Tuesday, 16 June 2020
Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019; Second Reading
I rise on behalf of the opposition to speak to the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019. Labor governments established universal compulsory superannuation, creating a world-class retirement income system for Australia. There is now over $2.5 trillion in our national savings pool, a direct consequence of the success of this system. The system gives working Australians the opportunity to maintain their living standards in retirement. It takes pressure off pension payments and, critical to remember at this time, the national savings pool is an incredibly important source of financial stability. It was an important factor in ensuring that Australia's banking system was well capitalised through the global financial crisis and now, again, the nation's industry superannuation funds are ready to deploy more than $28 billion to worthy infrastructure and property projects as the economy starts to emerge from the COVID-19 lockdown.
You wouldn't know it from the behaviour of the government; their continued petty ideological attacks on the system continue unabated despite the evidence of the significance of the system at this critical economic time for Australia. Unlike the coalition, Labor is unequivocally committed to the success of Australia superannuation system and to supporting changes that will make it stronger and fairer. As presented to the Senate, this bill does not yet meet that test. This is a bill with a long history. The government has been attempting to make these changes for a long time, but the changes are still no more appealing than they were five years ago. This is a measure that was first announced on 20 October 2015 in the government's response to the Financial System Inquiry. The bill reintroduces amendments to the act that were previously introduced in the last parliament, in 2017. That bill, the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill, was not brought on for debate in the Senate prior to the 2019 election.
The bill before us today amends the Superannuation Guarantee (Administration) Act 1992 to require that employees under workplace determinations or enterprise agreements have an opportunity to choose the superannuation fund for their compulsory employer contributions. The measure applies to new workplace determinations or enterprise agreements made on or after 1 July 2020. I understand that the government considered and rejected applying these same provisions retrospectively on the grounds that such a change would go too far. Well, Labor says that the changes in this bill still go too far.
In part, our position is a response to the evidence that was placed before the Senate Economics Legislation Committee when the bill was referred to that committee for inquiry and report in November 2019. The committee finished its work and reported in March this year. Most of the evidence focused on whether the bill had a positive or negative impact on members by allowing individual choice of superannuation fund. In general, unsurprisingly, submitters supported the broad principle of choice. However, the submissions raised important questions about the practical effects of the legislation on choice and on the overall effectiveness of the system.
At the start of any policy process it's important to ask the question: what problem are we trying to solve? Unfortunately, that basic impulse is not reflected in much of the legislation that is brought before this chamber by the government when it comes to superannuation. Once you've asked that question, it's always good to actually try and clearly define the problem. But in the case of the legislation before us, as with so many previous interventions by this ideological government, it is not exactly clear what problem the government is trying to solve. Industry SuperFunds brought it to the committee's attention that most workers do in fact currently have a choice of fund, citing its 2017 analysis of a sample of enterprise agreements ratified by the Fair Work Commission. They found that 82 per cent of all employees covered by agreements had no restriction on choice of fund and that only 1.9 per cent of the workforce had some form of restriction. The government is yet to clearly explain how changing this system will materially improve the results for individual members or the system overall.
A further issue concerns the way in which workers make choices about their interests within workplaces. The McKell Institute made the argument that, if passed, the bill would effectively inhibit one form of choice—collective or group choice—in favour of another—individual choice—without clear evidence that the latter is more effective in driving better outcomes. The McKell Institute also argued that it would put more Australians at risk of ending up in an underperforming fund and would limit mechanisms for ensuring ongoing accountability of and improved performance by superannuation funds. They're reflecting on the practical experience, which is that the industry superannuation funds have performed very strongly over the history of superannuation. In this regard, collective choice in the real world has been connected to positive performance. It's a reality the government doesn't like to acknowledge because of their highly ideological approach, which prioritises their hostility to worker representation on boards over the empirical evidence about performance. But I don't think they should ignore it in this case.
The Australian Council of Trade Unions also opposes the bill on similar grounds. In the committee process, it argued that the bill is an attack on workers' rights to collectively bargain for a superannuation fund in their interests and it abolishes the ability of workers and their employers to agree to specific benefits only available with single-fund workplaces. Industry SuperFunds also argued for the role of the Fair Work Commission in the system to ensure the quality and appropriateness of funds that receive superannuation contributions on behalf of employees who do not exercise an individual choice.
