with access to compensation where consumers have wrongfully suffered a loss and decisions that are binding on financial firms.
All financial firms will be required to be members of AFCA by law, and decisions made by AFCA will be binding on them. If a financial firm fails to comply with an AFCA determination, AFCA can expel the firm, which would mean the firm would be in breach of its licence conditions. AFCA will be more flexible. Its terms of reference, rather than legislation, will set out, for example, the kinds of disputes it can hear, the remedies it can provide and the techniques it can use to resolve disputes. The flexibility will allow it to address new emerging issues—for example, cases involving the use of non-monetary covenants have been prominent in the debate over industry conduct. The Australian Small Business and Family Enterprise Ombudsman's report on small business loans recommended that banks be restricted from defaulting a loan under $5 million for any reason where a small business has complied with the loan payment requirement and acted lawfully.
As I indicated when I moved the amendments, the amendments are essentially of a technical nature and respond to key concerns raised by superannuation consumer stakeholders. Given the question asked, let me go through the amendments in detail. Three amendments change or add wording to the AFCA bill to make it consistent with the language from the existing Superannuation (Resolution of Complaints) Act 1993. One amendment provides AFCA with the power to issues directions aimed at protecting the confidentiality of information in certain circumstances. The amendment also allows AFCA to give directions as to the persons who may be present at certain meetings. This power is supported by a penalty provision. A similar provision is currently in the Superannuation (Resolution of Complaints) Act 1993. One amendment to the AFCA bill includes an ongoing requirement that the AFCA board have an independent chair. Another amendment corrects a typographical error in the bill. In direct answer to the question: these amendments do not go to the funding of the new body; they go directly to the technical issues that I've outlined.
Thanks for that answer, Minister. The amendments on sheet HU180 would reinforce the proposition in terms of some of the technical issues: the power to give directions, the directions relating to meetings, the cancelling of membership of the life policy fund and the interest in a death benefit. In the context of the overall bill, you indicate that these are simply technical issues. On that basis, we certainly would prefer our amendments. We will be pursuing our amendments on sheet 8284. These are technical issues. They may have to be superseded if we get the numbers on the other side, but, on that basis, we would probably be happy to let this go to a vote.
I will just clarify. I fully appreciate the point that Senator Cameron has made. Obviously, the opposition would prefer an alternative approach, which is reflected in your amendments. What I would say, very respectfully, is that, if the bill stands as it was put forward, I believe that the opposition would actually prefer these amendments to pass in case the Labor amendment is unsuccessful. That would be my instinctive view, without wanting to put words into the opposition's mind.
The Greens made it clear in our speech in the second reading debate last night that we're not at the point where we can support the SCT going into this new structure, so I need to be very clear that we'll be supporting Labor's amendments to keep the SCT out of a new AFCA. Our view is that AFCA should proceed as the FOS and CIO at this stage. As I made clear last night, I believe that negotiations, consultations and discussions should be occurring between stakeholders in the superannuation industry, the government and the new AFCA board. I just want to make that very clear. The issue to me is a simple one. It's an issue of trust and a lack of confidence in this government and, of course, a question of the government's motivation for bringing superannuation into this new body. I don't find it surprising that superannuation stakeholders, including the employees at the SCT, their union and others, are highly suspicious of this government's intentions.
This issue around superannuation has been a political battleground. I don't necessarily blame the minister so much for some of the rhetoric that has been out there in the public sphere, but all of us have heard in recent weeks how this government is deadset bent on changing the model of not-for-profit super through industry super funds in this country. To me, this is a matter of getting this organisation set up, getting this architecture in place today and then having discussions. We're in this impasse where SCT have admitted that the union who wrote to me, the CPSU, have admitted their performance hasn't been good enough, but they're hampered by funding and a business model, which looks at the volume of complaints, that needs to change. They're not happy with the upper oversight and the way that works at the moment with super contributions, so that needs to change. At the same time, we've got a government that wants to push ahead with bringing the SCT under this AFCA architecture, and the SCT and other industry stakeholders in superannuation, including ASFA—that's the retail and for-profit funds side of superannuation and the not-for-profit side—don't agree. They believe this has been rushed and needs more work.
Keeping that in mind and then coming to this amendment, the Greens will be supporting Labor's amendment to keep the SCT out of this new structure. But what we essentially have before us in this amendment on sheet HU180 are the amendments that SCT wanted put into this bill if they were to lose this fight. Let's be clear about this: the SCT have recommended these amendments to the bill if superannuation were to be included in AFCA and if we were to lose this fight on the Senate floor here today. So we will be supporting these amendments because, if we lose this fight, at least this tries to improve the situation for the SCT if they're going to be incorporated under this umbrella.
Item (2) on sheet HU180 says:
Schedule 1, item 2, page 8 (after line 18), after paragraph 1051(3)(d), insert:
(da) the operator’s constitution provides that the Chair of the board of the operator must be an independent person; and
As I also said in my speech last night, we've had some constructive discussions with the minister's office over weeks about this legislation. Ultimately, we couldn't land on supporting the inclusion of the SCT, but we did urge the minister to consider an independent chair of this organisation. This was a recommendation of the Ramsay review, but we took on board the concerns that Senator Bernardi and One Nation and others have outlined here today.
The CIO has been out there writing us letters saying they're very worried that the big banks and big financial services companies are going to have the run of the new one-stop shop. They're going to be calling the shots, so to speak. So putting an independent chair in place is a really important point. It will mean the chair of this body won't be associated with the big end of town, with the big financial services companies—and I hope that's the case that there will be no conflicts of interest—and they'll be able to stand up for some of the smaller businesses and financial services companies that are currently covered by the CIO.
This is actually an important amendment. Should this bill get up, the Greens would rather see an independent chair in place than have one that was perhaps appointed by the minister or someone who may have conflicts of interest in relation to the existing financial services industry. I just want to get that on record. We don't support the inclusion of the SCT, but, if it is going to be included—and the government has the numbers—at least this improves their lot. The Greens will be supporting this amendment.
I understand the Greens' position, but we are still of the view that the preferred position is Labor's. It would have been good if we could have tested the Labor amendments prior to the minister moving these amendments. That's normally how this process eventuates, but the minister got the jump—the minister was up on his feet the whole time—so that's just something we have to deal with. We will oppose these amendments. We do recognise, if our amendments don't get up, that these amendments are appropriate; I won't put it any higher than 'appropriate'. But our position is we will oppose them because we prefer our position, and we will be moving our amendments at the appropriate time.
Question agreed to.
