Jenny McAllister (NSW, Australian Labor Party, Shadow Cabinet Secretary) | Link to this | Hansard source

This bill, the Treasury Laws Amendment (Putting Members' Interests First) Bill 2019, seeks to amend the Superannuation Industry (Supervision) Act 1993 and the Superannuation (Unclaimed Money and Lost Members) Act 1999 to improve the default insurance arrangements for superannuation. It aims to protect the superannuation savings of younger members and members with low-balance funds from being eroded by insurance premiums. It does this by removing the default life insurance option for these accounts. Labor supports these aims; however, it believes this bill requires some amendment in order to be able to properly achieve them without running the risk of unintended consequences.

Before moving on to the substance of the bill, I want to take a moment to reflect on the path that has brought us here. When this bill was introduced into the Senate in early July, the Senate referred it to inquiry with a reporting date of mid-October. Stakeholders and experts had suggested that there were implementation issues and potential unintended consequences arising from the quite technical amendments proposed in the legislation. The long reporting time frame would have given the committee time to engage deeply with these issues and hear from those who would be affected by the bill. Instead, the government chaired and government controlled committee decided to set a closing date for submissions of 15 July, just 11 days after the bill was referred. This was an incredibly tight time frame for submitters to compile the evidence and data that was needed. Despite that, despite an unreasonable time frame, 46 submissions were received, including submissions from super 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. Instead, it resolved to report early, on 23 July.

Of course, the government has not reflected this urgency in its subsequent actions. For the past three months, the bill has just sat here as this chamber has considered other pressing matters at length, such as the Governor-General's address-in-reply, which we considered again yesterday. It's unfortunate, because it is only now, in September, that we're debating this for the first time, and the intervening period could have been fruitfully used by the committee to interact with stakeholders and fully address the issues that they have raised.

One of the issues raised by stakeholders was the unreasonableness of the implementation time lines contained in the bill. The bill as drafted has an operative date of 1 October 2019, with a requirement for funds to inform their members about the changes by 1 August 2019. Those deadlines are clearly impossible now, in mid-September, but they were unreasonable even when the legislation was introduced, in early July. Requiring superannuation funds to implement the changes in the required time frame will pose significant challenges to the industry, and this is because they are technical amendments that reach right down into the individual policies that are offered through super funds to members. It takes time to work through the changes that are required, and the process is only made more complicated by the fact that these amendments will also interact with changes made through the protecting your super legislation very recently. The committee received numerous submissions from super funds explaining in patient detail the challenges involved in undertaking this body of work in such a short time frame, and their position was supported by the regulators. APRA considers that an appropriate implementation time frame would be, at minimum, six months but preferably 12 months from the finalisation of both this bill and the protecting your super legislation.

One of the challenges with meeting the existing timetable is that the proposed changes will result in significant pricing revisions. These changes will not just flow through automatically. Instead, the super funds need to go away and renegotiate the group insurance contracts with their insurers. This takes time, and it will take even more time because, instead of having to renegotiate and re-sign contracts in a staggered manner as contracts come up for renewal, insurers will have to deal with super funds en masse. And all of this is at the same time that the industry is grappling with the changes flowing from the protecting your super legislation. More time is needed. More time is required to enable the industry as a whole to undertake this repricing activity and engage in negotiations with insurers. If that time is not available, there is a risk that superannuation members will bear the consequences of harsh commercial negotiations.

This is why the Labor senators on the committee recommended that the commencement of the bill be deferred. We note that the government has circulated an amendment that would delay the starting time for this legislation. Although that amendment is enough to deal with the delays in having this legislation considered by the chamber, it's not enough to deal with the substantive concerns about timing that have been raised by stakeholders. Labor has also circulated amendments that would change the implementation time lines, and we will have more to say about those amendments during the committee stage.

The main concern that stakeholders raised, however, was the impact of this legislation on young workers in high-risk occupations. Australians have the right to expect that they come home safe and sound from a day's work. Unions have played an essential role in making sure that this is the case and continue to do so despite this government's ideological obsession with restricting the rights of working people and their representatives. Tragically, however, workplace deaths do still happen. Evidence from the ACTU is that from 2003 to 2016 more than 3,400 workers lost their lives on the job. That is a very big number. And, of those, close to 10 per cent were under the age of 25. This legislation would remove default insurance for workers under 25. The rationale is, in part, that workers under this age are less likely to have dependants and so insurance is less valuable for them and that workers under 25 are less likely to draw on their death or disability insurance. While this is no doubt correct for many of the individuals in this cohort, it is not entirely correct for young people who work in high-risk occupations. This bill, as drafted, would cancel the insurance for police officers, paramedics, construction workers, truck drivers, agricultural workers, forestry workers, prison officers, nurses and health-care workers, all of whom are at higher risk of suffering a workplace injury or, tragically, a workplace death. More than 27 per cent of workers under the age of 25 are in a high-risk job such as these. Insurance has real value for them and their families.

It has been suggested that if insurance is important to these individuals they could seek individual cover themselves rather than relying on the cover provided by their super funds. The truth is that 18- to 25-year-olds are not known for their engagement with risk management. And actually, in that regard, they are similar to the rest of us: nobody likes thinking about bad things, and humans are not so great at thinking long term into the future, particularly around financial questions. The question of life insurance and the risk of suffering an accident at work or on the roads are not front of mind for young people starting out in life. Even if it were, many would find it difficult to find alternative cover.

Mine Super is a fund that has 90 per cent of its members employed in high-risk occupations, and they told us in their submission that these occupations are often ineligible for retail insurance coverage and are uninsurable outside of the group insurance offering within the superannuation environment. In working in a high-risk occupation, these members have a higher chance of being exposed to a severe workplace accident and an increased probability of being off work due to illness or injury, which renders them and their dependents financially vulnerable. If our members can find insurance outside superannuation in the retail environment, the cost of insurance is often significantly higher than what Mine Super can provide. They go on to explain that they receive 800 claims per year, which represents approximately one in every 50 insured members making a claim in any given year. The ACTU likewise advises that this will cause insurance premiums to spike for those who prudently opt in as well as for existing members within the group insurance plan.

Labor listened to these stakeholders and moved amendments to protect workers in high-risk occupations. It is a shame that in the other place the government was unwilling to support those amendments. We will be seeking to have protections for workers in high-risk occupations included in this bill, and we'll have more to say about the necessary amendments in the committee stage.

I want to touch briefly on the gender dimension to these changes. Men and women have very different working lives. It means that many financial services laws that appear to be of general application actually have a different impact on men and women as a cohort. The government does not appear to have given this much thought in relation to this proposal, and that is entirely consistent with their longstanding hostility to undertaking gender analysis of Treasury proposals. The proposed changes will affect women differently. Women who have broken careers because of caring responsibilities would be more likely to fall into one of the categories affected by these changes. The gender gap results in a super gap, and this means that women are more likely to have a low superannuation balance. Similarly, women who take time away from the workforce to have children or to deal with other caring responsibilities are more likely to have inactive superannuation accounts because they are not working and contributing at that time.

Women in Super provided a useful anonymised case study in their submission to the Senate inquiry. Fund A is a large industry super fund. Let's have a look at the cohorts of people in this case study affected by the government's proposal. Members under 25 pay $34 a year for their death and long-term disability income protection insurance—$34 a year. The protection is being used, a claim on this super fund is being paid out, every 12 days on average. So the capital investment, the money invested to purchase this cover, $34 a year, is being used. Every 12 days someone makes a claim.

