Senate debates

Thursday, 14 February 2019

Bills

Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018; In Committee

7:04 pm

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | | Hansard source

I advise that the government withdraws its amendments to this bill. I withdraw, on behalf of the government, all of the amendments on sheet QM101.

Photo of Deborah O'NeillDeborah O'Neill (NSW, Australian Labor Party, Shadow Assistant Minister for Innovation) Share this | | Hansard source

by leave—I move the opposition's amendments (1) to (34) on sheet 8501 together:

(1) Schedule 2, page 10 (before line 5), before item 1, insert:

1A Subsection 10(1) (after paragraph (h) of the definition of reviewable decision )

Insert:

(haa) a decision of the Regulator refusing to make a declaration under section 68AADC; or

(2) Schedule 2, item 1, page 10 (line 14), omit "13", substitute "16".

(3) Schedule 2, item 1, page 10 (line 19), omit "13", substitute "16".

(4) Schedule 2, item 1, page 10 (line 28), omit "13", substitute "16".

(5) Schedule 2, item 1, page 11 (line 8), omit "13", substitute "16".

(6) Schedule 2, item 1, page 11 (line 11), omit "13", substitute "16".

(7) Schedule 2, item 1, page 12 (line 14), omit "1 April", substitute "1 October".

(8) Schedule 2, item 1, page 14 (after line 28), after section 68AAD, insert:

68AADA Sections 68AAB and 68AAC do not apply if section 68AADC declaration in force

Sections 68AAB and 68AAC do not apply in relation to a kind of member of a regulated superannuation fund if a section 68AADC declaration specifying that kind of member of the fund is in force.

68AADB Application for section 68AADC declaration

(1) A trustee of a regulated superannuation fund may apply to the Regulator for a written declaration that sections 68AAB and 68AAC do not apply in relation to a specified kind of member of the fund.

(2) The application must:

(a) be in writing; and

(b) be in a form approved, in writing, by the Regulator.

68AADC Declaration that sections 68AAB and 68AAC do not apply

(1) On receiving an application under section 68AADB for a written declaration that sections 68AAB and 68AAC do not apply in relation to a specified kind of member of a regulated superannuation fund, the Regulator must decide:

(a) to make the declaration; or

(b) to refuse to make the declaration.

(2) The Regulator must not make the declaration unless the Regulator is satisfied that if the fund were to provide a benefit to, or in respect of, a member of the specified kind under a choice product or MySuper product held by the member by taking out or maintaining insurance, doing so would:

(a) be consistent with the fund's insurance management framework (however described); and

(b) not unreasonably erode the retirement savings of a member of that kind; and

(c) either:

(i) represent exceptionally good value for money for a member of that kind; or

(ii) meet a need for insurance of a member of that kind, having regard to the matters specified in subsection (3).

(3) The following matters are specified for the purposes of subparagraph (2)(c)(ii):

(a) the level of workplace, occupational or other risk faced by a member of that kind;

(b) the extent and nature of the financial commitments, including commitments to dependents, of a member of that kind;

(c) any other matter advanced by the applicant consistently with the fund's obligations to its members.

(4) If the Regulator decides to refuse to make the declaration, the Regulator must give the applicant a written notice setting out the decision and the reasons for it.

(5) A declaration made under subsection (1) is not a legislative instrument.

(9) Schedule 2, item 3, page 16 (line 4), omit "1 July 2019", substitute "1 January 2020".

(10) Schedule 2, item 3, page 16 (line 14), omit "1 April", substitute "1 October".

(11) Schedule 2, item 3, page 16 (line 18), omit "1 May", substitute "1 November".

(12) Schedule 2, item 3, page 16 (line 22), omit "1 July 2019", substitute "1 January 2020".

(13) Schedule 2, item 3, page 16 (line 25), omit "13", substitute "16".

(14) Schedule 2, item 3, page 16 (line 33), omit "13", substitute "16".

(15) Schedule 2, item 3, page 17 (line 11), omit "1 April", substitute "1 October".