I move government amendment (1) on sheet HU185:
(1) Page 3 (after line 5), after clause 3, insert:
4 Review of operation of amendments
(1) The Minister must cause an independent review of the operation of the amendments made by this Act to be undertaken as soon as practicable after 18 months after the day on and after which, under item 58 of Schedule 1 to this Act, the amendments made by Part 4 of Schedule 1 to this Act apply.
(2) The review must take into account feedback, provided by complainants under the AFCA scheme (within the meaning of Chapter 7 of the Corporations Act 2001 as amended by this Act), relating to whether their complaints were resolved in a way that was fair, efficient, timely and independent.
Note: Paragraph 1051(4) (b) of the Corporations Act 2001 as amended by this Act provides that one of the operational requirements for the AFCA scheme is that complaints against members of the scheme are resolved in a way that is fair, efficient, timely and independent.
(3) The review must also specifically examine the appropriateness of limits on:
(a) the value of claims that may be made under the AFCA scheme (within the meaning of Chapter 7 of the Corporations Act 2001 as amended by this Act); and
(b) the value of remedies that may be determined under that scheme;
in relation to disputes about credit facilities provided to primary production businesses, including agriculture, fisheries and forestry businesses.
(4) The Minister must cause a written report about the review to be prepared.
(5) The Minister must cause a copy of the report to be tabled in each House of the Parliament within 15 sitting days of that House after the day on which the report is given to the Minister.
(6) The report is not a legislative instrument.
This amendment will require the government to commission an independent review of the new external dispute resolution framework as soon as practicable 18 months after AFCA commences operations. The review will take into account feedback provided by complainants to AFCA in relation to whether their complaint was resolved in way that was fair, efficient, timely and independent. In particular, it will examine the appropriateness of the monetary limits applying to complaints relating to credit facilities provided to primary production businesses, including agriculture, fisheries and forestry businesses. A report will be provided to the responsible minister and, within 15 days, will be tabled in parliament.
I think Senator Cameron's point that we would have rather tested their amendment first was a very valid one, because I think that's the game changer for us—taking the SCT out of this architecture and this legislation. But can I say that the review was, once again, something the Greens had constructive discussions with the government about in recent weeks and months. We heard stakeholders, including in the superannuation industry, say that, if this were to get up, there should at least be a review of the new AFCA body. We wanted more than just a review. We wanted it to be tabled in parliament. We wanted it to be an instrument that we can debate and scrutinise closely. It is a big move to bring the ombudsman schemes together in a statutory body.
As I mentioned in my speech last night, we accept that there are different cultures and different aspects to superannuation and to financial services, especially the evolution of those organisations. One tends to have a judicial process; they're government employees; they're under a totally different, shall we say, ownership structure to FOS. As I mentioned earlier, these cultural issues haven't been sorted out yet. The super industry, including ASFA, still aren't convinced that there has been enough consultation on this, that it has been rushed and that these issues haven't been properly dealt with.
I reiterate to the government that they should have a process in place where they sit down with the SCT and other industry stakeholders and work to bring them on board to a new AFCA structure, which hopefully will pass today, for FOS and the CIO. The SCT themselves have admitted that their business model needs to change. They need to change their business model. They need more funding. They need more support. Surely there can be some common ground between a government that's been hell-bent on attacking the industry super industry and the stakeholders. The reason we're here today and are having this debate is that the government haven't been able to bring the super industry on board with this. I think it was the Greens who first put up our amendment and said to the government that we wouldn't support anything unless it had a review. Here we have in front of us a government review. I know One Nation have put up an amendment for a review as well, with some specific aspects that we would support. I understand the Nick Xenophon Team have put up a review. A review makes sense and, on that basis, the Greens will support this amendment.
Yes. As previously indicated, the purpose of this amendment is to require an assessment of the effectiveness of the AFCA scheme for rural debtors to be provided to both houses of the parliament two years after commencement. The amendment will require the minister to conduct an independent review after 18 months of operation, including whether the limit on the value of claims that may be made under the scheme is appropriate, whether the remedies available to be provided by the AFCA are sufficient and whether complainants indicated that the outcomes are fair and timely. The report of this review is required to be tabled, in both houses, six months after its commencement. While the intentions behind this bill are good, if this measure is to be effective we obviously need some kind of measure of success. This modest amendment seeks to do just that. I strongly urge other senators to support this important and very necessary amendment and help all struggling borrowers, from both the country and the big smoke, to get a fair go.
The TEMPORARY CHAIR: The question is that amendment (1) on sheet HU185 be agreed to.
Question agreed to.
by leave—I move opposition amendments (1) to (6), (8), (10), (12), (14), (16), (18), (22) to (25), (27), (29), (31), (33) and (35) on sheet 8284:
(1) Clause 2, page 2 (table item 8), omit the table item.
(2) Schedule 1, item 1, page 5 (lines 33 and 34), omit the definition of superannuation complaint in section 761A, substitute:
superannuation complaint has the same meaning as complaint in the Superannuation (Resolution of Complaints) Act 1993.
(3) Schedule 1, item 2, page 9 (line 10), omit "scheme; and", substitute "scheme.".
(4) Schedule 1, item 2, page 9 (lines 11 to 18), omit paragraph 1051(4) (f) (including the note).
(5) Schedule 1, item 2, page 13 (lines 8 to 10), omit paragraph 1052E(1) (b).
(6) Schedule 1, item 2, page 13 (lines 18 to 29), omit subsection 1052E(2).
(8) Schedule 1, page 29 (line 9), omit the heading.
(10) Schedule 1, page 31 (line 11), omit the heading.
(12) Schedule 1, page 32 (line 6), omit the heading.
(14) Schedule 1, page 32 (line 19), omit the heading.
(16) Schedule 1, page 33 (lines 9 to 10), omit the heading.
(18) Schedule 1, page 33 (line 28), omit the heading.
(20) Schedule 1, page 34 (line 25), omit the heading.
(22) Schedule 1, item 31, page 36 (lines 18 and 19), omit "13, 14 and 29", substitute "13 and 14".
(23) Schedule 1, item 32, page 37 (line 6), at the end of paragraph 912A(2) (c), add "(unless all of the complaints against the licensee, made by retail clients in connection with the provision of the financial services covered by the licence, may be dealt with by the Superannuation Complaints Tribunal established by section 6 of the Superannuation (Resolution of Complaints) Act 1983".