The fund in question has over 177,000 active members with a balance under the $6,000 threshold. And, surprise, surprise, 75 per cent of those members with a low balance are women, because that is entirely consistent with what we know about the operation of the superannuation fund. Their average age is 36 years old, and the majority of them do have dependent children. Through the arrangements proposed, these members could lose their entitlement to over $500,000 in combined default death and long-term disability protection. In this case study, it takes these members of this fund an average of two years of working to reach a superannuation balance of $6,000, the threshold that's proposed in this legislation. It reflects the low wages in the industry that this fund services. It has 177,000 active members on low wages, and, yes, it's taken them two years to get to $6,000.

Members risk not having proper insurance cover during the period that they are accruing this minimum balance. Like most people, the majority of these members do not have personal insurance outside superannuation and, if they did so, it would be significantly more expensive than what is made available in this fund. Due to demographic factors, many of these members never reach a superannuation balance of $6,000. This isn't dealt with in the way that this bill has been constructed, nor in the way that it's been debated by the government, and the different interests of women in our retirement system continue to be ignored by the government, as indeed do the different economic interests of women more broadly.

I'd like to conclude by briefing touching on the Liberals' record on super. The government has called this bill 'putting members' interests first'. It's a bit of a novelty for the Liberal Party to acknowledge that working Australians have a legitimate interest in superannuation, let alone that members' interests should be put first. Close to 24 years ago, to the day, on 25 September, the member for Warringah, Mr Tony Abbott, told the parliament:

Compulsory superannuation is one of the biggest con jobs ever foisted by government on the Australian people … The government is making us worse off now so that it will be better off in the future.

Well, almost 24 years on, to the month, the Abbott government went on and struck a deal with the Palmer United Party to freeze compulsory superannuation contributions at 9½ per cent for seven years.

The Liberal Party's war on superannuation is not a thing of the past. When this legislation was put up for debate in the other place, Liberal members of parliament were putting the case again that we should cancel those delayed superannuation increases. These are the increases which are supposed to be guaranteed by legislation and due to take place between 2012 and 2025. We heard Senator Bragg use his maiden speech in this chamber to call for superannuation to be voluntary for low-income earners. The Liberal Party seems to think the only way to increase wages for Australians is to slash their retirement entitlements. Well, in fact, there is another way. There is another way they could be approaching this. They could have a wages policy, they could have a plan to stimulate growth and productivity, they could acquire an energy policy after six years of total failure in this area and they could just get a plan to govern.

The Labor Party take a very different approach. We know that we can increase wages for working Australians and provide them with more superannuation. We have always stood up for the rights of workers to get a fair deal on their superannuation. It was Labor that introduced compulsory superannuation and Labor that defended it from the coalition's repeated attempts to undermine its universality. That is because we believe that every Australian deserves to retire with dignity and independence and that our superannuation system is critical to that goal.

Peter Whish-Wilson (Tasmania, Australian Greens) | Link to this | Hansard source

As I was listening to the previous contribution, I realised that this is actually my second speech in a row with a lectern. It suggests the gravity and the importance of the bill before the chamber today, the Treasury Laws Amendment (Putting Members' Interests First) Bill 2019. What a lost opportunity this legislation is. Yet again, with the help of a deal-making crossbench, this government is going to spit out a half-baked, gerried-up piece of law that doesn't fix the problem, that will leave those who can least afford it with less protection and that opens the door for their mates at the big banks.

The current problem is that too many people, especially young people, are paying too much for insurance that they don't need. I think we all agree with that. I don't imagine any senator would disagree with this statement, but this bill does not fix the problem with group insurance provided through default super. Instead, this bill simply replaces this existing problem with another problem. The government's fix will leave other young people who do need insurance without cover. This will have a dramatic effect on people's lives. This will change the course of some young Australians' lives.

Costings by the Greens through the Parliamentary Budget Office indicate that, if passed unamended, this bill would see under-25-year-olds and people with low-account balances missing out on as much $5.8 billion in insurance payouts over 10 years. I accept this assumes no opt-ins, which wouldn't be the case, and this costing doesn't take into account the amendments put forward by the government today; nevertheless, it does give the Senate some sense of the magnitude of what is being decided upon today. To put it another way, this government is meddling with somewhere in the order of $600 million a year worth of payouts to young people on low incomes, who clearly need default insurance, without providing a safety net.

Let's talk about the fallacy of choice. The fundamental problem is that the government's bill relies on members exercising choice, even though the problem it is seeking to fix is a direct result of members not exercising this choice in the past—a conundrum. The vast majority of people do not engage with their super fund, let alone insurance in super. That's why the Howard government established that default funds should include life insurance. Through you, Acting Deputy President Brockman, I say to Senator Bragg, 'The next time you present at a young Liberal meeting, the picture of John Howard on the wall, next to the picture of the Queen, will be frowning on you. This is a legacy of the Howard government that you are trying to remove.' I will just point that out to the chamber.

Unlike the superannuation legislation amendment before us today, the choice of superannuation funds bill 2002 required to provide minimum levels of insurance in respect of death in order to qualify. That's not to say the current system is perfect, far from it. But superannuation is defined by member disengagement, which is why we have default super. And the provision of default insurance through default super should be premised on the reality that most people don't make an active choice about super, let alone insurance through super. This brings me to the key fallacy of the bill, which is to think those young people who do need insurance are likely to make an active decision more than anyone else. Senator McAllister made the point earlier that the majority of us don't necessarily engage with these choices. Indeed, it was one of the key issues raised by the royal commission and in countless inquiries that I've been on in various committees in the Senate. We have a problem with financial literacy in this country. That financial literacy causes motivational issues around people wanting to seek more information. It's a bigger issue that we have to deal with, but it is fundamentally at the heart of the problem with this bill. I invite any senator, any government senator, Senator Lambie, Senator Patrick, to explain how a 23-year-old, who's married with a couple of kids, will in the first instance understand that life insurance is even available for super and, secondly, make a decision to try and opt in to life insurance through their super. On what planet are young people with kids and a mortgage and one or two or three jobs and everything else going on in their lives going to sit down on a Tuesday night and say, 'Do you think we need to opt in to insurance in super?'

It would be nice if we were in a perfect world and could assume that young Australians would do that, but I think we need to have a look at ourselves to understand that that's a very unlikely situation. Indeed, it's bunkum. Yet again it's a neoliberal fallacy of choice: informed consumers participating in an active market—what we economists call perfect information, a highly efficient market. It is anything but that. Indeed, I would say the fallacy is straight from the derriere of a bull. You are a farmer yourself, Acting Deputy President Brockman, but, for those who don't know what the derriere of a bull is: it's the backside of a bull.

Nick McKim (Tasmania, Australian Greens) | Link to this | Hansard source

The rump.

Peter Whish-Wilson (Tasmania, Australian Greens) | Link to this | Hansard source

Or the rump. I'll take that interjection from Senator McKim. The bum, the butt—plenty of names that we could add to that. But you get the picture.

What we really have going on when we talk about choice is a proxy war between the group insurers—TAI, AIA, and MetLife, to name a few—and, of course, the retail insurers, the banks and AMP. Who will win out as a result of there being less group insurance? Retail insurers; that's who. The banks and AMP might be losing super customers hand over fist, thanks to the royal commission, and here's the government once again in their corner, opening up the market for life insurance for them.

Senator Bragg interjecting—

Senator Bragg, you'll certainly have your chance to respond.