Labor's dissenting report to the committee's report affirmed our broad commitment to principles around choice, and it made two substantive recommendations for amendments, along with a third recommendation concerning the bill as a whole. The first of these relates to the issue of defined benefit superannuation schemes, and that recommendation arises most directly from the evidence presented by UniSuper. UniSuper believes it is one of the only open private-sector defined benefit funds. Certainly, I'm not aware of any other. Their scheme is essentially entirely dependent on maintaining a very broad take-up across multiple employers within a sector that is defined by relatively high levels of continuity of employment for staff. These circumstances are relatively unique to employees in higher education. In the world of academic research and teaching, these staff frequently spend a career transferring between institutions, undertaking broadly similar roles and experiencing broadly similar working conditions. That membership profile gives UniSuper the stability that allows them to actuarially underwrite a defined benefit scheme.
There is no government or employer guarantee to provide protection for members, so the effect of this bill is to move arrangements for new employees from opt-out to opt-in. This presents particular risks to UniSuper's product. UniSuper described the risk as being grounded in the impact on the salary growth profile of new members and the way in which skewing the average age of new defined benefit scheme members may occur. That in turn could jeopardise their ability to provide the product. As a consequence, Labor has recommended—in the committee process and as proposed amendments here—that the current exemption from choice-of-fund requirements for existing defined benefit members continue and that an exemption for those who are newly eligible to become defined benefit members be provided for in the legislation.
The second recommendation contained in Labor's dissenting report goes to the heart of the topic of the bill: choice. Our amendment is about ensuring that workers retain the choice to bargain for a single fund or bargain for a set of funds where it is determined by the Fair Work Commission that it is in their interests to do so. This is about protecting workers and the rights of workers to collectively determine what is in their best interests. The amendments drafted in response to this recommendation will ensure that, if an enterprise agreement includes a restriction on the choice of superannuation fund or funds available to employees, the Fair Work Commission must be satisfied that the restriction is in the interests of the employees who will be covered by the agreement. This enables consideration of the factors that are essential to the proper functioning of our superannuation system and the protection of workers and members, including safeguards against underpayment and features of proposed default superannuation funds, including matters such as insurance. The final recommendation in the dissenting report is that the bill be passed subject to Labor's proposed amendments. That remains our position.
At the beginning of my contribution, I spoke about Labor's proud history of building the modern system of superannuation in Australia. This is not a history that we share with many of those opposite. For decades now, the coalition, in opposition and in government, has worked to undermine and dismantle a system that has helped bring security and dignity to Australians in retirement. It has reduced the burden on the social security system and supported our national prosperity. Prior to the reforms of the Hawke and Keating governments, superannuation was not something that was widely enjoyed across the community. It was reserved for those who were privileged by their circumstances, usually only highly paid white-collar workers. Very few women were included in the superannuation system. Our reforms changed all this. They opened up superannuation to many more people, and they also opened up the capacity for this sector to invest. Yet those opposite consistently seek to oppose and undermine this system.
On this occasion, Labor is suggesting sensible amendments to address the real-world challenges presented to the committee during our deliberations. With the support of the Senate, these amendments can substantially improve the legislation. Without them, the only option is to oppose the bill.
I start this contribution on the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019 by reflecting upon the last contribution. There are a lot of smart people in this parliament, including, occasionally, across the aisle, but this is one of the places where the Labor Party has absolute decay of the brain. Some suggestions have been made here around reducing public costs—the super system costs so much more than it saves. I'm not sure how you can even begin to pretend that it is a net save to the government. In fact, the last Intergenerational report said that super would effectively not really make any difference to pension reliance, ever. Seventy per cent of people are taking a pension today, and that will be the same in 2050. So there's a lot of mythology in this space, and I'm not sure being lectured about being 'ideological' carries much weight. Coming in here and reciting what the unions say and what the industry super funds say and what McKell says—they're all the same people and they're all effectively benefiting from this scheme, which has enriched their organisations.