(24) Schedule 1, item 33, page 37 (line 9), at the end of paragraph 1017G(2) (c), add "(unless all of the complaints against the person required to have the system, made by retail clients in relation to financial services provided in relation to any of those products, may be dealt with by the Superannuation Complaints Tribunal established by section 6 of the Superannuation (Resolution of Complaints) Act 1983".
(25) Schedule 1, page 38 (line 15), omit the heading.
(27) Schedule 1, page 38 (line 22), omit the heading.
(29) Schedule 1, page 40 (line 3), omit the heading.
(31) Schedule 1, page 40 (line 9), omit the heading.
(33) Schedule 1, page 41 (lines 9 to 10), omit the heading.
(35) Schedule 1, page 41 (line 21), omit the heading.
(37) Schedule 1, page 42 (line 1), omit the heading.
We also oppose schedule 1 in the following terms:
(7) Schedule 1, item 2, page 14 (line 9) to page 29 (line 2), Division 3 to be opposed.
(9) Schedule 1, items 5 to 10, page 29 (line 10) to page 30 (line 4), to be opposed.
(11) Schedule 1, item 12, page 31 (lines 12 to 21), to be opposed.
(13) Schedule 1, item 15, page 32 (lines 7 to 18), to be opposed.
(15) Schedule 1, items 16 to 18, page 32 (line 20) to page 33 (line 8), to be opposed.
(17) Schedule 1, item 19, page 33 (lines 11 to 27), to be opposed.
(19) Schedule 1, items 20 to 25, page 33 (line 29) to page 34 (line 24), to be opposed.
(21) Schedule 1, items 26 to 30, page 34 (line 26) to page 36 (line 12), to be opposed.
(26) Schedule 1, item 42, page 38 (lines 16 to 21), to be opposed.
(28) Schedule 1, item 43, page 38 (lines 23 to 27), to be opposed.
(30) Schedule 1, item 45, page 40 (lines 4 to 8), to be opposed.
(32) Schedule 1, item 46, page 40 (lines 10 to 16), to be opposed.
(34) Schedule 1, item 52, page 41 (lines 11 to 20), to be opposed.
(36) Schedule 1, item 53, page 41 (lines 22 to 30), to be opposed.
(38) Schedule 1, items 54 to 57, page 42 (lines 2 to 26), to be opposed.
(39) Schedule 3, page 52 (line 1) to page 57 (line 9), to be opposed.
Our position is clear: we think that the Superannuation Complaints Tribunal should be maintained in its current position. The complaints tribunal, as I've indicated, has operated for some time. The very fact that the government has tried to replicate the powers of the Superannuation Complaints Tribunal in the AFCA bill demonstrates that the current powers, protections and structures for the SCT are appropriate. In May this year, the draft legislation tried to copy and paste a few of the Superannuation Complaints Tribunal's statutory provisions into the new AFCA. In September this year, the final legislation introduced, copied and pasted, more of the Superannuation Complaints Tribunal's statutory provisions in the new AFCA. Now, after the Senate inquiry and after Labor senators exposed serious flaws, the government has circulated amendments to copy even more of the Superannuation Complaints Tribunal provisions into the new AFCA. The ad hoc process of grafting features of the Superannuation Complaints Tribunal onto the AFCA has been a tacit admission by the government that the Superannuation Complaints Tribunal is a far superior model for resolving superannuation disputes than the private AFCA body.
The Superannuation Complaints Tribunal is designed as a statutory body, a statutory tribunal, imbued with statutory powers to resolve disputes. The significant public role that the SCT has in upholding the integrity of Australia's superannuation system is reflected in its structure—with a chairperson appointed by a government for a fixed term and part-time tribunal members with expertise in superannuation, insurance, government, legal and medical fields—in recognition of the complexity of the superannuation disputes that come before it. It also includes superannuation life insurance disputes. Submissions to the Senate inquiry also made clear that issues that arise with the other two existing bodies, the FOS and the CIO, do not arise with respect to the SCT. Unlike the other two existing bodies, there is far less overlap between the jurisdiction of the SCT and the other two schemes than there is between the other two existing bodies, the FOS and the CIO.
In relation to the prospects of increasing on the monetary limits to the disputes that can be heard, it should be noted that any changes would only benefit complainants with disputes currently heard before the Financial Ombudsman Service and the Credit and Investments Ombudsman. In relation to superannuation disputes, the Superannuation Complaints Tribunal already has an unlimited and uncapped jurisdiction to hear disputes relating to superannuation.
There have also been serious concerns raised about the transition arrangements to the AFCA as currently outlined in the bill. Mike Taylor, in Super Review, summarises these nicely:
… there is much to suggest that the creation of AFCA represents a bureaucratic slow-motion train crash with the Treasury officials confirming that the financial services industry will have to deal with four different external dispute resolution schemes for at least a year after the necessary legislation is passed and that the SCT will still be clearing its workload as late as 2022.
He goes on to say:
The transitionary arrangements as outlined by the Treasury officials involve more loose ends than a beggar’s blanket with no definitive numbers being available for how the SCT will be funded to complete its work, how a statutory Government authority will be appropriately transitioned into a not for profit company arrangement or precisely how much superannuation funds or other stakeholders will have to pay.
The Turnbull government has no plans to ensure that AFCA will have the professional expertise to resolve superannuation disputes. The expertise currently resides in the Superannuation Complaints Tribunal and it will have to stay there, because, under the government's plan, the SCT will stay in operation for a number of years to work through existing superannuation disputes.
The Turnbull government has announced no plans to adequately fund the Superannuation Complaints Tribunal to deal with those existing disputes. The government's plan is to keep the SCT in place to resolve disputes received before the commencement of AFCA on 1 July 2018. The government has said it wants the SCT to resolve all existing complaints by 30 June 2020; yet it cut the SCT's funding by $7.2 million in this year's budget. The SCT told the Senate inquiry that, on current funding, it won't be able to finalise old disputes until 2022. When asked by the Senate committee, Treasury could not provide any guarantee that the funding issues would be resolved. All it could offer on behalf of this government were weak assurances that discussions between Treasury and the SCT were ongoing. So, Minister, can you give us an update on those discussions and whether the funding issues have been resolved?