We don't want opt-in. Another piece of this bill is straight from the back end of a bull, and that's the notion that it's simply changing default insurance from opt-out to opt-in. That's not in case. There's no guarantee that young people seeking to opt in or low-income people seeking to opt in will not be subject to individual underwriting barriers. In fact, I understand the insurance industry itself has made this clear. In other words, someone who is under 25 who wants to opt in and get life insurance may have to pay more than they're currently paying to get cover or may be refused cover altogether, yet they currently have it. Thanks to Mr John Howard, they currently have it.

Here's some advice I received from the Parliamentary Library on this matter. 'Trustees will need to carefully consider their obligations under the insurance covenants to determine whether it is permissible for the members who would like to opt in to be included in the same pool as those who are automatically opted in. Furthermore, trustees will need to determine whether those members who choose to opt in are permitted to do so under the terms of the group insurance policy negotiated between the fund and the insurer. For example, the cost of the policy to the fund may increase as a result of select members opting in, and the trustee would need to determine whether this is consistent with its obligations under the insurance covenants. Where the trustee determines that it is not appropriate, different group insurance policies may be negotiated. Alternatively, insurers may require policies to be individually evaluated and underwritten.' The point was raised during the committee inquiry. It's the point that the government and the crossbench seem to have totally ignored.

I go to the government and crossbench amendment. So what has the government cooked up to get this bill through the Senate today? Here is a little bit of corporate knowledge not going back very far. Some may remember that it was only recently that the Greens voted with the government to get a number of significant improvements on insurance through this place, but we insisted that default insurance not be part of that legislation. I understand that the government did say at the time that their policy was to remove default insurance, and that's why we have this piece of legislation before us today.

This is an amendment apparently to cover high-risk occupations. You may think that the Greens would support this, given what I have just said here today, but it has a number of significant problems. The first problem with this amendment is that it makes a false correlation between group insurance and occupation. It does not help anyone who is not in a high-risk occupation who injures themselves or dies because of something they do outside work. I want to really labour this point about 'outside work'. It was pointed out numerous times when we debated the original piece of legislation that this default insurance is coverage for young and low-income Australians outside of work: when you're up a ladder on the weekend, when you're trying to clean your gutters. It's not for when you are in the workplace, because most workers are covered by other forms of insurance in their workplace. This amendment is kind of redundant, really, if what we're actually looking at is trying to reduce risk for young and vulnerable Australians. If you're a white-collar worker up a ladder on the weekend, this amendment is of no help to you.

What kind of workers could we be talking about? Well, you could be working for the Public Service. You could be a clerk—of course, not a clerk of the Senate, as we have here in the chamber today, but someone who is generally starting out in a low-income occupation. You could be a retail worker. You could be a call centre worker. We can think of a lot of examples of people who aren't going to be covered by this amendment who are going to be vulnerable. For the Senate's interest, we did a quick calculation of the number of workers who aren't going to be covered by the amendment, and it's four-fifths of workers. Four-fifths of young, low-income, vulnerable workers as a cohort aren't going to be covered by this amendment. For a government that is intent on trying to separate the connection between your area of employment, your union and your super, this is a clumsy oversight.

The second problem is that there is currently no definition of a dangerous occupation and, moreover, super funds do not have a record of what occupation their members are actually involved in, something that certainly would be worth senators labouring in committee stage on this bill. This amendment will generate a truckload of paperwork, another thing, Senator Bragg—through you, Deputy President—you may have to bring up at your young Liberals meeting. This is significant red tape—or do we call it blue tape? It can be any colour. What about the guidance notes to board members and the minutes that are going to have to be taken to try to define and track who is working in what occupation and whether it constitutes a dangerous occupation? It is yet more complexity in a system that is already a maze, a system that is already failing, a system that we are trying to fix.

So how do we fix this problem? If the chamber is going to vote to change default super today—which is the position the Greens would like to maintain; which is a position that the Greens forced the government to adopt when the previous legislation came to this parliament—how do we put up an amendment to this bill that actually does protect all young Australians, no matter their occupation? We've got an idea that we'd like the Senate and the chamber to consider. Our amendment will nationalise group insurance for young people and low-income, vulnerable cohorts. The amendment that I have circulated would prohibit members who are under 25 and with a low account balance from being provided group insurance through default superannuation funds and, instead, establish the government as the shadow provider of insurance for these members by assessing and honouring valid claims under the same terms and conditions as would be the case if these members were defaulted into group insurance. In other words, nationalised life insurance for the excluded cohorts as provided for by this bill. There's more to this, Senator Bragg—through you, Deputy President. This would fix the problem of young people having their balances eroded, while ensuring that those who need insurance are still covered. It would also maintain the concept of universal default cover, which was Mr John Howard's idea, which is integral to the provision of affordable insurance through super.

There are a number of ways that the costs of this could be covered. What would the costs be? Just off the cuff, we note from the PBO's assessment that you'd be looking at about $600 million a year on average payouts to high-risk cohorts. That could be borne by the government or it could be provided for on a cost basis. It could be recovered through the ATO or APRA levies, and so paid for by the insurance companies themselves and either partially or fully weighted towards the affected cohort—in other words, business as usual.

I would prefer to see provision of this insurance, on a risk weighted basis, at cost. It would be not for profit—no more gouging of young people by banks and insurance companies. It would be provided by the government at cost on a risk weighted basis. In other words, it could fund itself. There would be no additional cost to the government and yet we would have solved the problem. Even better than that, the at-risk cohorts wouldn't be gouged anymore, because we'd expect that the provision of this insurance through a government default scheme would be a lot cheaper for young, low-income and vulnerable Australians. Either way, it would be at a far lower cost than is currently the case for people under 25 or with less than $6,000 in super.

This position is coming from the Greens today, but I thought I'd read a quote from Mr Michael Roddan, writing in The Australian. I have great respect for him; he's a very, very good financial journalist. I should give a plug to his book, The People vs the Banks. It is a really good run-down on the royal commission and what needs to be done following that royal commission—which, of course, the Greens played a major role in getting through parliament and getting funding for. He wrote:

Instead of workers sending 1 per cent of their wages to companies that show little interest in meeting their responsibilities, the money could be redirected to a national insurance scheme.

Claims could be capped at modest but suitable levels. Death policies would cover funeral costs and liabilities—to a degree—for those without dependants, and then increase depending on the spouse or the number of dependants. Income protection claims could be better regulated to reflect the reality of forgone wages in the event of an injury.

…   …   …

The government wouldn't even have to underwrite a national insurance scheme—

and this is the bit you might like, Senator Bragg—through you, Deputy President—

It could just provide the policy parameters, the administration, and the industry could still take on the risk—and conversely, any reward.

Essentially, there could still be a role for the industry in the provision of that default insurance.

To summarise: this legislation will result in thousands of young Australians who might benefit from group insurance going without. If the government are so sure that people carved out of this bill—young people and low-income Australians—don't need insurance, then they should be prepared to underwrite their risk. I will say that again, because it makes sense. If the government and the crossbench are so sure that young people and low-income Australians, who have been carved out of this bill, don't need insurance, then they should be prepared to underwrite their risk; otherwise, this legislation is just about dismantling group insurance. And who would want to see group insurance disbanded? Follow the money trail! As I mentioned earlier, a number of big businesses would.

The reality is that most people don't pay attention to their super, let alone young people paying attention to group insurance through their super. That's why default insurance through default superannuation was established in the first place. It's a very simple principle. If passed, even with the gerry-up amendments from the crossbench, this bill will result in some of the least well-off people in our society being underinsured. This chamber will be giving assent to that today if it passes this bill. What we do here is real and has real consequences. The Greens have argued consistently that removing default insurance will impact the lives of some of the most vulnerable Australians. I urge the Senate: support the Greens amendments or don't support the bill at all.

