Tim Ayres (NSW, Australian Labor Party) | Link to this | Hansard source

Before I was interrupted, I was talking about the tight timetable for making submissions to the proposed inquiry. Despite that timetable, 46 submissions were received, including submissions from industry superannuation funds, academics, regulators such as ASIC and APRA, and other interested parties. It is unfortunate that the government-chaired and government-controlled committee did not schedule public hearings to interrogate this written evidence. You would think, given the scope and scale of the changes to superannuation funds, which many millions of Australian workers rely upon for their retirement income, there would be proper scrutiny and a proper process, but that's not the government's purpose here. Instead, the committee resolved to report early, on 23 July. The urgency that apparently was there was not reflected in the government's subsequent actions.

For the past three months, the bill has just sat there as the chamber has considered at length other pressing matters such as the government's Governor-General's address-in-reply, which has gone on now for some months. It is only now that we are debating this bill for the first time. It is unfortunate, because the intervening period could have been fruitfully used by the committee to more fully address the issues raised by stakeholders and for the government members of the committee maybe to learn a thing or two. Concerns about the implementation timetable were raised in the submission of the Australian Prudential Regulation Authority. The deputy chair of APRA said:

APRA considers an appropriate implementation timeframe would be, at minimum, 6 months but preferably 12 months …

Industry Super Australia provided evidence of the impact on behalf of the industry super funds. They said:

If the Government proceeds with the proposed changes, the implementation date is unimplementable and will result in member confusion and detriment. It is proposed that the commencement date of 1 July 2020 would allow funds to renegotiate insurance contracts on reasonable terms, make relevant system changes and properly inform members, but under no circumstances should it be sooner than 6 months after royal assent.

Australian Super gave evidence of the impact of the previous reforms on their ability to communicate with members and to administer the changes. They said:

… due to the short timeframe for removing cover for inactive members, the response from affected members was overwhelming and our expanded contact centre was unable to cope with the volume of calls …

…   …   …

Whilst losing cover may provide significant benefits from not eroding account balances for the majority of members, a failure to make an informed decision to continue cover for members with financial commitments and dependents may have dire financial consequences for those unfortunate enough to die or become disabled.

That evidence was ignored, because of course the government's purpose here isn't to assist people; it is to disrupt the operation of the superannuation funds.

Mine Super gave evidence about the difficulty of communicating with workers in remote areas and about FIFO workers being hard to reach. As a former board member of Mine Super, I can speak about the excellent work that they do, their very sound governance principles and the deep consideration that they give to the efficacy of the superannuation products that they offer to members.

The Financial Services Council also provided evidence of their members' experience in implementing the Treasury Laws Amendment (Protecting Your Superannuation Package) Bill. They said:

… the compressed timeframe for implementing the PYS changes caused confusion among consumers. Following soon after with similar changes may further undermine trust and confidence in the system, particularly given call centres are still receiving enquiries about PYS.

That was probably the government's intention.

Group insurance is a means by which affordable and effective life, income protection, and total and permanent disability insurance can be provided bundled as part of a superannuation account. The bulk purchase of cover means that workers who would otherwise be unable to buy insurance because of cost or their high-risk occupation can gain the benefit of that insurance. Superannuation funds have provided this as a standard benefit. The Productivity Commission found that default insurance premiums significantly eroded the superannuation balance of low-income fund members. In extreme cases, this could amount to up to a quarter of the retirement balance. The Productivity Commission's findings also indicated that the default insurance offerings offered low value to some workers, particularly younger workers. The Productivity Commission acknowledged that the costs and claims ratio for most group insurance products was better than that in the general market. It also acknowledged that some workers would miss out on a benefit if that was not provided through their superannuation fund. That's quite a balanced set of conclusions, but, as I say, the government's not interested in taking account of these issues.

Industry Super Australia advises:

Nearly 30 per cent of workers under 25 years or approximately 340,000 employees, are employed in occupations and industries that are inherently hazardous. Some industries are extraordinarily hazardous. In 2016, half (50%) of worker fatalities occurred within the Transport, postal and warehousing and Agriculture, forestry and fishing industries.

Regarding those who are active low-balance members, Industry Super provided a table that showed that out of 633,159 active members, 25 per cent were in a high-risk job, 64 per cent were with a spouse and/or children and 23 per cent had a mortgage.