Firstly, let me say, as the government has previously indicated, that we believe funding arrangements are appropriate but, of course, always under review. Let me also indicate that the government will not be supporting these amendments. These amendments seek to retain the Superannuation Complaints Tribunal so that AFCA will not be able to hear and determine superannuation complaints. Instead of a one-stop shop, we would be left with a two-stop shop. Under a one-stop shop, consumers will be able to approach one body to resolve all financial disputes, eliminating uncertainty, confusion, inconsistency of outcomes and the cross-referral of disputes between bodies. Where a complaint covers multiple providers within the financial system, managing these complaints will be smoother. The one-stop shop will remove the current duplication associated with multiple external dispute resolution bodies, such as duplicated governance arrangements, systems, overheads and costs associated with regulatory oversight. A one-stop shop will also be better able to respond to unanticipated changes in dispute volumes and to reallocate resources from those areas experiencing a reduction in dispute volumes to those areas experiencing higher dispute volumes. For example, in the event of a natural disaster like a flood or a cyclone, AFCA will be able to increase resources in areas where disputes may increase, such as in the area of general insurance claims. A one-stop shop will have much more flexibility and direct control over its funding and dispute resolution processes. This will allow a more timely resolution of superannuation complaints.
Again, the Ramsay review found that maintaining a tribunal structure to resolve superannuation complaints would not provide the flexibility needed to adapt to changes in the superannuation sector and that existing pressures would only increase in the absence of significant reform. This is why I indicated before that the government is acting on the independent advice of the expert Ramsay review panel, which recommended an industry dispute resolution scheme as a more flexible and effective model than a tribunal. I would also like to remind the chamber again that the overwhelming majority of submissions to the Ramsay review expressed concerns that a statutory tribunal would be legalistic, inflexible and costly, delivering worse outcomes for consumers, and that key consumer groups, including the Consumer Action Law Centre, the Financial Rights Legal Centre and Financial Counselling Australia, have indicated their primary position remains that the best framework for dispute resolution in the financial system is a single industry ombudsman scheme for all disputes, including superannuation disputes.
I would also take this opportunity to comment on a related matter that was mentioned by Senator Whish-Wilson, referencing the view of CPSU members at the Superannuation Complaints Tribunal. I would note that only 12 employees of the Superannuation Complaints Tribunal are members of the CPSU. The CPSU does not speak for or represent all employees of the Superannuation Complaints Tribunal, or rather ASIC, as they are actually ASIC employees. So, with those few comments, I indicate the government's opposition to these amendments.
Minister, I'm still not clear as to what the funding arrangements will be. You took us through some of the political reasoning for the position that you've adopted, but there's another issue that has also come up. If the bill is passed this year, the four years will expire in late 2021. That's what the bill says, and yet it's clear, taking into account the cuts to the SCT in the 2017 budget, that it won't be able to resolve all disputes until December 2022, a whole year after it's had the statutory rug pulled out from under it and from under Australians whose disputes are yet to be resolved at that date.
We think it's contemptuous of the government to ask this chamber to authorise the abolition of the tribunal by a certain date when the government can't even guarantee the funding to ensure that all residual disputes of the tribunal are resolved by that date. What guarantees can you give us that that funding will be there between late 2021 and December 2022?
Firstly, I reject the proposition that the government cannot guarantee adequate funding. The government is guaranteeing adequate funding for the Superannuation Complaints Tribunal. Furthermore, the government will ensure that the Superannuation Complaints Tribunal has adequate funding while it operates and to wind down in an appropriate manner, and so it is able to clear the backlog of complaints. So I reject the premise of the question that was originally asked. I thought that I had already answered it. The government is satisfied that adequate funding has been provided. We'll continue to monitor, of course, the situation. And, of course, the government will at all times ensure that adequate funding is available.
I must say that I'm not convinced by the answer. I just want to move to another issue—the death benefit disputes. It's worth looking at an example of the achievements of the SCT. One of the most difficult aspects of superannuation disputes are superannuation death benefit disputes. These kinds of disputes are just one example of the value of a specialised, professional and statutory body for resolving superannuation disputes. It's important to note that there are significant differences between retail life insurance disputes and superannuation death benefit disputes. Under superannuation law, it's often up to the superannuation trustee to determine how payments of the death benefit are divided between the deceased person's family members in accordance with the rules of the superannuation fund. This can be a very difficult process, and the trustee may have to consider the rights of a number of family members of the deceased person and the level of reliance the family members had on them. The superannuation trustee often has to look into the dependence of family members on the person who has died and whether they had a reasonable expectation of continuing financial support, such as the surviving partner and financially dependent children.
One of the strengths of the Superannuation Complaints Tribunal has been its ability to resolve these disputes through what is known as its conciliation process. Through this conciliation process, the SCT allows all those with a claim to the death benefit to be heard, but the information is kept confidential and the SCT has the power to do this. As the SCT reported to the Senate committee, this information:
…can be highly personal, sensitive, inflammatory and identifiable (for example, the assertions that are made in the context of family members disagreeing about who is entitled to a death benefit under a superannuation life insurance policy).
It's encouraging that the SCT is able to resolve the vast majority of these very difficult disputes between family members by conciliation. Only a small proportion have to go on for final determination by the SCT. This reflects the value of a specialised, professional tribunal with expertise in superannuation law, and strong and established processes for resolving these claims.
Just as important with disputes like these is certainty. The dispute resolution process needs to give an opportunity to all those who feel that they may have an entitlement to part of the death benefit to be heard. But once everyone is heard, there needs to be a final resolution so that there can be certainty and families can move on. This means that anybody or institution tasked with resolving these disputes must have the power to join additional parties. It must also have the power to make a decision that is binding on all those parties.
One of the criticisms of the way non-superannuation disputes are handled under AFCA is that for non-super disputes, such as banking disputes, there is no power to join parties. Any dispute scheme that is involved in resolving superannuation death benefit disputes needs power to join a number of parties and the power to deliver a resolution that is binding on these multiple parties. These are necessary powers but they are also significant powers, and it is appropriate that such significant powers lie with a statutory tribunal body like the Superannuation Complaints Tribunal.
Labor is concerned that the loss of the expertise and statutory powers that currently exist would be detrimental and result in Australians, who have worked hard for their retirement savings, being denied access to a specialist tribunal which deals solely with superannuation matters. The Prime Minister promised a new tribunal in October 2016. This bill has no new tribunal; instead, it abolishes an existing tribunal. This amendment will protect that tribunal. What we get in AFCA is no significant change from the existing arrangements for disputes from banks. But for superannuation disputes, we get the abolition of a tribunal—a strong statutory tribunal that, resource constraints aside, has served Australians well in handling complicated and heated superannuation disputes, and it does that in an accessible, fair and conclusive manner.