(16) Schedule 2, item 4, page 17 (line 26), omit "1 July 2019", substitute "1 January 2020".

(17) Schedule 2, item 4, page 17 (line 28), omit "1April", substitute "1October".

(18) Schedule 2, item 4, page 17 (line 32), omit "1 April", substitute "1 October".

(19) Schedule 2, item 4, page 18 (line 1), omit "1 May", substitute "1 November".

(20) Schedule 2, item 4, page 18 (line 5), omit "1 July 2019", substitute "1 January 2020".

(21) Schedule 2, item 4, page 18 (line 10), omit "1 April", substitute "1 October".

(22) Schedule 2, item 4, page 18 (line 28), omit "1 April", substitute "1 October".

(23) Schedule 2, item 4, page 19 (line 5), omit "1April", substitute "1October".

(24) Schedule 2, item 4, page 19 (line 9), omit "1 April", substitute "1 October".

(25) Schedule 2, item 4, page 19 (line 12), omit "1 July 2019", substitute "1 January 2020".

(26) Schedule 2, item 4, page 19 (line 15), omit "1 April", substitute "1 October".

(27) Schedule 2, item 5, page 19 (lines 34 and 35), omit "1 July 2019", substitute "1 January 2020".

(28) Schedule 3, item 21, page 25 (lines 12 and 13), omit the definition of inactive low-balance account in section 8, substitute:

inactive low - balance account: see subsections 20QA(1) and (1A).

(29) Schedule 3, item 30, page 27 (line 13), omit "13", substitute "16".

(30) Schedule 3, item 30, page 28 (line 2), omit "13", substitute "16".

(31) Schedule 3, item 30, page 28 (after line 15), after subsection 20QA(1), insert:

(1A) However, an account in a fund that is a regulated superannuation fund is taken not to be an inactive low-balance account if:

(a) the account is held on behalf of a member of the fund; and

(b) any of the following occurred in relation to the member in the last 16 months:

(i) the member changed the member's investment options under the fund;

(ii) the member made changes in relation to the member's insurance coverage under the fund;

(iii) the member made or amended a binding beneficiary nomination;

(iv) the member, by written notice given to the Regulator, declared that the member was not a member of an inactive low-balance account;

(v) the superannuation provider was owed an amount in respect of the member.

(32) Schedule 3, item 32, page 42 (line 19), after "must", insert ", within 28 days of becoming satisfied as mentioned in paragraph (1)(b),".

(33) Schedule 3, item 32, page 42 (lines 27 to 29), omit paragraph 24NA(2)(d).

(34) Schedule 3, item 32, page 42 (line 34), omit "(c), (d) and (e)", substitute "(c) and (e)".

I'm a little at a loss for words, given the amazing change that we've seen from this government in the last few hours. We had a contribution from Senator Hume, who described herself just before lunchtime as a person worthy of making a considerable contribution to what's going on in this debate because of her experience as part of the superannuation sector. It's a big sector. It's grown to be a big sector because the Australian Labor Party envisioned a retirement savings structure for Australians. We instituted it. We've made sure that it's been protected. We've looked after it and protected it from the actions of this government opposite.

What we're seeing tonight from this government is an absolutely disgraceful response to the reality that faces Australians under the type of government it's offering us—the chaotic, dysfunctional, out-of-touch government that we have come to know and expect here, sadly, every single day. At lunchtime today, we had the Deputy Government Whip in the Senate saying that she worked in superannuation for almost all of her professional career before coming to the Senate. She worked in retail and industry superannuation funds and she thinks that that gave her a unique perspective on superannuation—its intricacies, complexities and vagaries. But what we see here tonight with this government is that it's decided to gut its own bill. Responsible governments who undertake negotiations in good faith with a sector as large as the superannuation sector should do what they say they're going to do.