Labor is determined to ensure that younger workers are protected from the erosion of their superannuation balance, but, at the same time, this must be balanced with ensuring that workers in those industries have cover they can afford or that they can access. Stripping police, construction workers, firefighters, transport workers and miners of their life insurance through superannuation, which may be the only life insurance they can access, is not a reasonable step. These workers and their families may be faced with devastating hardship if they are unable to access life insurance in the face of a calamity. Workers who put their lives on the line deserve to be able to access affordable insurance that will protect their loved ones in case of need.

As I said earlier, this bill seeks to balance the interest of providing affordable, effective life insurance cover to employees, many of whom would be uninsurable, against the public interest in ensuring that member accounts are not eroded by insurance premiums. Labor supports these objectives, but we have concerns about unintended consequences for members in high-risk occupations, the implementation time frame of the bill and insurance premium increases and long-term impacts.

The Senate committee received 44 submissions. The opposition will move amendments to remedy the defects in the bill, including an amendment to extend the operative date to 1 July 2020 and to protect the benefits of workers in certain high-risk industries. Labor will always look to ensure that workers get a fair deal from their superannuation. The government has rushed through the bill without adequate time to consider these questions. Not a single public hearing has been held.

There is a reasonable balance to be struck here. We want to be able to support the objectives of the bill, but we want there to be a balanced, sensible approach to this set of reforms. On top of these issues, hardly a day goes by when a coalition MP doesn't come out with a new idea to trash the superannuation industry. We've heard from Senator Bragg, the leading light of the coalition backbench on these questions, saying he'd scrap the superannuation system for workers earning under $50,000 a year. This follows on from a gallery of coalition MPs—I think that's the collective noun we're using now—calling for a cut to the superannuation guarantee, including Craig Kelly, Andrew Hastie, Barnaby Joyce and Jason Falinski. None of these people will ever have to trouble themselves worrying about their retirement income, but they're most interested in trashing the retirement incomes of low-income workers.

No-one has the form, though, of the current minister, Senator Hume, when it comes to the coalition's war on industry super. For the minister, it's a holy war—what one may expect if you put a former big-four banker in charge of industry super. Industry superannuation funds, trade unions and Labor form an unholy trinity, the member wrote in a piece earlier this year—unsurprisingly, it was in the Oz—calling for the imposition of retail-fund-style governance on the industry sector. Incapable of conceiving how the system was built and the principles that drive the participants in the system, she regards that as an unholy trinity. It's a line that she's fond of. She also appears to believe that the primary problem in superannuation isn't the massive underperformance of retail super funds, like those at NAB, or the gouging and rip-offs perpetrated by the big banks, AMP or others on retail fund members; it is what she believes are industry super funds' inherent conflicts of interest. She can't drag herself away from that question to deal with the big performance issues in the sector.

Indeed, for Senator Hume the very birth of compulsory super in Australia was evil. She said:

There was an unholy accord, for want of a better expression, between Bill Kelty and Paul Keating back in about 1991 when they decided to introduce compulsory superannuation, rather than a pay rise, for the unionised workforces.

It was not an unholy accord. It was the result of struggle and work to build a retirement income system that members opposite would have found impossible to conceive. The only interest they've got now in the system is to wreck it. Actually, compulsory super was introduced in the 1985 accord, but let's not sweat the small stuff.

Compulsory superannuation was, as Senator Hume said, very hard for employers. Indeed, she insisted that the compulsory superannuation system put a lot of people out of work. To be fair to her, she is yet to go as far as Senator Bragg and others calling for the abolition of the system for some classes of workers. In 2017, in a speech in which Senator Hume claimed that compulsory superannuation had been introduced during the death throes of the Labor government—we thought 1985 was a pretty good year—she argued that the existing industry super governance model, which has delivered returns for members far greater than retail super, was 'entirely irrelevant'; it was 'a legacy of the past'; it suffered from an 'uncritical groupthink mentality'. This is the approach that drives the heart of the coalition's approach to industry super. It's an approach that the community should reject. I think that the Senate, by adopting the Labor amendments, should send the government a message: hands off industry super.