Andrew Bragg (NSW, Liberal Party) | Link to this | Hansard source

If I had a dollar for every time Senator Whish-Wilson says 'gouging' I would be a wealthy man. I'm glad he mentioned the word 'gouging', because gouging is what's been going on in this industry for far too long. The life insurance and superannuation sectors have been getting one of the best deals going in Australia. They have had 25 years of compulsory savings, where they have been able to consistently charge excessive insurance premiums, often for people who don't need insurance. And so the findings of the third parties, the independent people here—the Productivity Commission, the regulators and, frankly, the only groups who aren't conflicted, who are the Grattan Institute and Choice—have all said this rort and this gouging have to stop. That is why our legislation, the Treasury Laws Amendment (Putting Members' Interests First) Bill 2019, makes life insurance in super opt-in for people under the age of 25 or for people with balances under $6,000.

The reason we're doing this is we're on the side of the workers; we're not on the side of the insurance companies. It was illuminating to hear Senator McAllister worry about what's going to happen to the insurance companies. I mean, give me a break! We are absolutely focused on trying to get a better deal for workers because, after all, the Productivity Commission has said that $1.9 billion in excess premiums have been charged in this group insurance. Over the working life for an average worker, that could be $85,000 of lost retirement savings. And, remember, the purpose of this scheme is to provide income in retirement above and beyond the age pension.

We on this side are not in the business of trying to help vested interests. Senator Whish-Wilson's got some conspiracy theories about this. I wish he had expanded further; I would like to hear them. But this legislation clearly empowers people by saying that you either have to opt in or you don't have insurance if you're under the age of 25, or if you have a balance under $6,000. This is a finding of the Productivity Commission. It's been backed in by ASIC, Grattan and the Choice organisation.

This has also been through a thorough consultative process. Senator McAllister mentioned there was a truncated Senate committee process. That's because there has already been a full and detailed Senate committee process, because this has been our policy for a long time. This has been our policy to put workers before insurers and to put workers before profits of large companies, because this compulsory super scheme is about workers; it is not about insurers. And to hear the Labor Party run all these pathetic lines from the financial services industry—I have heard it all before; it's not a pretty story.

We have seen some of these life insurers run around this place with what they call the 'book of death'. The book of death is a dreadful sob story about how people won't have insurance, which, of course, glosses over the fact that in many cases workers' compensation schemes will in fact ensure that people do have coverage. But to put it beyond doubt we are proposing to move amendments which will ensure that emergency services workers do have the existing arrangements in place, as well as workers in high-risk occupations. The proposal is that that will be determined by the trustee, but within a framework. The Labor Party amendments that I think Senator McAllister foreshadowed would basically give a blank cheque to the industry to say, 'You can do whatever you want,' again, putting Dracula in charge of the blood bank.

In summary, we have the weight of opinion of the people who aren't conflicted. Grattan, Choice and the government's independent economics advisor, the Productivity Commission, are all saying that this enormous drain on people's retirement savings has got to stop, and that's why we're moving forward with the legislation. We are also putting additional safeguards in place to put beyond doubt any concerns that may be out there, which, at the end of the day, will put the trustee on the hook for determining whether or not people are in fact in a high-risk occupation.

At the end of the day, people can always choose to opt in. Wherever government can avoid making decisions for people, especially to do with their financial affairs, that is a good thing. The idea that government can, frankly, enforce a set-and-forget mentality is very, very dangerous. We have seen the enormous malfeasance that's happened inside this financial services sector. We really want people to think about their financial goals, their financial future. We want people to be engaged. People should think about the sorts of insurances they want. In most cases, the group insurance in superannuation won't in fact give a family all the coverage they would need in the event of an untimely death or total and permanent disability, which could occur. So, generally speaking, it will be a retail insurance policy that will provide more coverage and more appropriate coverage for each family's needs.

Finally, I just want to commend the assistant minister, Senator Hume, for the exhaustive consultation process. I think there's been a lot of listening done by Senator Hume. I know that there are some very strong advocates. Some of them are not pure of heart; but some are, and so we have, I'm sure, sought to accommodate some of those concerns in these amendments.

Alex Gallacher (SA, Australian Labor Party) | Link to this | Hansard source

I rise to make a contribution to this important debate on the Treasury Laws Amendment (Putting Members' Interests First) Bill 2019. I want to say at the outset that I do have an interest. I go back to superannuation in 1986, when there was an industrial campaign run by many unions around Australia to put in place superannuation for workers who didn't have any—nothing at all. They had no death cover, no TPD, no retirement savings at all. So that was long time prior to it becoming compulsory.

I want to take up a couple of points that Senator Bragg has made. Basically, there are a number of ways that you can further the retirement incomes of people in superannuation. You can make super be paid on time, for starters. You can make super be paid at the same time as wages. That would force people to make a contribution on time and in full, and bump up retirement incomes. You could make sure they have actually paid the right amount of super. The tax office indicates that there is about $2.7 billion worth of unpaid super, as a guesstimate. They look at their records, at what should be paid and what has actually been paid, and there is a $2.7 billion shortfall. But, no, the workers' friend, the coalition government, has decided to take a very small slice of the industry and say, 'People under 25 don't need insurance.'

If you think of bespoke insurance, which Senator Bragg alluded to, as being the solution for families, I'll give you a short story. Looking at my industry fund this morning, I will pay $124 worth of contributions per year for life cover of $34,000. Now, were I to go to a retail fund and try to get any insurance at my stage in life, I'd be paying a lot more than $125 a year. I'd probably be paying $125 a week. So group life insurance is not a bad thing. It is not a bad thing per se. If you take 1.2 million customers to the marketplace and say, 'Here are the assessments of death, TPD and the like; what's the best premium you can give us across 1.2 million members,' you're going to get a very competitive product. If you take 1.2 million customers individually to a retail fund, you're going to see a vastly higher premium. And there is evidence to that effect. The Rest superannuation fund will say, 'On average, you're getting insurance for life and TPD for $1.11 a week.' A comparable retail product is $8 a week. Last time I looked, that was 700 per cent more.

The argument, simply put, by those opposite is that people do not need insurance or TPD if they're under 25. Well, that's not the world I live in. The data that Senator Hume has used is Taxation Office data which says they do not have dependants. At 25, they may not have children; that's true. But they may well have a 'better half', a partner. They may well be living with a grandparent. They could be sharing with any number of family members. In the event that something awful happens, such as death or injury, there are expenses to be met. I know this from having sat for 10 years on a claims committee, where we routinely dealt with up to 30 deaths per month, including death by suicide, misadventure and the like. Quite often, the funds that were paid out in those circumstances were the only amount available to recompense the people who paid for the funeral costs or to assist those people over that very difficult time that they were having on their life journey. I don't subscribe to the idea that this is a rip-off. In fact, if you look at the submission from Women in Super to this inquiry, you will see a case study. This is the case study:

Fund A has 177,742 active members with a balance under $6,000. Approximately 75% of these members are women. Their average age is 36 years old. A majority of these members have dependents. Under the proposed changes, these members will potentially lose … $500,000 in combined default death and long-term income protection.

It takes members of Fund A approximately 2 years to reach a superannuation balance of $6,000 – this reflects the industry sector Fund A services, and the low wages … Like most people, a majority of these members do not have personal insurance … outside superannuation.

Due to demographic factors, 6% of members of Fund A never reach a superannuation balance of $6,000. For these members, the insurance component of their super is far more valuable than the additional retirement benefit that would have accrued—

if they didn't have insurance.