Labor will not accept this government abolishing a crucial piece of the architecture of Australia's superannuation system. We urge this parliament to stand up and prevent a reduction in consumer protections and outcomes that will come from the abolition of the Superannuation Complaints Tribunal and its replacement with a private body, a generic, one-stop ombudsman scheme. There is very little change in this bill for customers who have a dispute with the banks. They can go to an ombudsman scheme now. AFCA will be an ombudsman scheme as well, and AFCA has no new powers for these disputes. The Prime Minister promised a tribunal. The bill fails to deliver one. Instead, what this bill presents is a rebadging of the existing Financial Ombudsman Service and the Credit and Investments Ombudsman and the abolition of a tribunal, the Superannuation Complaints Tribunal.
In relation to superannuation disputes, this bill represents a substantial reduction in the quality of dispute resolution in its attempt to replace a statutory Superannuation Complaints Tribunal, with specialist expertise for complex super disputes, with a generic private body one-stop shop ombudsman whose powers are based on contract law. As such, we commend this amendment, as it protects the quality and integrity of superannuation dispute resolution by retaining the Superannuation Complaints Tribunal. I would urge all of the crossbench to support what has been a very effective, efficient and longstanding tribunal with runs on the board in dealing with the specialist issues that arise from superannuation.
The problem that we have is that this government does everything in its power to resist superannuation being delivered to working-class people in this country. It resisted superannuation being introduced in the first place. It continues to resist increases to superannuation for workers who need superannuation so that they can retire with dignity. This is part of its attack on superannuation. It removes a tribunal that has worked effectively and efficiently over many years. It takes it away from a statutory organisation to a privately run organisation.
We don't believe it's the appropriate way to go. We would hope that the crossbench supports our position. The crossbench should not be aligning itself with the government to further attack the efficacy of the superannuation system in this country. I would ask One Nation to give serious consideration to supporting this body, the Superannuation Complaints Tribunal, that has been effective, that has been efficient and that looks after families—it's not just workers; it's families—who end up in disputes or disagreements over superannuation payments. I ask that One Nation continues to support the Superannuation Complaints Tribunal as the most effective and longstanding proposition to deal with these superannuation disputes.
I take the view that these are important issues that we should deal with. Just before we go on, I'd like the minister to answer these questions: can the minister confirm that the SCT will be wound up four years after the bill receives royal assent; can the minister confirm that the SCT has provided advice to the government that, on current funding levels, the SCT will not be able to finalise all disputes until December 2022, over five years away; and can the minister guarantee that the SCT will receive additional funding from the government to resolve the disputes?
In relation to the last question, I've already indicated that the government will ensure that the Superannuation Complaints Tribunal, as it's wound up, has the appropriate resources to clear the backlog of complaints. I can also confirm that the legislation provides that the Superannuation Complaints Tribunal would be wound up by 2022.
I will also just address some of the other issues that Senator Cameron has raised. Again, pointing to the Ramsay review, the Ramsay review found that a statutory tribunal to resolve superannuation complaints does not provide flexibility to adapt to changes in the superannuation sector. It also found that the longstanding issues with superannuation dispute resolution arrangements could not be fully resolved in a statutory tribunal structure, even with reforms to funding and governance, as the tribunal structure would not provide flexibility. AFCA will have maximum flexibility to deal with complaints in a timelier manner by having direct control over its funding and its processes. It will have increased transparency and flexibility over funding arrangements.
AFCA will also retain key statutory powers to ensure that superannuation dispute resolution is aligned with trustee duties and, most importantly, consumers can approach one body to resolve all financial disputes, eliminating uncertainty and confusion. Specifically in relation to the issue of death benefit complaints—which is where Senator Cameron started in his most recent contribution—the current processes for determining death benefits, including identifying who has an interest in a death benefit within appropriate time limits to bring forward a complaint about the distribution of a death benefit, have been replicated in this new legislation.
I can indicate that the Nick Xenophon Team will not be supporting these amendments. While we acknowledge some of the concerns that have been raised about the Superannuation Complaints Tribunal being incorporated into AFCA, we believe that the proposed model will deliver faster, more effective dispute resolution for all consumers than a model that preserves the SCT as a standalone tribunal. There are inherent limitations with the tribunal model, where processes are determined by legislation, the appointment of the tribunal members can be delayed and any changes to funding is dependent on the government budget cycle. It is also inflexible and not able to respond to changes in demand in the way the ombudsman scheme can. These limitations do not contribute to positive consumer outcomes.
I would like to take the opportunity to ask the minister a couple of questions in relation to the AFCA terms of reference, specifically in relation to principles of fairness in the external dispute resolution framework. I refer to a case in the Victorian Supreme Court, Cromwell Property Securities Limited v Financial Ombudsman Services and Radford (2013), where the court found that a party to a contract, and that contract is the terms of reference, must establish Wednesbury unreasonableness—namely, that the decision was one that no reasonable decision-maker could properly arrive at at the evidence. Basically, it is saying that you can't appeal a tribunal decision unless the decision is so unreasonable that no-one could reasonably make it.
I'm strongly of the view that fairness principles used by a multiple of statutory tribunals need to be adopted such that fairness is not left to the opinion of AFCA. Some of these fairness principles might include the fact that there is mandatory discovery for parties, open exchange of information between the parties, the prohibition of private advocacy to the ombudsman, the prohibition of apprehended or actual bias, the right to be heard, that irrelevant material must not be considered, that relevant considerations must be considered, and that the tribunal cannot act in the manner that constitutes Wednesbury unreasonableness.
Can the minister please advise what steps the government has taken to ensure the terms of reference contain these principles of fairness so the decisions made by AFCA will not simply be based on a process that is fair in the opinion of AFCA alone?
I thank Senator Patrick for his contribution. AFCA will be required by law to be appropriately accessible to persons that have complaints against financial firms that are members of AFCA. All Australian financial services licensees will be required by condition of their licence to be a member of AFCA. AFCA will also be required under the legislation to resolve complaints in a way that is fair, efficient, timely and independent. ASIC will be given a broad new directions power to compel AFCA to comply with the mandatory requirements under this legislation. ASIC will also have a new legislative instrument-making power to ensure AFCA satisfies its legislative requirements, including the requirement to resolve complaints in a way that is fair, efficient, timely and independent.
AFCA's discretion to decline to hear a particular complaint will be appropriately limited by tightening the parameters for exercise of its discretion—that is, by requiring AFCA to set out the factors it will have regard to before exercising the discretion, including a requirement to provide written reasons where AFCA exercises the discretion, and including an internal review mechanism for those circumstances where AFCA exercises its discretion. In addition, the responsible minister, the Minister for Revenue and Financial Services, Minister O'Dwyer, will have regard to AFCA's proposed terms of reference when making the authorisation decision, and will be able to impose conditions on authorisation. The responsible minister, Minister O'Dwyer, will require AFCA's terms of reference to include a commitment to procedural fairness before she will authorise the scheme. Following authorisation, any material change to AFCA's terms of reference will require ASIC approval. These measures strike the right balance, we believe, between providing AFCA with the flexibility to refuse to hear a complaint when this is appropriate and ensuring that AFCA is accountable for the exercise of this discretion.