Louise Pratt (WA, Australian Labor Party, Shadow Assistant Minister for Manufacturing) | Link to this | Hansard source

While the Labor Party is supporting the Treasury Laws Amendment (Putting Members' Interests First) Bill 2019 because it has some good objectives, I very much sign up to the chorus of concern from Labor senators, who have expressed their deep concern about the failure of the government to engage with the Labor Party on addressing some of the key problems in this legislation, including, as my colleague Senator Ayres has pointed out and as Senator McAllister pointed out in her speech on the second reading, the issues to do with workers who are in high-risk industries.

We know the substance of this bill arose out of the Productivity Commission's concern about the number of Australians with multiple superannuation accounts, as well as the concerns about the fact that insurance premiums have been eating into the balances of workers in low-wage industries. I myself should have been more aware of the fact that I paid insurance out of two superannuation accounts—accounts that I was happy with. I paid insurance out of two accounts for some 10 years. I dread to think what the impact of that was on my superannuation balance; I probably don't want to look too hard at that. I have since remedied that situation. So I do understand that the government needs to take action to improve superannuation and these superannuation policies to ensure that they fit people's needs in terms of their point in life—if you're a young worker and you're not as likely to be facing periods of illness in your life or have a greater call for insurance. I understand that it is in Australians' interests for us to tweak these policies and the legislation framework around it. However, I do not believe that the government has done its best due diligence in that regard. We have Australians who work in very high-risk industries where this is likely to be the only insurance product that they can afford. We would have really liked to have seen the government pay more attention to those issues, but it's very clear that they've failed to do so.

We had the opportunity, in the form of a Senate inquiry, to take the time to address those issues, but I can see from the Senate's records that the committee that dealt with this legislation reported early and didn't hold public hearings on the matter to interrogate this written evidence.

Slade Brockman (WA, Liberal Party) | Link to this | Hansard source

You didn't look very hard!

Louise Pratt (WA, Australian Labor Party, Shadow Assistant Minister for Manufacturing) | Link to this | Hansard source

I'm happy to take the interjection if I'm incorrect on that matter. It is the responsibility of this chamber to hear the concerns of Australians about the legislation that is before us in this place. A long reporting time frame should have given the committee time to engage with these issues and address the concerns of people in high-risk industries. The committee received some 46 submissions from super funds, academics, regulators and other interested parties, but we didn't get to hear and interrogate that evidence before a Senate committee.

In that context, Labor was calling for a longer time frame of implementation on this legislation, out to 2020, the government sought to push ahead with an implementation date of 1 October—some two weeks away. I understand the government is moving amendments in this regard, however, it really does underscore the point that it hasn't taken the time to address the technical issues in this legislation that this place, and the committee, should have had the opportunity to do.

Super funds have expressed to the parliament and the committee their concern about implementing this legislation in such a short time frame, and the regulators also have expressed that concern. Yet here we are, with a start date of 1 October in the draft of this legislation. I'm not across the detail of the amendments that the government might seek to move, but I would want very clear assurances that the new timetable as you amend it—or that I hope you amend—has been worked through with regulators and the industry to make sure that it is something that is objectively achievable.

I note that of the other concerns in relation to this legislation, meeting the existing proposed time line looks to result in significant pricing revisions, and that that doesn't flow through automatically. That will see super funds needing to renegotiate the group insurance contracts with their insurers. I would like to know how those issues will be addressed, in the context of the minister responding on this legislation in the second reading response. We want to see how the renegotiation of contracts is going to fare in the context of the time line for the implementation of these legislative changes. That is why Labor senators have been pushing that the commencement of this bill not be until next year.

I want to return to one of the issues I've already touched on, and that is the concern for members of these super funds who are in high-risk occupations. These issues were at the forefront of submissions made to the inquiry, and they haven't been adequately addressed. We sought to make amendments in the other place on these issues, and we will need to pursue them here, because the government has not adequately responded to the situation that current holders of these insurance policies may find themselves in when they are suddenly without these insurance policies to protect them.

Clearly, the ideal situation for Australian workers is that everyone comes home safe and sound from a day's work. Then we wouldn't need these life insurance policies, which are, in large part, to cover us for workplace injuries or accidents. I want to highlight to this place the fundamental importance that unions play in campaigning and ensuring that superannuation is fit for purpose and the excellent role that industry super funds have played in supporting workers in Australia. But hand in hand with that is coming home safe from work every day. Sadly, this is not the case for all Australian workers. These insurance products, embedded in superannuation, are incredibly important for all workers, but specifically, and in particular, for those in high-risk industries.