The disparity between income earning potential is abundantly clear—women do it a lot tougher in superannuation than men. Time out of the workforce, lower pay, more casual work and the like means that, quite often, life insurance, TPD and the like are valuable to these women during their working career. In fact, they're not likely to get, as Senator Bragg alluded to, a funded over-pension retirement income. It's just not going to happen. It's going to be of some funds, if they're lucky, which will assist them in combination with the age pension. That's the future they're looking at, because you need to be contributing a lot more than your current level of earnings to fund your retirement over the age pension. That's exceptionally clear.

There are a lot of people in these industry funds for whom life insurance and TPD is extremely valuable. It's a safety net. Is it expensive? No, it's not extraordinarily expensive. If you look at the largest fund which covers young people, Rest Super, they have approximately 480,000 members who will lose their insurance coverage if these changes go through as is. They maintain that the group insurance can be designed to not erode balances. For example, members at 20 years of age pay $82 per annum and get income protection benefits of $1,650 per month, a TPD benefit of $28,000 and a death benefit of $50,000. Claims are being paid. Rest alone paid $530 million in the last five years to around 3,800 members with balances below $6,000 and around $115 million to around 1,200 members younger than 25 years of age. So clearly it's not a one-way street here.

Senator Bragg pointed to the Grattan Institute, CHOICE and the Productivity Commission. But the reality is that it is a really white-collar view of the world. Workers in low-paid service industries have complicated relationships—with their family and with other people around them. They may not have the two children I had at 25 years of age, but the reality is they have commitments and they are still vulnerable to shock in the event of death or TPD. I think if you ask them, genuinely and openly: 'Are you happy to pay 80 bucks a year to have this coverage?' an extraordinarily high number of people would say yes.

The real problem we have here is disengagement with the industry—disengagement of workers, but not just young workers. I can point you to workers in this parliament who have been in good, high-paying jobs for a long time who haven't bothered to go and have a look at their super scheme and what it entails, what it entitles them to and how much they're paying in fees and costs. We're trying to protect the younger cohort from a diminution of their retirement through the removal of a very clear and concise benefit. I would say at the outset, having been a trustee director, having chaired an investment committee, having sat on an industry super fund board for quite a number of years, that I always acted in the best interests of members. They didn't always know I was acting in their best interests, because they never asked or they never looked or they never checked. But, when tragedy befell them or things happened and they put in a claim and got paid, they were extraordinarily thankful.

If the government were fair dinkum about protecting members' retirement income into the future, it would, as I say, ensure that the right amount of super is paid. The Australian Taxation Office states that it has estimated 'the difference between the value of super guarantee contributions required to be paid under the law and actual super guarantee contributions made'. For the year 2015-16, the ATO estimated the net gap—which is the gap taking into account the impact of the ATO's compliance activities—to be $2.79 billion. That is vastly more than what we're seeking to save workers from—82 bucks a year.

I know that those on the other side would like to say that they're on the side of workers. Well, I've got a little bit of history regarding superannuation. They have opposed superannuation every step of the way. It was unions that fought for it industrially. Never forget that. Unions took the campaign to employer groups and created superannuation funds. It was the Keating government that extended that across the whole workforce. But, for about six or seven years, this was an industrial campaign—worth fighting for and delivered on the job, and people put their shoulders the wheel. Industry funds were formed. The royal commission found, in my humble view, that the retail funds were where the bulk of the problems were. If you go down this line of forcing people to opt in, you are going to disenfranchise a whole lot of people who are currently covered—they probably don't know it; I accept that. A lot of them wouldn't know it. There is a not insignificant number of people with dependants. The ATO figure is that 3½ per cent of people between 15 and 24 are living with children. Where do they go for cover? What happens to them? Do they just hope, as Senator Whish-Wilson or Senator Bragg said, that they might be covered by workers compensation? I'm not sure that that's a fair analogy at all—in fact, I'm sure it's not.

This is flawed legislation. I think it is designed to move retail funds back into the picture. I can quote some interactions my office has had where a worker in a retail fund is actually paying $1,800 a month for life insurance. I won't give you the details of that fund or that person, but it's the classic retail modus operandi. The president of a football club or some sporting group is an agent; everybody knows that they're a good boy or a good girl—they look after you. You know they get a commission, because that's how they get paid. When it all unravels and you see that a person with a modest amount of money in a retail fund is actually paying more for his insurance than his entire contribution to the fund, the answer is: 'Well, he should read his fund prospectus. He should read the detail.' Workers aren't reading the detail. Retail funds are not the solution here. The solution is a careful evaluation of the real risks we're imposing on this section of the community.

My contention, particularly from a transport perspective, is that young workers are vulnerable. They are vulnerable in any number of ways. They're vulnerable in accidental death and they're vulnerable in terms of intentional self-harm—and those are certainly the statistics we've seen through the years of involvement with the transport superannuation industry. To get a group life insurance cover in our area that was respectable was extremely difficult because we had a high rate of death, we had a high rate of injury and we had a disparate group of members. We had to get a collective group insurance policy that got it up. I can remember when the death cover in the TWU was $32,000. That was the best we could get, based on our claims experience. It's much higher than that now, and you can go in and purchase additional levels of cover.

What hasn't been said in this debate but should be said is that all of these group life insurance premiums are deductible. They're deductible by the funds against the 15 per cent contribution tax. There is a forward estimate of the savings that this government, or any government, will make by eliminating this cover, and they're in the hundreds of millions of dollars.

What's been put to me is that if you simply excise 15- to 24-year-olds and those on a $6,000 or less balance from the cover what you're quite probably going to do is increase the cover for those aged 24 to 55, 65 or 75 or whatever people work to. The savings that are going to be banked in the forward estimates may well evaporate because the group life insurance premiums for a fund—and I've been quoted this figure by one fund—will rise by 14 per cent. So the members of the fund will not see any net saving anyway. You will not be covered until 25, and when you get to 26 you're going to pay a 14 per cent higher premium. How does that make any logical sense? It only makes sense if you're batting for the retail funds and bespoke insurance, and I'm certainly not doing that. I'm batting for group life insurance for the widest possible membership at the best possible price that, in aggregate, delivers the best outcome for workers. There is a very simple test that you need to prescribe: 1.2 million members with a disparate age groups and diverse occupations going to market to get a group life insurance policy that covers the whole group versus 1.2 million people going to the marketplace and trying to deal with their individual circumstances.

At one point in my life I sought a higher level of cover. I had every medical test known to medicine, basically. I paid a doctor to write up a very comprehensive report and, after careful checking that I had no existing frailties or injuries and that I hadn't smoked for 10 years and all that sort of stuff, I was grudgingly offered a bespoke policy. That's fine. You can choose to go down that path. But we've got a system now that's not broken.

There are at least 3½ or four per cent of the workers in this area, by Senator Hume's own analysis, who have dependants. My question in the committee stage will be: what replaces the existing cover for those people who have dependants? The next question will be: in your forward estimates, if you're going to make some savings on tax deductibility of group life insurance premiums, have you factored in the fact that premiums may raise by 14 or 15 per cent? If they do, your savings will evaporate. They will go straight out of the window.

These are early days in a very complex piece of legislation. We know from the Treasurer's remarks that there are going to be another 42 pieces of legislation coming through the economics committee. All of them will have a good testing in this chamber and all will have a result, one way or the other, and I'm happy to abide by that. I do want to put this clearly on the record: this was the first bit of legislation to come to the economics committee. It came through the selection of bills process with a reporting date of 19 October and a commencement date of 1 October for the legislation. It would be pretty hard, I would have thought, to report on a piece of legislation with an operating date 18 days before the reporting date.