AFCA's decision-making approach in relation to non-superannuation complaints and as affirmed by the Ramsay review will adopt the approach currently taken by the Financial Ombudsman Service and the CIO. AFCA will make decisions based on what is fair in all circumstances. As a non-legal body, it is reasonable that AFCA should make decisions that are fair in all circumstances as opposed to decisions that, while adhering to the law, nonetheless result in unfair or very unreasonable outcomes for consumers.
There is also a legislative obligation on AFCA to ensure that it has the appropriate expertise to deal with complaints within its jurisdiction, and AFCA will be required to have an independent assessor and to have regard to the use of panels for complex complaints, and will also be subject to more frequent independent reviews, which can look at different aspects of AFCA's operations, including its decision-making processes. The government has also established a transition team led by Dr Malcolm Edey, former assistant governor with the RBA, for the establishment of AFCA. The consultation paper on AFCA's governance and funding arrangements has been released for stakeholder feedback.
I have some questions, but firstly I want to reiterate the point that I've made the last couple of times I've spoken: we'll be supporting this amendment by Labor. We don't believe that now is the right time to be merging the SCT into this new entity. There needs to be considerable discussion between stakeholders and the government, and with AFCA, before that occurs.
In relation to the SCT being merged into this organisation, I have some questions that I don't believe have been addressed—if it is going to go ahead; hopefully it won't, but if it is. Minister, you mentioned terms of reference in your response to the Nick Xenophon Team. The Association of Superannuation Funds of Australia have given us the key reforms and their positions on these reforms. One of the points they make that they're disappointed by is that, while time limits for complaints will be addressed by the terms of reference, they actually haven't seen the detail of those terms of reference because they're yet to be finalised—I'm not even sure that they are majorly completed yet. I will put on record that it's been a topic of conversation between the Greens and the minister: we've requested to see those terms of reference and the detail around those terms of reference, but they haven't been done yet. Minister, do you have the terms of reference and that kind of detail with you now? And, if you do, will you be able to table them for the Senate?
My answer to Senator Patrick actually went directly to this point. There is a transition team currently underway, led by Dr Malcolm Edey, which is overseeing—among other things—the consultation in relation to the AFCA terms of reference, governance and funding arrangements, a consultation paper, which has been released for stakeholder feedback. It obviously wouldn't be appropriate for the government to finalise terms of reference in relation to a body that hasn't yet been set up by legislation. We're not presuming the outcome for the parliament; the first step is to get the approval of the parliament for the establishment of this one-stop-shop complaints mechanism, which we are strongly recommending to the parliament. We have set out the process that we would follow from here to finalise the terms of reference and we've indicated some of the guiding principles that the Minister for Revenue and Financial Services will work from in order to finalise those terms of reference.
Does the minister accept, though—because there's very little detail in this bill, and most of the detail is going to be in those terms of reference—that there is considerable uncertainty over the final detail of how this is all going to work? Does the minister accept that that's contributed significantly to the lack of confidence and trust, especially amongst the stakeholders in the superannuation industry, around this legislation?
No, I don't, and I don't accept the premise of the question. As I've indicated in answer to a series of previous questions, there has been wide-ranging support—in particular, in the context of the independent Ramsay review—for the approach that the government is taking and proposing to the parliament. It is extremely rare for reform proposals to have the unanimous support of everyone, but we believe that the government has got the balance right with the reforms that we're putting forward. We believe it is manifestly in the public interest to establish this one-stop-shop efficient complaints resolution process for consumers and small business.
The Association of Superannuation Funds of Australia, ASFA, gave us a briefing—and, as I've said a couple of times, they have acknowledged that in their discussions with the minister they have been able to achieve some success and some of the outcomes they wanted. But they make it really clear that they believe the implementation process is going to be rushed with a July 2018 commencement date. ASFA considers that the bill should specify a commencement date for the scheme no earlier than 1 January 2019 or provide for at least six months notice of any milestone in the transition process. Is the implementation going to be rushed with a July 2018 guideline for commencement, and do you accept ASFA's criticisms in this regard?
I will point out that the Association of Superannuation Funds of Australia is both the for-profit and the not-for-profit part of the super industry. Your government has been very critical and has brought considerable legislation before this place to try and break apart the business model of the not-for-profit industry super sector, but this organisation covers the banks and financial services as well as the not-for-profit sector. I would have thought, with a key body like ASFA, you would have at least noted and discussed with them a change to the implementation date and made sure this process wasn't rushed.
ASFA also note that they remain concerned with the indication that, where the SCT has not made a final determination on a complaint, the complainant will be able to withdraw their complaint and instead progress it via a complaint to AFCA. This raises the prospect of what they call forum shopping. It will be difficult to manage the complaints involving things such as death benefits. Given the complexity of the transition for superannuation, do you accept ASFA's criticisms in this regard?
No. Among other things, the whole point of this reform of creating a one-stop shop is to improve consistency of decision-making in relation to these sorts of dispute-resolution processes and to stop the problems that come with forum shopping.
I will put a couple of questions to you that have come more broadly from other stakeholders to us around the inclusion of the SCT in this new body—issues that haven't been resolved to the satisfaction of those stakeholders in the superannuation industry. For example, Industry Super Australia has expressed concerns that the new arrangements could result in superannuation trustees and therefore the members of these funds subsidising an EDR process primarily used by non-superannuation financial providers. They expressed the concern that this is in conflict with trustees' obligations, including their obligation to act in the interest of all members. They have also highlighted that they believe this issue may be challenged in the Federal Court. Does the minister accept this criticism? How has the minister consulted with ISA on this issue?
No, we don't accept the criticism. We are confident in the legal and constitutional position in relation to what is in front of the parliament. There has been very broad consultation, in particular and most importantly, through the independent Ramsay review.
The Law Council of Australia, the Association of Superannuation Funds of Australia, the Australian Institute of Superannuation Trustees, Industry Super Australia, the ACTU and the Chartered Accountants Australia and New Zealand either oppose the abolition of the SCT or have raised concerns about protections that are not included in the new bill or process. One of the protections that was in place under the current situation was the capacity to go to an administrative review. What replaces the administrative review?