The amendments that we have moved here this evening were composed in the context of honest, careful conversations with the sector. Our amendments seek to address the government's proposed very blunt removal of default insurance for large groups of Australians. That was their view. In its current form, the bill risks leaving younger members and lower income earners, predominantly women, without adequate insurance cover. That's why Labor have advanced these amendments. Our amendments were carefully considered. They were advanced in consultation. They haven't been changed at the last minute, which is what we've seen from the government. We know that the government simply don't understand the reality of hardworking Australians. They don't accept and respect the responsibility of government and they've failed the Australian people by what they've done here this evening.

7:08 pm

Photo of Peter Whish-WilsonPeter Whish-Wilson (Tasmania, Australian Greens) Share this | | Hansard source

The Greens won't be supporting the Labor amendments tonight. I won't go into any detail on that—

Senator Watt interjecting

except to say that we think our amendments are better than yours, Senator Watt. We will get that on record.

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | | Hansard source

The government will not be supporting the Labor amendments either. I have to say that, on this occasion, I agree with Senator Whish-Wilson that the Greens amendments are better than the Labor amendments. The Labor amendments were essentially going to gut the whole bill, whereas with us supporting the Greens amendments today we are able to secure the passage of important reforms like the capping of fees on low-value accounts, the abolition of exit fees and the streamlined consolidation of superannuation accounts. We would have liked to have seen the reforms in relation to insurance pass through the Senate today, but that wasn't possible. There wasn't a majority in this chamber for that.

So instead of getting nothing, we're securing passage of a substantial part of our package, and we will, of course, introduce legislation at the earliest opportunity to pursue the remaining part of this very important reform package. Of course, the Labor Party would have liked us to just cop a complete dismantling of every aspect of important reform. That is not something we were prepared to entertain, because we are standing up for the best interests of Australians saving for their retirement. That is what Australians saving for their retirement expect us to do—to get as many improvements as we can today by securing a consensus on the Senate floor. That is what we've been able to do. Let's continue the conversation in relation to the remaining reforms.

As I've indicated to the chamber previously, the government continues to be of the view that there ought to be reforms to the default provision of insurance for under-25s and low-balance accounts. As I indicated earlier, while the government acknowledges that insurance in superannuation provides benefits to many people, there are some cohorts, particularly young people, who do not receive value from default insurance, and for too long these people have been cross-subsidising other members. The independent Productivity Commission, in its superannuation report, found that while insurance in super provides value for money for many members, it doesn't for all, particularly young members or members with low incomes. The PC found that insurance in super is poor value and does not meet their needs.

Secure passage on the very important reforms that we are able to get majority support for in this chamber is why we've made the decisions we have made. Labor's amendment seeks to delay the implementation date to 2020. We don't support that. It seeks to do a whole range of other things that we don't believe are desirable. For example, it seeks to give APRA the authority to carve out funds of cohorts of members from the under-25s and under-$6,000, where members are at particular risk—

Senator O'Neill interjecting

Let me tell you, essentially the Labor amendments were causing difficulty all throughout the reform. To be fair to the Greens, the Greens are carving out a very distinct bit, and that is a very distinct bit that we will be able to pursue separately later. But in the meantime we don't want to stand in the way of Australians saving for their retirement and having the benefit of lower fees and the abolition of exit fees altogether.

7:12 pm

Rex Patrick (SA, Centre Alliance) Share this | | Hansard source

I only have one question for the minister. It relates to a quote in The Australian. This question is a bit unorthodox, Minister; it's a multiple-choice question. The quote is: 'It is true that most young people don't need life insurance, but no-one needs insurance until they need it.' If I were to ask 100 people where that quote came from, and I gave them an option of someone selling insurance or a Greens senator, I think most people would pick the former. It's a rhetorical question. The Greens are forcing insurance upon people who do not need insurance. I think that's entirely inappropriate. The senator who said that, I think, would receive medals from the insurance companies for his efforts in boosting their profits.