The main point here about super is that it is a very good idea. The idea that, over the long run, people take more responsibility in having savings to rely on in retirement and to improve their standard of living—something which is universal—is a great idea. The problem with the scheme is that it is being run to benefit the vested interests and it doesn't actually work. In terms of any reasonable judgement you could make here, is it going to reduce the burden on the public purse going forward? No. In this year alone, the scheme cost $36 billion. The last time the industry said, 'We're going to put a number on how much we're saving,' they said it would save $9 billion. So you're $25 billion out, noting that's an imprecise comparison. But the idea is good; the execution has been so poor. And why wouldn't we be surprised? When you go back and look at the history of this scheme, it was designed by the unions for unions. Peter Walsh, who was a Labor finance minister, said, 'This scheme will be a pot of gold for the unions, who'll get their feet into funds management.' That is exactly what it's done. It has been a significant failure so far.
The enterprise agreement is a place where the decay is really on show. Effectively, the way this works is that big business and big unions get into bed together and say, 'Okay, we're going to take away the workers' rights to choose their own fund.' If you go back to the middle years of the Howard government, when super fund choice was passed by the Senate after protracted negotiations, I think it was the then Assistant Treasurer, Mal Brough, who said, 'This is a deal that will give all working Australians the choice of fund.' The problem is: we're back here again, 15 years later, talking about the same issue. You know why? That bill had a loophole in it, which has been ruthlessly exploited by big business and big unions.
One of the things I did before I came into this place was work for the Business Council of Australia, and that gave me a fair proximity to big business. This is not about saying all the union guys are bad and the big-business people are great. This is a deal where big business and big unions get into bed together to rort workers. Mr Shorten was good at this on penalty rates, but taking away workers' rights to choose their own fund can only be for a devious purpose. Why on earth would we, in 2020, say you're not allowed to choose your own super fund? It is just bizarre. The fact that the Labor Party would defend this anachronism shows the huge decay on show here.
I'm sure that if most Labor members and senators looked at this on its merits, without the vested interests polluting their policy discussions, they would say, 'Of course we want to give every Australian the right to choose their own super fund; we want to allow them to determine their own destiny.' The way this works is that the big businesses and big unions get into bed together. They do these secret deals, and all of a sudden you find that workers have no ability to choose their own super fund.
The government passes a law and says: 'You, the workers of Australia, must save 10 per cent of your wages in a super fund. Most of you can choose your own fund, except for people that are covered by enterprise agreements, which steal your right to choose your own fund.' I mentioned this was an anachronism, but I have three agreements from 2020: one for the Warrnambool bus and roadways company, one for the Super Benefits Administration company and one for Smart Metering Services. All these examples have stolen these workers' rights to choose their own funds. The Warrnambool bus EBA says TWUSUPER and AustralianSuper are the only funds permissible. The Super Benefits Administration company says that First Super is the only fund you can go to. That's a CFMEU fund. This other one, Smart Metering Services, says Energy Super is the only fund these workers are legally allowed to contribute to. They can't choose any other fund; it is not possible. You've got to ask yourself why. Why would these organisations, the IR club, be trying to steal workers' rights to choose their own super fund? After all, it is their money.
We on this side are suspicious of the reason. There have been several independent inquiries into this issue. This is not some ideological journey. The royal commission into trade unions, the Murray financial inquiry and even the Senate inquiries have said there is no basis for workers to be banned from choosing their own fund. Worse, there is no basis for people to have their super fund choices stolen. You have to ask why.
There have been, helpfully, some whistleblowers who've come out and tried to choose their own funds. There's a fellow called Paul Bracegirdle, a Toll truck driver. He wanted to choose his own super fund. He didn't want to be with the TWUSUPER fund. He told the royal commission that he was legally denied the choice and told by the union official: 'Fuck off; no-one cares, Paul. Go away.'
Okay, I withdraw. 'Go away,' he was told. So there you go. He wasn't able to pursue that any further. Another fellow, Luke Zhou, who is a UniSuper member, said that due to provisions in the University of New South Wales enterprise agreement:
… casual staff employed by the university are unable to exercise choice of fund, being compelled to contribute into UniSuper. This is highly detrimental to my peers, as they are often confused as to why they are defaulted in two superannuation funds, which automatically deduct two sets of fees and insurance premiums.
Mr Zhou and Mr Bracegirdle are rare beasts; they are whistleblowers and they have sought to try to break the monopoly on these ridiculous anti-choice provisions, but they haven't really had any success, because the IR system has been against them for—it is now effectively 30 years that we've had this system. This is now an opportunity to right these wrongs.