The whole point of this process is to ensure that decisions are binding and final. There is a process of internal review, as I've indicated in response to a previous question, but that is obviously something that is deliberately not part of this process.
To me, that just demonstrates that, if all of those organisations have concerns about this issue, the need to have an administrative review of any decision is an important aspect of protection for someone seeking a decision. I'm concerned that the Xenophon Team are saying that it's going to be far more effective, when, obviously, the current situation provides individuals and families with more protection than this bill does. As I understand it, the only review is to the Federal Court on a matter of law. Is that the situation?
That's right. Let me go back to what I said right at the beginning when I dealt with these issues when Senator Cameron moved his amendments. Under our one-stop shop, consumers will be able to approach one body to resolve all financial disputes, eliminating uncertainty, confusion and inconsistency of outcomes and the cross-referral of disputes between bodies. Where a complaint covers multiple providers within the financial system, managing these complaints will be smoother. This provides efficient and binding outcomes. But, yes, the answer to Senator Cameron's question about the circumstances in which a review by the Federal Court could occur is that that is accurate.
So, basically, we'll move from a tribunal with an administrative review process to a private body that can make a decision, and the only redress someone has if that decision is, in their view, not appropriate is to go to the Federal Court. I would state that the bulk of Australian families in the superannuation system have very modest superannuation accounts and modest means. For them to have the Federal Court as the only avenue of redress—which means expensive lawyers, litigation and thousands of dollars a day—is clearly a step backwards in the context of the existing tribunal.
This is one of the key issues for us in the context of ensuring that we have dispute resolution appeal processes that are not only efficient but also cost-effective. For this government to simply push an individual to the Federal Court, with the associated costs relating to a Federal Court hearing, is, I think, an absolute disgrace. For all the rhetoric that we had from the minister about efficiency and getting consistency, I think this is a backwards step. So, Minister, can you just outline what the process of appeal to the Federal Court includes?
I think we're going round and round in circles now. The government has been very up-front, right from the word go. In fact, in our second reading speech and again in the summing up speech today, I made the point that the whole purpose of this one-stop shop proposal through the Australian Financial Complaints Authority is to ensure that consumers and small businesses have access to free, fast and binding dispute resolution, and it's of course part of the government's broader commitment to ensure that consumers and small business can have any legitimate grievances against banks or financial institutions more generally resolved in a timely, efficient and conclusive manner. The purpose is not to replicate a parallel judicial structure. So the intention is for this to offer an avenue for consumers and small business to get access to a free and very efficient dispute resolution process. Obviously, the aspiration is that this dispute resolution process will be effective in resolving all legitimate disputes.
I would, again, say that the overwhelming majority of submissions to the Ramsay review supported this approach and expressed concern about the proposal to persist with a statutory tribunal because it would be too legalistic, inflexible and costly, delivering worse outcomes for consumers. That includes key consumer groups, including the Consumer Action Law Centre, the Financial Rights Legal Centre and Financial Counselling Australia. They have all indicated that their primary position remains that the best framework for dispute resolution in the financial system is a single industry ombudsman scheme for all disputes, including superannuation disputes. As far as access to the Federal Court is concerned, that is a matter of the usual processes applying.
Thanks. Minister, the Superannuation Complaints Tribunal currently has an unlimited and uncapped jurisdiction to hear disputes relating to superannuation. Will there be a financial cap on the disputes that come before this new tribunal?
No. There will be no financial cap. The capacity for the Australian Financial Complaints Authority to hear disputes in relation to super is on the same terms as for the Superannuation Complaints Tribunal—that is, it is uncapped.
In relation to the appointments to this new body, will the government be consulting widely about the appointments? Will the government consult with the ACTU? Will the government consult with other political parties? Will the government consult with the opposition in relation to the appointments to this tribunal?
I'm advised that the government has sought nominations for appointment from 19 industry bodies. As is the case for appointments of this nature, the relevant ministers responsible for these appointments will consult as appropriate.
In relation to that question about appointments to the board, will there be appropriate representation for the not-for-profit superannuation sector? Has the government considered a separate AFCA superannuation panel that has appropriate expertise in its representation?
In relation to Senator Cameron's question, will you, in your appointments and your process, include not-for-profit representation in terms of the superannuation system, if it gets included? And would you consider a separate AFCA superannuation panel with appropriate expert representation, including not-for-profit representation?
This is my concern, Minister. Your government has been waging a war against the not-for-profit sector in superannuation—the industry super sector. We've had two sets of legislation before this place in recent weeks. We've had them over a year ago. There has been all sorts of rhetoric around the announcement of a royal commission and inclusion in the terms of reference that a commission can go after the not-for-profit industry super sector, and here you're saying the minister is going to consult and then appoint experts to the board however she chooses—presumably, if she's still minister when this organisation gets set up. Will you include not-for-profit representation, because it is the not-for-profit part of the super sector that your government has done everything it can to try to dismantle?
Firstly, I need to correct Senator Whish-Wilson's perception. It does come under the purview of ministers in the elected government to make these sorts of judgements on behalf of the Australian people. The minister will make a one-off appointment of the independent chair and a minority of the board, and the ongoing composition of the board is going to be a matter for the board itself.
Minister, I think this is a key question. I just want to continue on from where Senator Whish-Wilson finished. You're aware of the history of the establishment of the superannuation industry in this country. It came about in the early 1980s, when the ACTU and the trade union movement became absolutely sick and tired of a proposition where only, or predominantly, white-collar workers had access to superannuation and blue-collar workers had limited or no access to superannuation.
I indicated earlier—not in this debate but in previous debates—that I was employed by the Electricity Commission of New South Wales as a maintenance fitter at Liddell power station, and my superannuation was the first superannuation I ever earned or achieved as a blue-collar worker in Australia. For about 10 years prior, I think, I worked in various industries and in various companies with no access to superannuation whatsoever. When I left the Electricity Commission of New South Wales, I was denied the Electricity Commission's contribution to my superannuation because I left that company. At that stage, I think the Electricity Commission's contribution to my superannuation was about $17,000, and that $17,000 from about 1981 would have been a significant amount in my and my family's superannuation now.
That was a regular situation that blue-collar workers found themselves in. It was called vesting. There was no vesting of the company's contribution to the worker if they left their existing employment, so they just lost their superannuation, other than the contribution that they themselves had made. So all I received when I left was the contribution I had made in addition to the Electricity Commission's contribution, which significantly disadvantaged me and disadvantaged my family. That was typical of how blue-collar workers were treated in relation to superannuation.