7:13 pm

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | | Hansard source

I thank Senator Rex Patrick for that question. As I've indicated, the government remains committed to that important part of the reform, but we had to recognise that today it wasn't possible to reach a sufficient consensus with the majority of people in the Senate. The alternative would have been to get nothing or to allow Labor to cannibalise our bill in a way that would have made it unworkable. So what we've decided to do is to secure passage of the cap on fees for low-value accounts today, to secure passage of the abolition of exit fees today, to secure passage of the more efficient consolidation of super accounts today and to ensure that all of these reforms are in place from 1 July 2019. We will continue to pursue the remaining aspect of this reform in relation to default insurance, but in the end you have to be pragmatic in politics and get the best possible outcome when you can and keep working to improve on that further.

7:14 pm

Rex Patrick (SA, Centre Alliance) Share this | | Hansard source

I will just briefly state that, when we get around to dealing with this next time, we'll support the proposition that the government has put up in its original legislation—

Photo of Deborah O'NeillDeborah O'Neill (NSW, Australian Labor Party, Shadow Assistant Minister for Innovation) Share this | | Hansard source

In the part-time parliament, you won't get much chance!

Rex Patrick (SA, Centre Alliance) Share this | | Hansard source

Well, we'll deal with that. I'm just quite disturbed that we end up with people in this place forcing insurance upon people for the benefit of insurance companies only.

7:15 pm

Photo of Peter Whish-WilsonPeter Whish-Wilson (Tasmania, Australian Greens) Share this | | Hansard source

I might respond to that, and to Senator Watt's not-so-veiled threat that they're going to remind us constantly of the time that we tried to improve outcomes for vulnerable workers in this place.

Senator Patrick, you weren't in here for my second reading contribution. But if you had been and you'd been listening, you're a very intelligent man, so I'm sure you wouldn't have had a problem picking up the gist of my argument. Having worked in the financial services industry myself and having sat on numerous inquiries in here, I know that we have what's called the 'asymmetry of information'. Most people who take financial products don't understand them. They don't know what they've got, where they've got it or what it costs them. That's why the system is so easily rorted.

The Greens are very happy to say that we stand for the universal provision of something like life insurance, especially through superannuation. It's a critical part of the way the system is set up, and it was supported by the royal commission. As I said in my second reading contribution, some countries even include that life insurance with social security so that everyone is covered. The problem we have is that a lot of young Australians, particularly those who are financially illiterate—and, sadly, there are many of them in this country—and in high-risk occupations, especially blue-collar occupations, are the most likely to suffer death and disability outside the workplace. That's a fact.

You can tell me that they should be able to opt in. Great—if I trusted the system. If I trusted the system, the provision of information and the processes in place to make sure that every vulnerable worker and every young Australian in this country opted in for insurance. then it might have been a different matter. But my understanding, having worked in the financial services industry, is that most people wouldn't actually opt in because they wouldn't get the information they needed to make that decision in the first place, or they would be too busy to make that decision, or there is something more pressing in their lives, like putting food on the table or watching Big Brother or whatever it happens to be. We believe that that system is in place for a good reason, and the Greens would actually like to see the role of government go even further in this area.

In relation to your point, Senator Watt: we've just been through a royal commission that has been scathing of the role of the regulator, APRA, amongst other regulators. Unfortunately, I accept that Labor's amendment that's before us has the right intentions. It's trying to find a medium between opt in and opt out. But the issue is that it's highly arbitrary and it's extremely subjective. I don't trust the regulator to be in a position to have the information to make those decisions and I don't know how it's going to work.

What we have before us is a simple proposition; it's surgical, it's precise and it keeps things the way they are, which keeps that provision of life insurance for some of the most vulnerable Australians. That's why we're doing this—we are standing up in this place and making sure that the most vulnerable Australians are protected. And it's not just us. I've got the report here, from the Parliamentary Library, that goes through the entire process. I recommend that you read it, Senator Patrick. It talks about the number of stakeholders, particularly unions around this country, that are extremely concerned about moving from opt out to opt in. It's actually a fundamental principle that we want to protect Australians where we can, and we're very proud of this amendment.