The returns in a lot of these funds, which are compulsory for workers, have often been far less good than those of some of the more widely used funds. The TWU super fund, which has been ruthlessly put into these enterprise agreements, as we saw in the case of Toll and Mr Bracegirdle, has returned far less than the average industry super fund, like AustralianSuper. You've got to ask yourself why they are trying to stop people from choosing their own funds.
The payments to the unions from these large industry super funds are significant. TWUSUPER has paid TWU $8.6 million over the last 10 years and the Cbus fund has paid $14 million to the CFMEU over the last 10 years. These are some very significant contributions. The super funds are on track to pay $31 million a year by 2030 to the unions, which is an extraordinary sum of money. You've got to come to the conclusion that this is all about money, power and patronage. It can't be about anything else, because if unions are there for workers and the super funds are there for workers, then why aren't they letting them choose their own fund? So, it has to be about the cash—it has to be.
The Labor Party's positions on this has been absolute intellectual rust-bucket stuff. Andrew Leigh, who is one of the shadow Treasury spokespersons, has said:
… Labor will reserve our position on these proposed choice of fund changes until the Senate committee has reported.
The Senate committee has reported and the Labor senators said in their report:
Superannuation remains an evolving industry, and Labor Senators believe that careful consideration should be given to how opening up choice of fund might preclude other innovative product offerings if the risk pooling of membership cannot be achieved.
So, we're going to have less competition and then we are going to have more innovation! That sound great, doesn't it? The Soviet Union is back in business and they are writing the economic policies of the Labor Party.
In fact, if only it were a fair comparison. The fact is that this is all about money and ideology. We come in here and listen to these absurd contributions from the other side, saying that we are being ideological. We just want to give people their choices. We want to let people choose their own fund. It's 2020 and the whole idea of being able to choose a consumer product has been well and truly made. Across the board, our government is prosecuting openness and competition, open banking, open energy, open telecommunications. We want people to choose to get a better deal, because that is the way that the market needs to go. We don't think that people have been getting a great deal from their super funds. We've had the same view about banking, about telcos and about energy. We are moving into open super, open banking, open telcos. The idea that a product like super, which is compulsory, would be a product where people have their choice of fund rights stolen by big unions and big businesses working in the shadows is absolutely absurd.
People don't understand super very well. It is an opaque and darkened industry. It is worked on the basis that people don't have the time or the energy to understand all its intricacies. That is a real sickness, when you think about the amount of money at stake here. Yes, we spend $36 billion a year in forgone tax revenue. This system costs a bomb and it gets basically no-one off the pension. Perhaps the most insidious numbers are the fees charged—$32 billion a year in fees. People in this country spend more on super fees than they do on power bills. It is just ridiculous.
I just want to conclude on this point. If only people understood super better, then I don't think Labor would be arguing against people choosing. I think they're using the cover of people not really engaging with super to argue this ridiculous position that, for some reason, people should not be allowed to choose their own fund. I urge the Labor Party to reconsider their ridiculous and unsustainable position on this issue. I want to finish on the example of John Berger, the TWU fellow. He went before the royal commission, and it was put to him that he had charged the TWUSUPER fund 50 per cent of his $190,000 salary for five days of consulting. He was questioned about this by the commission, and he said, 'Well, that's the maths.' That is $93,000 for five days work. So this is a great scheme if you can get into it. Labor are running a racket for their mates and the unions so they can charge high fees, they can lock in the workers and they can rort the system and pay people like Mr Berger 93 grand for five days work. It is just ridiculous.
One of the things that our government is trying to do is to encourage all parties to work in the national interest, which is why we've invited the ACTU to come to the table and look at some of the intractable changes in the industrial system. I urge the Labor Party to look at this in the same spirit that we are looking to engage the ACTU in it. If you look beyond your own narrow self-interest and the interests of McKell, the unions and industry super—all the people that Senator McAllister mentioned before—and you look at the national interest, you will see very clearly that there is no possible reason for you to deny the workers of Australia their own choices. There is no possible basis for that, so I commend this bill to the House.