From the ACTU's evidence, between 2003 and 2016 a staggering 3,400 workers lost their lives on the job. Of those, close to 10 per cent were under the age of 25. It's all very well to assume that when a young worker loses their life they don't need an insurance product because they don't have dependents and they don't have things that need covering, but you cannot ever assume that's the case. Young workers do have families, they do have mortgages, they do get cancer, they do get sick, and you can't assume that they're not going to need to call on that insurance product to support themselves or to support their families. So for those who work in high-risk occupations, we need to consider their issues substantively in this place, and I do not believe that the government has adequately done that.

I hope very much that you have a very real response to the amendments that the Labor Party will seek to move in this place. The bill, as drafted, currently cancels insurance for police officers, paramedics, construction workers, truck drivers, agricultural workers, forestry workers, prison officers and healthcare workers, all of whom are at high risk of suffering a workplace injury or, tragically, death. More than 27 per cent of workers under the age of 25 are, in fact, in high-risk occupations such as these, and it's very clear that insurance has real value for them and for their families. It is, frankly, nonsense to suggest to young workers that they should seek individual cover for themselves rather than rely on the default cover provided by their super fund.

Let's look at, for example, the intersection of this legislation with the fair work bills that are also currently before this place, one of them being the Fair Work Laws Amendment (Proper Use of Worker Benefits) Bill 2019. The funds that currently enable redundancy payments, which is where employers collect funds on behalf of employees and put them into these redundancy funds, also help protect workers in these high-risk occupations. They're high risk not only in a safety sense but also in a phoenixing sense—the coming and going of industries that go broke and then recreate themselves. In this situation, young workers will reply on their insurance product while they're working and also rely on redundancy products to make sure their entitlements are paid out as they peak and trough from contract to contract. What I'm concerned about here is that you are abandoning the needs of these workers not only in this legislation but also in the proper use of worker benefits legislation. The viability of redundancy funds and of access to reasonably priced and accessible insurance products are incredibly important for this cohort of workers. And, frankly, I think it is ridiculous to expect young people who have plenty of other issues on their minds, who are hopefully saving up for a mortgage, who are just making their way in the insecure world of work—because many of them are also in insecure work—to truly think about having their own insurance product. You can't really choose an insurance product if your work is insecure, and the insurance in your superannuation may be the only insurance product, other than your car insurance, that you really think about having.

For example, Mine Super are a fund where 90 per cent of their members are employed in high-risk occupations. They've raised concerns where they say that these occupations are often ineligible for retail insurance coverage and are uninsurable outside the group insurance offering within the superannuation environment. So surely there's an argument for the government to have addressed whether there are some super funds where it is relevant to opt out from insurance being removed from their products on an arbitrary basis.

The other thing I want to address in this context is the importance of group insurance in keeping insurance premiums down. In the second reading response, you might also address for us the issues that are around the way insurance premiums are derived, particularly if people in high-risk industries are suddenly left needing to purchase their own insurance products because they don't get the bonus, if you like, of being in pooled superannuation funds where you can really drive down the price of insurance—where you've got people in lower-risk industries cross-subsidising the insurance for people in higher-risk industries. That's because, if these people in high-risk industries are truly uninsurable or if the insurance is truly unaffordable, there are deeper questions, really, about the fact that we should be having insurance products, and we really need to look at it in a policy context of how we address life insurance questions for people who do face a higher level of risk.

Mine Super have said that they receive about 800 claims per year, which is approximately one in every 50 insured members making a claim in any given year. Frankly, it seems pretty ridiculous that you would have an arbitrary opt-out in those circumstances, because there's a reasonable likelihood that even young workers will need to draw on that insurance product, and the cross-insurance that they gain, even if they are low-paid workers, is worth investing in.

The ACTU touched on the issues that I was raising before in relation to what happens to insurance premiums—how they sort themselves out when you start opting out high-risk occupations or opting out younger people. They've raised concerns about insurance premiums spiking for those who prudently opt in, as well as for existing members within the group insurance plan.