Photo of Alex GallacherAlex Gallacher (SA, Australian Labor Party) Share this | | Hansard source

The question is that amendments (1) to (34) on sheet 8501 be agreed to.

7:27 pm

Photo of Peter Whish-WilsonPeter Whish-Wilson (Tasmania, Australian Greens) Share this | | Hansard source

I withdraw the amendments on sheet 8557 revised. I seek leave to move the Greens amendments on sheet 8635 revised together.

Leave granted.

I move Greens amendments (1) to (5), (7) to (13) and (15) to (22) on sheet 8635 together:

(1) Schedule 2, item 1, page 10 (line 14), omit "13", substitute "16".

(2) Schedule 2, item 1, page 10 (line 19), omit "13", substitute "16".

(3) Schedule 2, item 1, page 10 (line 28), omit "13", substitute "16".

(4) Schedule 2, item 1, page 11 (line 8), omit "13", substitute "16".

(5) Schedule 2, item 1, page 11 (line 11), omit "13", substitute "16".

(7) Schedule 2, item 1, page 14 (line 25), omit "Sections 68AAA, 68AAB and 68AAC do", substitute "Section 68AAA does".

(8) Schedule 2, item 1, page 14 (line 27), omit "Sections 68AAA, 68AAB and 68AAC do", substitute "Section 68AAA does".

(9) Schedule 2, item 2, page 15 (lines 22 and 23), omit the heading to subsection 68AA(8A), substitute:

Inactive accounts

(10) Schedule 2, item 2, page 15 (line 28), omit ", 68AAB or 68AAC".

(11) Schedule 2, item 2, page 15 (line 33), omit ", 68AAB or 68AAC".

(12) Schedule 2, item 3, page 16 (line 25), omit "13", substitute "16".

(13) Schedule 2, item 3, page 16 (line 33), omit "13", substitute "16".

(15) Schedule 2, item 6, page 20 (line 5), omit "items 3 and 4", substitute "item 3".

(16) Schedule 3, item 21, page 25 (lines 12 and 13), omit the definition of inactive low-balance account in section 8, substitute:

inactive low - balance account: see subsections 20QA(1) and (1A).

(17) Schedule 3, item 30, page 27 (line 13), omit "13", substitute "16".

(18) Schedule 3, item 30, page 27 (line 29 to 34), omit subparagraph 20QA(1)(a)(ix).

(19) Schedule 3, item 30, page 28 (line 2), omit "13", substitute "16".

(20) Schedule 3, item 30, page 28 (after line 15), after subsection 20QA(1), insert:

(1A) However, an account in a fund that is a regulated superannuation fund is taken not to be an inactive low-balance account if:

(a) the account is held on behalf of a member of the fund; and

(b) any of the following occurred in relation to the member in the last 16 months:

(i) the member changed the member's investment options under the fund;

(ii) the member made changes in relation to the member's insurance coverage under the fund;

(iii) the member made or amended a binding beneficiary nomination;

(iv) the member, by written notice given to the Commissioner, declared that the member was not a member of an inactive low-balance account;

(v) the superannuation provider was owed an amount in respect of the member.

(21) Schedule 3, item 30, page 28 (line 21), omit "(v), (viii) and (ix)", substitute "(v) and (viii)".

(22) Schedule 3, item 32, page 42 (after line 18), after subsection 24NA(1), insert:

(1A) The Commissioner must pay the superannuation amount in accordance with subsection (2) within 28 days after the Commissioner is satisfied it is possible to pay that amount in accordance with that subsection.

The Greens oppose schedule 2 in the following terms

(6) Schedule 2, item 1, page 12 (line 6) to page 14 (line 24), sections 68AAB and 68AAC, TO BE OPPOSED.

(14) Schedule 2, items 4 and 5, page 17 (line 23) to page 19 (line 35), TO BE OPPOSED.