One of my first jobs as a union official for the then metal workers union was to go out and fight for superannuation entitlements and the vesting of superannuation for workers across the country. The coalition at that time opposed superannuation applying generally to workers. Their position has been ongoing as one of opposition to industry superannuation funds and opposition to increases for workers to make sure that they could retire with dignity.
My view is that this is another aspect of this government's ideological opposition to superannuation. This is an ideological opposition to industry superannuation funds that have, in most places, 50 per cent of representation from workers and 50 per cent of representation from employers. It's an industry that has delivered on average, over many, many years, about a 2½ per cent yield to workers through the superannuation on a regular basis. This is an industry—that is, the industry super funds—that regularly and consistently outperforms the private sector superannuation funds run predominantly by the banking industry.
As a result of the history of superannuation and the involvement of the trade union movement in providing that benefit to workers across the country, they had a say and a contribution to make to the superannuation industry. The Superannuation Complaints Tribunal was one of those contributions where the ACTU, the trade union movement and the employers were engaged in its establishment. Now, we see this being moved out from a tribunal—a government oversight body—to the private sector, which again is part of the ideological position that this government adopts consistently and unfailingly. We've seen the results of this transfer of public oversight and public bodies through the competition policy and privatisation taking place regularly under this government.
One of the areas that I think should be maintained, and the Labor Party believes should be maintained, given the history of superannuation, is the continuation of the Superannuation Complaints Tribunal. NXT came in here earlier and made some assertions how this would be more efficient and more effective. The minister has made similar assertions. But when you look around at the tragic contribution that company policy and privatisation has made in other industries and in other areas, then you see that it is not as ideologically pure and effective as some of the acolytes of privatisation and competition policy would have us believe. You've only got to look at the disastrous position in the VET training sector and at VET FEE-HELP to understand that the theory of academics and ideologues is not always represented in the practical outcomes of these changes.
Again, I take the view, and Labor takes the view, that it is the ideologues in the government and the ideologues in the private sector who want this tribunal to be put into a private-sector body that will not deliver. I just don't see the rhetoric that the minister has outlined being deliverable in that there is not going to be any consultation, by the looks of it, with the industry in terms of people who go onto this board. There will be no consultation with the ACTU, who were fundamentally responsible for creating the superannuation system, along with the Labor government at the time. These are some of the underpinning issues that we want to deal with. I want to ask the minister a couple of general questions on this. Can the minister confirm that the new dispute resolution caps—the limits on the value of disputes that can be heard by AFCA—are not specified in the legislation for non-superannuation disputes?
They have been publicly announced. They were in the minister's press release announcing the relevant changes some time ago. AFCA will commence with significantly higher monetary limits than the Financial Ombudsman Service and the Credit and Investments Ombudsman. AFCA will have a claim limit of $1 million and a compensation cap of $500,000 for non-superannuation disputes. That is almost double what is currently in place for small business credit facility disputes. AFCA will be able to consider complaints related to a credit facility of up to $5 million and award compensation of up to $1 million. This is triple what is currently in place. There will also be no monetary limits for disputes about whether a guarantee should be set aside—whether it has been supported by a mortgage or other security of the guarantor's primary place of residence. There will continue to be no monetary limits or compensation caps for superannuation disputes. The government does not support extending the compensation limit for non-superannuation disputes to $3 million at this point, but, because in the future these matters will be governed by the terms of reference, there will be flexibility to make adjustments as appropriate in the future.
How can the government guarantee that these will be implemented? What are the processes that will be undertaken to guarantee the implementation of these caps if they're not in the scheme?
As I've already indicated, they will be reflected in the terms of reference.
The CHAIR: The first question is that division 3 in item (2), and items (5) to (10), (12), (15) to (30), (42), (43), (45), (46) and (52) to (57) of schedule 1, and schedule 3, stand as printed.
Senator Gallagher did not vote, to compensate for the vacancy caused by the resignation of Senator Parry.
Senator Polley did not vote, to compensate for the vacancy caused by the resignation of Senator Nash
Senator Bilyk did not vote, to compensate for the vacancy caused by the resignation of Senator Kakoschke-Moore.
I just flag for the chamber that the government's view is that the vote that just occurred does not reflect the will of the chamber. I'm just flagging that it is likely that the government will seek to recommit this vote once we've ascertained why the vote that just happened did not reflect the will of the chamber.
I'm not sure why this would not have reflected the will of the chamber. If the minister can explain now why this has not reflected the will of the chamber, it might assist the chamber.
My initial advice from the whip is that, on the basis of some confusion during the division about which side of the chamber the Nick Xenophon Team would be voting on, one of our senators was sent out when he shouldn't have been sent out, and he wasn't able to come back into the chamber on time. That was Senator Scullion. The whip is just confirming that that is what has happened.
The CHAIR: Just for clarity, I take it you are referring to the question on the first part of that amendment?
The amendment is an amendment as a whole; it was just taken in two parts: one was that the bill stand as printed, to which we voted yes, and the other, which is consequential and related, was the one on which the government voted no. But, even though we had an indication that the Nick Xenophon Team would be supporting the government's position against the amendments, on the basis that for a period it looked as though the Nick Xenophon Team was seated on the other side—eventually they moved over—in informal communications that happened across the chamber, I am advised by our duty whip that somebody was sent out from our side who should not have been sent out, and he wasn't able to get back into the chamber on time.
If I could actually clarify the situation—I understood that the Nick Xenophon Team was with us. I confirmed that with Senator Griff. He then went and said that, no, that was wrong. Senator Scullion was sent out on that basis, so what I did was pair Senator Bilyk with Senator Scullion, and I did not count Senator Bilyk in that count.
If my understanding of this is correct—and I don't doubt what Senator Urquhart or Senator Cormann have said—there is some question about whether the will of the chamber has been correctly reflected. In those circumstances, it is not unusual, once a bit of humble pie has been eaten, to recommit the vote. If that's necessary, I will support that.
I seek leave to recommit the vote for the opposition amendments that were just divided on.
The CHAIR: The question is that division 3 in item 2, and items (5) to (10), (12), (15) to (30), (42), (43), (45), (46) and (52) to (57) of schedule 1, and schedule 3 stand as printed.
Senator Gallagher did not vote, to compensate for the vacancy caused by the resignation of Senator Parry.
Senator Polley did not vote, to compensate for the vacancy caused by the resignation of Senator Nash
Senator Bilyk did not vote, to compensate for the vacancy caused by the resignation of Senator Kakoschke-Moore.