Labor's listened very carefully to stakeholders that have raised these concerns. We've moved amendments in the other place to protect workers in high-risk occupations, and I look forward to those issues being vigorously pursued in this place in the committee stage. It is a shame to me that the government was unwilling to support amendments in the other place. We do need to have a strong committee stage on this bill to make sure that these issues are addressed. I also want to highlight the fact that there's a key gender dimension to this legislation, and the government do not appear to have given proper scrutiny to those issues either. I don't think that's any surprise, given the rough, rushed process that they have been in in implementing this legislation.

In closing: whilst there are very important elements to this legislation that I certainly see will benefit many workers in protecting the balance of their superannuation product— (Time expired)

Slade Brockman (WA, Liberal Party) | Link to this | Hansard source

I didn't jump up earlier to try to usurp Senator Pratt's spot but to protect her—to protect her from incorrectly informing this place about the history of this bill, the Treasury Laws Amendment (Putting Members' Interests First) Bill 2019. Unfortunately, I wasn't early enough to protect the previous speakers from the other side, Senator Ayres and Senator McCarthy, who were reading from the talking points and who reflected the fact that those opposite seem to have the corporate memory of a mayfly, given the fact that—

Senator Steele-John interjecting—

Catryna Bilyk (Tasmania, Australian Labor Party) | Link to this | Hansard source

Sorry, Senator Brockman. Senator Steele-John, that's quite repetitive and quite loud. Could you keep the tone down?

Jordon Steele-John (WA, Australian Greens) | Link to this | Hansard source

I apologise.

Catryna Bilyk (Tasmania, Australian Labor Party) | Link to this | Hansard source

Thank you.

Slade Brockman (WA, Liberal Party) | Link to this | Hansard source

I realise what I was saying was extremely funny, Senator Steele-John!

These measures were actually introduced in the 2018-19 budget, 16 months ago, and not only that, but the measures contained in this bill have been to a previous inquiry. I say this for your benefit, Senator Ciccone, because I don't want you to get up and repeat the same errors that your colleagues have just made. These identical measures were considered in the Treasury Laws Amendment (Protecting Your Superannuation Package) Bill, which was looked at by the Senate Economics Legislation Committee last year, including—surprise, surprise—at a public hearing. Who did we hear from at that public hearing? We heard from the Australian Prudential Regulation Authority, CHOICE, the Financial Rights Legal Centre, corporate super association Rice Warner, ClearView Wealth, the Financial Services Council—who's this one?—the Australian Council of Trade Unions, the Association of Superannuation Funds of Australia and the Australian Institute of Superannuation Trustees. So not only have these measures been around for 16 months; they have been considered before by the Senate economics committee, which is the reason that I and my fellow members of the committee decided that an inquiry off the papers was appropriate in these circumstances. Because the Senate economics committee takes its role very seriously, one of the things that I quizzed the secretariat about is whether the provisions in this bill were identical to the provisions considered in the previous inquiry, and the answer was: yes, they were.

I will let the minister respond to some of the other falsehoods we've been hearing from those opposite, who were talking about people being stripped of their insurance and about hazardous occupations not being adequately covered in this bill. Senator Ayres was quoting AustralianSuper data in his arguments when AustralianSuper, of its own volition, was one of the first superannuation funds to move to this system for under-25s. Yet he is quoting AustralianSuper data. So I just want to put on the record that the Senate economics committee did look at this bill. We looked at it in detail. We made two recommendations, which have been considered by the government, and I thank the minister for doing so. I certainly commend this bill to the House.

Raff Ciccone (Victoria, Australian Labor Party) | Link to this | Hansard source

I rise tonight to speak on the Treasury Laws Amendment (Putting Members' Interests First) Bill 2019. The stated purpose of this bill is to prevent insurance premiums from eroding superannuation balances of members of our community. In particular, it is targeted towards younger Australians and those who already have low superannuation balances. As stated in this chamber earlier today, Labor is supportive of the aim of the bill. However, as mentioned in the report of the Senate Economics Legislation Committee, Labor believes that, in its current form, the bill runs a very serious risk of producing a number of unintended consequences once it is put into effect. In doing so, the bill jeopardises the attainment of its own stated objective if passed through this place without any serious amendment.