Very quickly, in the few minutes that we have left: this retains group insurance as an opt-out for people under 25 and for people with account balances of less than $6,000. It amends the definition of 'inactivity' to a continuous period of 16 months. It amends the definition of 'inactivity' so that people who change their investment options, alter their insurance cover or nominate a beneficiary are considered active. It requires the ATO to consolidate accounts within 28 days. We originally had a delay of commencement to 1 January 2020, but that has been removed in the revised amendment.

Photo of Alex GallacherAlex Gallacher (SA, Australian Labor Party) Share this | | Hansard source

It being 7.30, the time allotted for consideration of the Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018 and other bills listed in the variation to routine of business agreed to this morning has expired.

The CHAIR: The question is that sections 68AAB and 68AAC in item 1 and items 4 and 5 of schedule 2 stand as printed.

7:41 pm

Photo of Sue LinesSue Lines (WA, Deputy-President) Share this | | Hansard source

We'll now move to the next amendments. The question now is that amendments (1) to (5), (7) to (13) and (15) to (22) on sheet 8635 revised, circulated by the Australian Greens, be agreed to.

Australian Greens ' circulated amendments—

(1) Schedule 2, item 1, page 10 (line 14), omit "13", substitute "16".

(2) Schedule 2, item 1, page 10 (line 19), omit "13", substitute "16".

(3) Schedule 2, item 1, page 10 (line 28), omit "13", substitute "16".

(4) Schedule 2, item 1, page 11 (line 8), omit "13", substitute "16".

(5) Schedule 2, item 1, page 11 (line 11), omit "13", substitute "16".

(7) Schedule 2, item 1, page 14 (line 25), omit "Sections 68AAA, 68AAB and 68AAC do", substitute "Section 68AAA does".

(8) Schedule 2, item 1, page 14 (line 27), omit "Sections 68AAA, 68AAB and 68AAC do", substitute "Section 68AAA does".

(9) Schedule 2, item 2, page 15 (lines 22 and 23), omit the heading to subsection 68AA(8A), substitute:

Inactive accounts

(10) Schedule 2, item 2, page 15 (line 28), omit ", 68AAB or 68AAC".

(11) Schedule 2, item 2, page 15 (line 33), omit ", 68AAB or 68AAC".

(12) Schedule 2, item 3, page 16 (line 25), omit "13", substitute "16".

(13) Schedule 2, item 3, page 16 (line 33), omit "13", substitute "16".

(15) Schedule 2, item 6, page 20 (line 5), omit "items 3 and 4", substitute "item 3".

(16) Schedule 3, item 21, page 25 (lines 12 and 13), omit the definition of inactive low-balance account in section 8, substitute:

inactive low -balance account: see subsections 20QA(1) and (1A).

(17) Schedule 3, item 30, page 27 (line 13), omit "13", substitute "16".

(18) Schedule 3, item 30, page 27 (line 29 to 34), omit subparagraph 20QA(1) (a) (ix).

(19) Schedule 3, item 30, page 28 (line 2), omit "13", substitute "16".

(20) Schedule 3, item 30, page 28 (after line 15), after subsection 20QA(1), insert:

(1A) However, an account in a fund that is a regulated superannuation fund is taken not to be an inactive low-balance account if:

(a) the account is held on behalf of a member of the fund; and

(b) any of the following occurred in relation to the member in the last 16 months:

  (i) the member changed the member's investment options under the fund;

  (ii) the member made changes in relation to the member's insurance coverage under the fund;

  (iii) the member made or amended a binding beneficiary nomination;

  (iv) the member, by written notice given to the Commissioner, declared that the member was not a member of an inactive low-balance account;

  (v) the superannuation provider was owed an amount in respect of the member.

(21) Schedule 3, item 30, page 28 (line 21), omit "(v), (viii) and (ix)", substitute "(v) and (viii)".

(22) Schedule 3, item 32, page 42 (after line 18), after subsection 24NA(1), insert:

(1A) The Commissioner must pay the superannuation amount in accordance with subsection (2) within 28 days after the Commissioner is satisfied it is possible to pay that amount in accordance with that subsection.

Question agreed to.

Bill, as amended, agreed to.

Bill reported with amendments; report adopted.