I said to the chair, Senator Brockman: 'Can we have a hearing in Canberra? Can we get the crossbenches involved? Can we get some evidence?' 'No, we can't do that.' I said, 'Why?' He said, 'This has all been thrashed out in a previous parliament. I said, 'No, that's not exactly correct. It didn't get up in a previous parliament. The issues are still live. They need ventilating. You need to get people together and give people the opportunity to refresh themselves in this new parliament.' And we were denied that access. The government used its numbers and said: 'No hearing. It's all good—ready to go.' Well, unfortunately, that's not true.

Claire Chandler (Tasmania, Liberal Party) | Link to this | Hansard source

I rise today to speak in support of the Treasury Laws Amendment (Putting Members' Interests First) Bill 2019. In particular after that last contribution that we had on this bill, I want to put it on the record that this is a bill about choice. This is not a bill that is stopping people from having life insurance if they want. What this bill is about is giving people the ability to choose insurance if they want to if they're in a certain cohort. What we are in effect doing is empowering people to take control of their super.

This is also a bill about young people. As the youngest member of the coalition in this place and, I believe, and also the youngest member in this place if we include the opposition, it gives me great pride to speak on a bill that will have such a profound impact on young people. Being slightly closer in age to the cohort that we are talking about here, I like to think that I might have some authority to discuss in my contribution today some of the reasons why young people become disengaged with superannuation and how this bill that we're discussing today will seek to improve that.

This is a sensible piece of reform that we're discussing today. It will allow young superannuation scheme members choice in how they take out insurance products within their superannuation and will prevent their low balances, which we know this cohort traditionally has, being eroded by fees for insurance products they may not need or want. This bill requires that insurance be provided only on an opt-in basis for members with balances below $6,000 and any new members from 1 October 2019 who are under the age of 25. And I'd like to dwell for a moment on those two important words: 'opt in'. We're not saying that young people don't need life insurance. We're not saying that young people or people with balances below $6,000 can't have life insurance. What we are doing is giving these people the choice as to whether or not they seek this product out. If you want insurance through your superannuation fund, under this bill you can choose to have it. If you don't then you won't lose hundreds of dollars a year for a product that you were automatically enrolled for when you filled out the paperwork for your superannuation scheme.

We know how important super is to Australians as they head towards retirement. From day one of your working life, you begin saving for retirement through the super contributions your employer makes on your behalf. Because super is so important, we should be encouraging young Australians to be aware of and engaged in their super choices so they can avoid excess fees and understand how their money is being invested. Yet for many young Australians their first experience of superannuation is receiving a statement from their fund showing that, after fees and insurance premiums, their balance has actually gone backwards. When that's your experience of superannuation, it's pretty easy to switch off and stop paying attention to what your super fund is doing.

Senator Gallacher mentioned in his contribution just now the importance of engaging young people in super, inferring that, because young people aren't engaged with their super, that's why we need to compulsorily force these insurance products upon them, but I think that's quite counterintuitive. I think the best way to engage people in superannuation is to not gouge their fund balances out in those early years, or when it's under a certain balance, because there is no better way to disengage someone from a process or a purchase that they've undertaken than by actually taking away some of the value that they've put in.

Why should a young person with no children or dependants working a few shifts in a bar or supermarket every week see their super balance reduced to pay for life insurance? Yes, under current arrangements they can choose to opt out. But if you sign up for superannuation and, by default, are also signed up for life insurance, the natural assumption to make is that it's important, just as important as having a superannuation account, and that you'd be taking a risk not to have it. That's why the two products are marketed together at the same time.

How many 18- and 19-year-olds do we think have the experience and the financial knowledge to fully understand what life insurance is and to assess whether they need it? I won't cast aspersions on all of the 18- and 19-year-olds in Australia, but what I will say is that when I was that age I certainly didn't have that experience or that knowledge. At the same time as these young people are signing up to super funds when they get their first job they're also trusting these funds to manage their retirement savings for the next 45 years. That's fine. But at the same time this transaction is going on, at the same time these young people are signing up, the super funds, who put themselves out as sound financial managers—after all, that's the business they're ostensibly in—in effect say to young people: 'We've also signed you up for life insurance at the same time. Trust us; it's a good deal.' The natural thing, of course, is to go along with it.

There's a huge difference though between opt-in and opt-out, and anyone who tells you otherwise is being dishonest. Everyone with an email address has had the experience of being regularly bombarded with marketing emails from hotels you once stayed at, stores you once bought something from five years ago or marketing partners of various websites you registered with just because you didn't bother to uncheck the 'Yes, I would like to receive special offers' box. Ninety-nine per cent of the time you would never have knowingly signed up for these, but in this case you were registered for it by default and five years later you're still receiving the emails because you haven't hit unsubscribe. If we don't have the time in our lives to unsubscribe from junk emails, what 20-year-old is going to sit down and research whether they need life insurance and then fill out paperwork to cancel their policy? These types of sales tactics aren't in the best interests of young Australians and people who have low incomes.

Default insurance required under Labor's MySuper reforms can result in members paying for cover that goes beyond their needs or paying for multiple policies upon which they can never claim. To put this in perspective, based on 2015-16 data, around 2½ million Australians who were either under 25 with a new account or with an account balance below $6,000—the cohort we're discussing today—paid an estimated $1.2 billion in insurance premiums annually.

There's a long list of problems with automatically enrolling young workers and low-income earners into insurance products. Indeed, the Productivity Commission found insurance is poor value for younger and low-income Australians, and estimates that insurance would erode balances for low-income workers by up to 14 per cent. Tax data shows that 96 per cent of 18- to 25-year-olds don't have dependents, and less than one per cent of people under 25 actually claim on their insurance in their superannuation. Further, it's estimated that 18- to 25-year-olds are paying more than three times the true risk based premium they should be, therefore subsidising older workers with much higher balances.

Insurance premiums can reduce low-income earners' retirement balances by 10 per cent or more, compared to having no insurance, and increase with every additional set of policies that might be held by an individual. Around 20 per cent of super fund members have duplicate insurance policies across multiple superannuation accounts. That means they may not be able to claim on these policies that they're paying for, even if they do need them.

One in four people don't know whether they're covered for these insurances or what they're covered for, and, honestly, it surprises me it's only one in four. Speaking of when I was a young worker going into the workforce, setting up my superannuation account, I was certainly one of that group. It demonstrates a significant amount of Australians are being signed up for something that costs them hundreds of dollars a year without knowing or without knowing why. And the Productivity Commission has reported that almost half of all super members surveyed found the opt-out process difficult or complicated. Again, I think that is an important point, going back to the metaphor of unsubscribing from emails. It's a difficult process. We know that young people are after more instantaneous processes. If it's going to take them too long to do something, they're not going to do it.

This list of problems demonstrates why these insurance policies should be opt-in. Through this bill the government will ensure that members who are at particular risk of account balance erosion will not have insurance provided as a default, unless they've directed otherwise. Of course, there is nothing wrong with being cautious and choosing to insure yourself against death, permanent disability or loss of income, but that should be an individual's conscious decision, particularly when they're just starting out at work or working casually and the costs of insurance premiums can exceed the amount their super fund is earning every year.

This bill doesn't claim there is no value in insurance—though certainly some of the contributions on the other side today have suggested it does, and that's not true—and this bill also doesn't claim there haven't been occasions when the insurance offered through super schemes has been important to individuals and their families. What this bill does do is ensure that people make a conscious choice about the financial products they're signing up for.