I wish to take this opportunity to put on the record a range of concerns that I myself have with this bill, because, indeed, there are significant areas of concern that must be properly considered by members of this place as we debate this proposed piece of legislation. At the heart of our role as a Senate is our own responsibility to protect the interests of our constituents and to ensure they all have the tools and resources that they need to live their lives in a prosperous manner. Insurance to cover yourself and your family to make sure you can continue to keep a roof over your head and food on the table, just in case the worst happens, is absolutely essential for workers, particularly those in high-risk industries.

The insurances we are discussing today, whether they be life insurance, total permanent disability insurance or income protection insurance, need to be easily understood and applied properly and ethically to ensure that coverage and protection can be accessed by every person in our community, whether they need it or not. To be clear, protecting workers from erosion of their superannuation balances is a reasonable goal. I, along with every member of the Labor benches, am committed to helping workers save for a secure retirement. However, I also want to make sure that every member of our community has access to the kind of insurance that will help give them the peace of mind that they and their loved ones will be covered should something go wrong.

In discussing the shortfalls of this bill and potential amendments for its improvement, Labor firmly believes that this bill should exclude workers in occupations that have a high risk of accident and injury. What we're talking about here are workers in construction; transport; agriculture and forestry; nurses; prison workers; paramedics; and police officers, just to name a few. It is absolutely in the best interests of these workers that they have the protection they need and the peace of mind that they and their families deserve.

According to the Australian Council of Trade Unions, around a quarter of workers aged under 25 are employed in these high-risk occupations. Of deep concern to a range of stakeholders is something that should be top of every senator's mind as we consider this bill and which was highlighted by Mine Super in a submission to the Senate inquiry:

• members in these high-risk occupations are often ineligible for retail insurance coverage and are uninsurable outside of group insurance offerings; …

within the superannuation environment.

I'm hugely reluctant to leave workers in high-risk occupations in the situation where they and their loved ones are unable to be covered by life insurance, total and permanent disability insurance or income protection insurance, given the greater risk they face. The timing of this legislation is also cause for concern and something that Labor believes must be changed. The start date is listed as 1 October, which is less than two weeks away. This will place an extraordinary administrative burden on superannuation funds. Representatives from funds that I have spoken with recently have reported to me about the onerous increases in workload following the most recent round of superannuation insurance changes, which commenced earlier this year.

Australian Super also gave evidence to this effect to the inquiry into the bill, telling senators:

…the response from affected members was overwhelming and our expanded contact centre was unable to cope with the volume of calls and provide what we would consider an acceptable service to affected members.

Representatives from Australian Super described the start date as implementable and that this bill would further increase workloads on funds as they notify members, answer member inquiries and ensure that the best interests and the needs of their members are met. It is completely unrealistic to expect that the nation's 500 or so superannuation funds will be able to notify their millions of members and implement a complex series of insurance changes between today and 1 October. In fact, APRA gave evidence to the Senate inquiry into this bill, telling the committee:

Requiring superannuation funds to implement the changes in the required timeframe will pose significant challenges for industry, particularly given the extent and complexity of the changes that will need to be undertaken …

APRA's submission continues:

… it is critical that the PMIF Bill provides for appropriately targeted transitional arrangements that provide superannuation funds with sufficient time to take the necessary steps to implement the reforms in a manner that minimises any unintended consequences, particularly for members.

It would be deeply wrong for us in this place to push through a series of changes that would impact fund members before they had the time to make an informed choice.

I'm very worried that the government is moving to make insurance harder, not easier, to access for people with accounts where there is a balance of less than $6,000. This was not included in the recommendations of the Productivity Commission report, which has been the impetus for this proposed legislation, and there has not been a compelling explanation from the government or the minister for this measure.

I'm also concerned that there has not been careful enough consideration given to the range of reasons why a person may have an inactive superannuation account. A number of stakeholders have raised significant concerns about the adverse impacts of this proposal on a range of account holders well beyond just young workers. The people who fall into this cohort do not often have large amounts of cash at hand, should the worst happen. Rice Warner warned the Senate inquiry into the bill that there would likely be adverse impacts on parents returning to work after the birth of a baby; on those who work part-time, an ever-increasing proportion of the workforce; on new migrants; on those with very little or very low salaries; and on anyone who simply opens a new superannuation account.