I know that the insurance industry has been lobbying heavily against these reforms. Clearly, super funds are not a neutral voice in this debate who are only interested in the best interests of their members. After all, as I said earlier, there is $1.2 billion in insurance premiums paid by Australians under 25 on the line. We've heard a lot recently about the behaviour of the banking and financial services industry, and, in many respects, they've been found severely lacking. I would have hoped that, after the recent banking royal commission, any business in the financial services sector would be thinking twice about selling products which people don't need, don't want or don't understand and about marketing them to people in a way that they don't even know what they've signed up for and what they're paying. Unfortunately, that doesn't seem to be the case when it comes to these insurance policies.

However, it's very clear that there is wide support for these reforms, including from institutions such as the Productivity Commission, CHOICE and even the Grattan Institute, who all want to see an end to the existing arrangement of automatically enrolling people in insurance products. Fundamentally, this bill does what it describes—it puts first the interests of members, particularly the interests of young members. There are so many ways we can encourage young people to be more engaged in superannuation, and changing the rules so they can get true value out of their super, as this bill does today, is only the beginning. I urge all senators to support the bill.

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

I rise briefly to contribute to the debate on the Treasury Laws Amendment (Putting Members' Interests First) Bill 2019, indicating that Centre Alliance will be supporting the bill along with the government amendments. Our consideration of this bill was informed in a couple of ways. One of them was the Productivity Commission's report into superannuation and associated insurances. I know that in the last parliament we fixed a number of the problems that were in play, but I remember—and I've just called it up on my iPad—that about a third of accounts, about 10 million, were unintended multiple accounts. This does include both insurance and super. These eroded members' balances by $2.6 billion a year in unnecessary fees and insurances—$2.6 billion a year that insurance companies were knowingly creaming off the pay packets of young Australians, the people who could least afford it. Senator Chandler is right in that there has been significant lobbying in this building. I've been subject to a significant amount of representation. Indeed, probably half an hour ago super industry representatives walked into my office, seeking to adjust, perhaps, what will take place in this chamber today.

The second factor that we considered was the needs of workers. There are a number of workers who clearly do need to have insurance and should be placed into an opt-out category. But there are many, many workers where one would argue—in fact, the Productivity Commissioner did argue—that these products weren't suitable or, indeed, were underperforming. Workers weren't being asked to pay for these products. In fact, they were just paying for them; they were never asked about them. We have worked with the government to try to find a balance to make sure that we protect workers, and that is what the amendment that the government has circulated does. We consulted with a wide range of people in respect of that particular amendment and worked very positively with the government in relation to it.

What that amendment does is create a pragmatic exemption for those employed in dangerous occupations, emergency service workers or those who have been deemed to have a higher level of risk. The effect of the amendment is that young people who are likely to have a superannuation balance under $6,000 and who are employed as part of the police services and forces, fire and ambulance services, coast guard or rescue services will not have their insurance cover changed. This is a safety mechanism for those young people employed in high-risk occupations that is proposed on the basis that young people don't normally give sufficient consideration to their future, and particularly their mortality. They all feel 10 feet tall and bulletproof and don't ever really consider what may happen if they were no longer around or weren't able to make a living. The bill as amended will protect the small group of people who face a higher level of risk, where accidents could result in workplace death or total and permanent disability.

We believe we've managed to find a sweet spot that balances the need to make sure that people are not automatically opted in to insurance that they don't really wish to have but are paying for. It is unusual for an industry simply to be given a free ride—the ability to simply charge people for their product without having to consult them. At no stage does this bill take away the ability of a worker to seek out and gain insurance. It carves out a particular group of people who are able to remain in the insurance without being opted out.

Senator Farrell interjecting—

Just responding to the heckling: look, if you think it's okay for people who don't need insurance to somehow subsidise people who may need insurance—we understand right now that the high-risk categories of workers will have their insurance arrangements catered for with an opt-out option. The ones that have to opt in are those who are less likely to need insurance. You shouldn't make people who don't need insurance and are not in high-risk roles subsidise people who do. The market will continue to operate, and, if indeed there is a problem in the way it operates, I'm sure the government will be open to correcting that—although I don't anticipate that. I commend the bill as amended by the government to the Senate.

Malarndirri McCarthy (NT, Australian Labor Party) | Link to this | Hansard source

The Treasury Laws Amendment (Putting Members' Interests First) Bill 2019 seeks to balance the interest in 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 the objectives of the bill to protect individuals' retirement savings from erosion, but we do have some concerns about unintended consequences regarding 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, including submissions from funds, insurers, APRA, the ACTU and individual unions. It's unfortunate that public hearings were not scheduled, which will be particularly clear when I relay to the Senate some of the serious concerns across remote and regional Australia. We are certainly proposing amendments to remedy the defects in this bill, including an amendment to extend the operative date to 1 July 2020 and to protect the benefits of workers in high-risk industries. Labor will always look to ensure that workers get a fair deal from their superannuation.

We've heard many different speakers, in particular from the government, on superannuation, but there have been some inconsistencies when we hear new coalition MPs come out each day with a new way to undermine superannuation. We should not be making superannuation harder. Let me share with the Senate that First Nations members continue to face significant barriers to accessing the superannuation system just as it is. These barriers are well documented, and they were further exposed during the royal commission—the royal commission that the government did not want to have. The evidence presented at the commission found that many First Nations members, particularly those living in remote communities, still have to face hurdles in meeting fund identification requirements. As Commissioner Kenneth Hayne said:

… Aboriginal and Torres Strait Islander peoples encounter needless difficulties to do with identification and about binding death nominations.

In fact, just yesterday I met with Eva Sheerlinck, the CEO of the Australian Institute of Superannuation Trustees, and Lynda Edwards, from Financial Counselling Australia. AIST were here to brief First Nations caucus members on the Indigenous Super Summit 2019, which was held in August. They also came to brief us on the Indigenous Big Super Day Out, held recently in Arnhem Land. The obstacles First Nations people face, particularly in remote communities, to accessing their superannuation and insurance and accessing the superannuation and insurance of a deceased relative are also a clear concern for these communities. People are missing out on the savings that are rightly theirs, due to identification issues—changes in phone numbers and addresses, name changes; it is very hard. It may sound like it shouldn't be hard, but think about the fact that just in the Northern Territory alone we have over 100 Aboriginal languages. We also have people whose identification is through an English name as well as their language name. Take my name, for example: Malarndirri Barbara Anne McCarthy. Malarndirri is an issue for some of the superannuation funds. Why would it be an issue? It is clearly something that many First Nations people struggle with in trying to communicate identification, whether it's with the super funds or even with the Australian Taxation Office and through the myGov system. These are issues that this Senate needs to be acutely aware of and the government needs to be aware of going forward. People are missing out on the savings that are rightly theirs due to these identification issues.

AIST were recently in Arnhem Land for the Big Super Day out. These outreach days are organised by the First Nations Foundation, a terrific organisation connecting Indigenous Australians with lost super. They bring reps from AIST, DHS and ATO to hold outreach days in these communities, and I commend them for that work. The need, though, is absolutely huge, and I don't think the Australian parliament actually appreciates just how huge that need is out there.

In north-east Arnhem Land, they spoke to 400 people in four communities—Milingimbi, Gapuwiyak, Galiwin'ku and Ramingining—and they had to turn other people away, mostly due to the wait times on the phones. Some of these are just logistical matters. First Nations Foundation have already reconnected $24 million in superannuation to First Nations people. Imagine what those families could do, had they known earlier of what they could access in terms of super, for those people already living lives in disability, in poverty, on renal dialysis and needing to be able to access this. They have not been able to access it until recently.

With this Big Super Day Out, they have helped 1,636 people across 21 communities in Australia. These organisations on the front line are seeing the impact that the confusion around super is having in our communities. They told us of family members trying to access the superannuation and insurance of deceased loved ones. A woman was trying to access her husband's super. He died just weeks earlier. Their marriage was described as a cultural marriage in some of the communities and the different language groups, yet they had to prove their relationship, or the wife certainly did, over the phone when trying to access his super. This is just one example of the cultural significance in making sure that there is greater awareness and interpretation with the different languages. As I said earlier, there are over 100 Aboriginal languages just in the Northern Territory alone. AIST was able to act as a third party on the phone to the superannuation fund to track down the lost super but this is not something that can always happen. They are not there in communities all the time and the financial counsellors who are there are not recognised as a third party, so the system is quite confusing and the barriers are enormously high.

At the Indigenous super summit, delegates agreed to an action plan. Firstly, standardise the AUSTRAC Aboriginal and Torres Strait Islander customer identification and binding death nomination forms. This would mean that every superannuation company would have the same forms. Think of all the different super companies there and the different forms just for those two areas—identification and the binding death nomination form. Secondly, allow financial counsellors to act as third-party representatives for members and funds, and use the financial counsellor register to give them confidence that a counsellor is a registered third party. Thirdly, partner with financial counsellors on the implementation of new processes. And, finally, as part of the action plan, work towards building an industry code of conduct. These are things which will make superannuation easier at a community level.

I will now go to members in high-risk industries. Labor has concerns about the unintended consequences of this bill for members in high-risk occupations. Industry Super Australia advised that 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, 50 per cent of worker fatalities occurred within the transport, postal and warehousing, and agriculture, forestry and fishing industries. We're most definitely keen to ensure that younger workers are protected from erosion of their superannuation balance at the same time as ensuring these workers in these industries have cover. 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 really not a reasonable step. Again, this will greatly impact on First Nations Australians, who are already facing impediments to accessing super and insurance. Construction is definitely the fastest growing employer of First Nations people in the country. Workers and their families may be faced with devastating hardship if they're unable to access life insurance in the face of a calamity. Workers who put their life on the line deserve access to affordable insurance that will protect their loved ones in cases of need.

I go to some of the concerns Labor has about the time line of this bill. The time proposed—less than two months from passage to implementation—will leave thousands of Australians stuck on a phone waiting for their super funds to respond. Let me tell you, in places like Arnhem Land, the Kimberley and Cape York that puts extraordinary pressure on families, especially when they don't have the direct access that many places in southern Australia do. Industry Super Australia, on behalf of industry super funds, provided evidence of the impact. It 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.

That's the advice the industry super funds are giving. The government has rushed this bill through without adequate time to consider these questions. We certainly needed to have the opportunity, with a Senate inquiry, to enable people to speak directly to senators about the issues that I have raised in my speech and the issues my colleagues have raised in previous speeches in this debate. We want to support the objectives of the bill, and we will propose amendments to protect workers in high-risk industries and to allow a reasonable, but not excessive, amount of time for superannuation funds to implement these changes. I urge the Senate—I urge the government—to consider the concerns that we are raising. These are sensible amendments and we certainly ask the government to support them.

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

I want to make some comments about the detail of the proposed legislation, the Treasury Laws Amendment (Putting Members' Interests First) Bill 2019, and the challenges that will be faced with the implementation of it. I say at the outset there are some matters of principle involved here which ought to be front of mind for senators and front of mind for members of the community who are considering this legislation. Industry superannuation is an achievement of the Labor movement that has made a very great difference to the lives of many millions of Australians. It was hard won. It was fought for in the 1970s, 1980s and 1990s with, in many cases, industrial action, detailed work with government and leadership from Australians who have made a very great contribution to the nation's future and our national savings. People like Hawke, Keating and Bill Kelty are rightly lauded publicly for the contribution they made. It was not a popular view at the time amongst employers or amongst those opposite. People over there tend to take credit for the development of the superannuation system as if they were supporters of it all along. They were not. But there were many other Australians who were involved in the building of the superannuation system—people such as Laurie Carmichael, Tom McDonald, Jenny George and Bill Mansfield. These people made an extraordinary contribution, over decades, of industrial and political leadership. With a sense of the long-term interests of workers and families, and of the nation, they delivered a system that is unequalled across the Western world.

The other contribution that is not often considered in the debate is the many thousands of people who, over the ensuing period, have worked hard in the industry superannuation system. The staff who worked for these organisations—the leadership of these organisations; the union officials and nominees; the employer representatives and employer nominees; and the independent representatives—who sit on these boards, have actually built a system that has integrity and decency, and delivers certainty in terms of retirement income for many, many millions of Australians and their families.

It seems to me that what's underlying this debate—it's important for senators to appreciate—is that, while there are issues of detail and there are ideological buzzwords attached to some of this, issues like choice and some of the framework that's been adopted by the government are really a proxy for a war on industry superannuation. It's because they hate the achievement that was made by the labour movement and by millions of Australian workers. They can't bring themselves to accept that it's now a mainstream, crucial condition for a future retirement strategy for millions of people.

Two objectives that we're dealing with here in superannuation are, firstly, retirement incomes and, secondly, the capacity of the superannuation system to use its scale to deliver low-price, effective insurance products for Australian workers and their families. I just don't buy for a second the student-politics obsession that underlines the drive to wreck the superannuation system that's coming from senators opposite, who will never have to worry about their own retirement incomes and who will never be in a position where they need a superannuation system that's got scale and support across the Australian economy.

The bill seeks to amend the Superannuation Industry (Supervision) Act 1993 and the Superannuation (Unclaimed Money and Lost Members) Act 1999 to improve the default insurance arrangements for superannuation. It aims, it claims, to protect the superannuation savings of younger members and members with low-balance funds from being eroded by insurance premiums. It does this by removing the default life insurance option for these accounts.

Labor support this aim. However, we believe that the bill requires some amendment in order to be able to properly achieve those objectives without what we see at this stage as unintended consequences, although unintended consequences does presuppose that the actual intent of the senators opposite is benign and actually supportive of the future operation of an effective, decent superannuation system. I suspect that what they're actually about is their mates in the retail super system. They're opposed to the existence and the effectiveness of the industry superannuation system, and they will do whatever they can in this place and in the other chamber to undermine those objectives.

When this bill was introduced into the Senate in early July, the Senate referred it to a committee inquiry with a reporting date of mid-October. Stakeholders and experts had suggested that there were implementation issues and potential unintended consequences arising from the quite technical amendments proposed in the legislation. The long reporting timetable would have given the committee the time to engage deeply with these issues, to hear from those affected by the bill and to actually take evidence from experts.

Instead, the government-chaired and government-controlled committee decided to set a closing date for submissions of 15 July; just 11 days after the bill was referred. Just imagine: a trillion-dollar superannuation system, major changes that affect the operation and governance of the system, and the answer of the characters opposite is 11 days for the industry to consider the impact of the legislation. You would only do that if you didn't care. You would only do that if your real objective was creating as much chaos in the system as was possible. It was an incredibly tight time line for submitters, and I think that was—

Cory Bernardi (SA, Australian Conservatives) | Link to this | Hansard source

Senator Ayres, you will have to be in continuation.