The Cancer Council and CanTeen wrote to me last month expressing some very serious concerns about what this legislation will do to young people who are diagnosed with cancer. For the 1,000 young people aged between 15 and 25 years who are diagnosed with cancer each year, the TPD insurance associated with their superannuation may be the only financial support open to them. Further, the letter also said that this was obviously particularly important as we recognise the growing financial toxicity of having cancer. I know a number of senators have raised a range of issues regarding people's stages of life and the importance of having that cover.

Another submission that was made to the inquiry was from the SDA, my former union. The SDA told senators at the inquiry into this bill:

By denying these workers default group insurance, when things go wrong, they will be likely to have to rely on the health and social welfare system.

As a former official of the SDA, I know from working there that a majority of our members are low-income earners. These are people who are earning somewhere around $30,000 to $40,000 a year. Having superannuation that has insurance as part of a collective means that they can afford to have cheap and effective insurance through REST accounts. SDA members mostly contribute their superannuation to REST, and most of them fall within the cohort that's defined in the bill. In 2018, 62 per cent of members of REST were women, and 35 per cent were under the age of 25. While the average account balance is around $26,000, almost half—around 924,000—have balances under $6,000. At the time, the SDA also made mention in the inquiry that more than 880,000 of its members would lose their cover. A year on, many more will be affected.

Insurance is a means of protection, be it financial protection or reimbursement against losses. Superannuation makes sure that those who can't afford insurance in the private sector can get something that is cheap and affordable for them and their families. It allows the risk to be shared amongst those who use it and those who don't. That's what insurance is. But insurance in the superannuation context is designed to assist and support workers who experience unexpected health and wellbeing challenges. The other comparison that can be made—and I think this was part of some other contributions earlier today—is to Medicare. We all chip in, whether we use the health care system or not, but what it does is ensure that all Australians have the ability to access cheap and affordable health care in this country, something we should be very proud of.

As superannuation is an industrial right of workers, it is the most cost-effective method of providing insurance cover for death, total and permanent disability, and income protection. One point nine million Australians are members of REST, and group insurance provides benefits that others just don't.

With a government who refuses to increase Newstart, who isn't afraid to push people off the disability support pension, who is known for deep cuts to Medicare and to health and hospital funding, you do have to wonder why it would seek to move costs for the care of people, when things go wrong, from their insurance provider to the public purse. That strikes me as a bizarre thing for the coalition government to do.

There are people who have less than $6,000 in their superannuation account who, sadly, will have an accident at home on a weekend—people who will fall off the ladder trying to clear out the gutters—who won't be covered by WorkCover, who won't be covered by public liability insurance, who won't be covered for TSC in my home state of Victoria, and who will find themselves without income protection or TPD insurance through their superannuation, because of this bill. What will happen to these people and their families?

One of the unintended consequences of this bill will very likely be upward pressure on premium prices for members who remain covered by the life, TPD and income protection insurance in their superannuation accounts. We are already seeing that now with private health insurance in Australia. As the SDA union submitted to the inquiry on this bill, it is also likely that there will be an increase in premiums across the board as numbers decline. Meanwhile, for the under 25s and the holders of accounts with less than $6,000 who do decide to opt in, their premiums could well be far more expensive than they are currently. The Australian Council of Trade Unions, in their submission, said:

Insurers will look at those who decide to opt-in differently if insurance becomes a choice. If a young person opts-in, insurers call that self-selecting which prompts the insurer to either deny coverage or require underwriting.

The Productivity Commission acknowledges that this group buying power gives account holders better products than they can access in the general market.

Labor will always look to ensure—and, hopefully, through the amendment I will be moving—a fair deal for workers across the country. The ALP has always stood in solidarity with workers. We are the party of 'the light on the hill' and the determination to bring something better to the people: better standards of living. We are the party of the accord, standing on the shoulders of those who sought to make sure Australians could be secure at work and secure in society. We will never stand by and watch workers' rights be ground away, unlike those opposite. We will never stop fighting to make sure that every person who works gets a fair day's pay and is looked after and protected under strong workplace relations laws. And we'll always fight to make sure that workers get the best from their superannuation.

Let's not forget, also, that a number of these superannuation funds are industry super funds. It is interesting to note that a range of senators in this place also have superannuation tied up with industry super funds. It would be interesting to see if they also currently have superannuation insurance cover.

Senator Bragg interjecting—

Senator Bragg, just looking at the register of interests, there are at least 10 senators from the government benches in this place who have superannuation associated with industry super funds, and that is a good thing. But it would be interesting to know if they have insurance also and whether they are willing to opt out or opt in, going forward.

We all respect the fact that, if we all chip in, it will make insurance cheaper in this country for all those who need it the most. We just don't know what is around the corner. I think it's very important to say that, with the packages that are offered by industry super funds, you cannot compete in the general marketplace. On that note, I move the amendment standing in my name, on sheet 8679:

That at the end of the motion, add:

", and the bill be referred to the Economics Legislation Committee for inquiry and report by 11 October 2019."

Tony Sheldon (NSW, Australian Labor Party) | Link to this | Hansard source

I rise to speak on the Treasury Laws Amendment (Putting Members' Interests First) Bill 2019. This bill seeks to amend the Superannuation Industry (Supervision) Act 1993 and the Superannuation (Unclaimed Money and Lost Members) Act 1999, allegedly to improve the default insurance arrangements for superannuation. By now, we're all aware of what this bill aims to do. I say 'aims to do' because, as we all know in this place, an aim is not necessarily the same as a result. The bill aims to protect the superannuation savings of younger members and members with low-balance funds from being eroded by insurance premiums. The bill aims to try to achieve this protection by taking away the default life insurance options for these accounts.

Whilst supporting the aim of the bill, the realities are quite different. As was also raised before, this bill has had previous discussion but it requires more discussion. It requires more consideration by the Senate. The bill requires some amendments so that there are no unintended consequences. When this bill was introduced in the Senate in early July, stakeholders were clear that there was some problematic issues and potential unintended consequences in this legislation. But instead of letting the Senate inquiry give further consideration to the issues properly and holding to the original October reporting time, the government, regardless, has shrunk the time frame for submissions and consideration, and there was an unseemly rush to get submissions in by 15 July. That left just 11 days after the bill was referred. This is an incredibly tight time frame on a matter that needs to be properly reconsidered for submitters to compile the further evidence and data that are needed for further consideration of this bill.

Despite this incredibly short time frame, 46 submissions were received. We had submissions from the broad range of stakeholders like regulators, super funds and academics. Regardless of previous consideration, they said the government chaired and government controlled committee did not schedule a single public hearing to ask questions and examine these submissions, because there needed to be further consideration beyond the consideration that had already been given.

Superannuation affects every Australian. Why the unseemly rush? Why the lack of more appropriate public scrutiny? My friends on the other side might say, 'We had a meeting here and a meeting there,' but it requires more public engagement. It requires people to actually be very clear about the consequences and be able to submit their views on the effect of this bill. Despite this whole process being rushed to a conclusion by 23 July, the government has done nothing for months. It's now September and we're finally debating the bill. We could have used this time more genuinely for further consideration, further examination and further reflection, and really allowed the Senate committee to do further work to grapple with the issues raised by all the stakeholders who contributed to this exercise in good faith. And now here in mid-September the government is back in rush mode. Say that to someone who doesn't have insurance, because not only will this impact on somebody under the age of 25 but it will impact on the entire family. The financial burden goes across families and communities.

The government wanted the bill to be operative from 1 October. Funds need to be able to properly inform members of their funds of the consequences of this bill. We note that these deadlines are totally unreasonable. They were unreasonable when they were introduced in July, let alone September. Concerns about the implementation timetable were raised in submissions from the Australian Prudential Regulation Authority. APRA, in its submission, said:

APRA considers an appropriate implementation time frame would be at a minimum six months, but preferably 12 months.

Industry Super Australia also offered their own evidence of the impact on industry super funds of these compressed timelines. They said:

If the Government proceeds with the proposed changes, the implementation date is unimplementable and will result in member confusion and detriment. It is proposed that the commencement date of 1 July 2020 would allow funds to renegotiate insurance contracts on reasonable terms, make relevant system changes and properly inform members, but under no circumstances should it be sooner than 6 months after royal assent.

Australian Super too has made it clear in the past the importance of communicating significant changes to their members. They also said, ' … due to the short time frame for removing cover for inactive members, the response from affected members was overwhelming and our expanded—

Debate interrupted.