That was yet another highly ideological contribution from the antisuperannuation ideologue himself, Senator Bragg. It's interesting to watch how some of the newer senators in this chamber seek to make their mark in the chamber and in wider debate. At one end of the spectrum, you have Senator Stoker out there making appalling comments likening the Queensland Premier's actions to the death of George Floyd. At the other end of the spectrum, you've got Senator Bragg out there waging his ideological war on superannuation. It seems that, with every year and every intake of senators in this chamber, the drift of the Liberal Party to the right just continues on so many fronts. We have seen it again from Senator Bragg now, and shortly I will mention some of the other contributions, if you can call them that, from Liberal Party senators on the debate regarding superannuation.
Superannuation is a great Australian achievement. It is a great Labor achievement. From the very beginning Labor has pushed for superannuation, with the sole purpose of giving working Australians a dignified retirement. In contrast, from the very beginning we have seen the Liberal Party and the National Party fight tooth and nail to stop superannuation, to whittle it away and to abolish it. There can be no other reason for them wanting to continue that ideological war than that they want to deny working Australians the dignified retirement that many people who are wealthier in our community get to enjoy. Well, I don't support that and nor does anyone on the Labor side. We believe that, no matter what your circumstances in life, you are entitled to a dignified retirement, and superannuation has become a core way of guaranteeing that all Australians, no matter what walk of life they are from, get that dignified retirement that they are entitled to.
A dignified retirement should not be the sole preserve of people who live in Potts Point or Mosman or some of the wealthier suburbs of our capital cities. A dignified retirement should be the entitlement of every single Australian, whether you live in the inner city of a capital city, whether you live in the outer suburbs or whether you live in our regions. No matter who you are, no matter what work you do, no matter what circumstances you come from, you should be able to enjoy a dignified retirement, and that's why Labor will always stand for superannuation and why we will always stand against the ideological attacks of people like Senator Bragg as they seek to undermine superannuation and as they seek to undermine Australians' entitlement to a dignified retirement.
I am supportive of the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019 and Labor is supportive of the bill. It will bring forward the rule for non-concessional superannuation contributions and allow those aged 65 and 66 to make up three years of non-concessional superannuation contributions, rather than stopping at age 64, which is inconsistent with the pension age.
Labor has a very proud track record when it comes to superannuation. As I said, Labor delivered superannuation and we will always support and fight for policy that enables Australian workers to have a stronger superannuation balance and to have security and dignity in their retirement. In contrast, those opposite have shown they hold no respect for our superannuation system and have repeatedly attempted to undermine it. As I said, they opposed it at the beginning, they have opposed increases to it, and they have sought every possible measure to try and undermine it and take it away from people. The net result of that is only the wealthy in our community get a dignified retirement and that is something that we're not about whatsoever on this side of the chamber.
Let's refresh peoples' memories about some of the other things that Liberal senators have said about superannuation just in recent times. In July last year, in his first attempt to make a name for himself in this chamber, Senator Bragg, in his first speech, made the point that superannuation should be voluntary and that by doing so it would save the government money.
Senator Canavan interjecting—
I think I just heard Senator Canavan yell out 'Hear, hear! ' So it seems that even people who claim to respect people from Rockhampton think that superannuation should be voluntary as well. Senator Canavan, I can tell you that any of the people I've met in the manufacturing sheds in Rockhampton, who you pretend to represent, don't want to see their superannuation made voluntary. They want to see their superannuation increased, not taken away, not made voluntary. That's just Senator Canavan, who likes to dress up as a worker but comes down here and rips workers' entitlements away from them.
Senator Bragg said making superannuation voluntary would save the government money. That tells you all you need to know about Senator Bragg's priorities and the priorities of the Liberal Party, aided and abetted by Senator Canavan and the National Party. They are clearly more worried about the bottom line of the Australian budget and pennies and cents than about the retirement savings of millions of Australians. We say, on this side of the chamber, we are for working Australians. We don't have to dress up in outfits like Senator Canavan does and try and pretend that we never worked for the Productivity Commission with a big free market ideology. We don't need to disown our past. We know that from day one we have always been for superannuation. We don't need to put out silly memes that pretend we look like a manufacturing worker because we act in the interests of manufacturing workers by making sure they have fair pay and conditions while they are in the workforce and by making sure they get the dignified retirement they're entitled to through superannuation.
Senator Bragg, along with other coalition MPs, Mr Tim Wilson, Mr Craig Kelly, Mr Jason Falinski and Mr Andrew Hastie and our old friends in this chamber Queensland Liberal senators Amanda Stoker and Gerard Rennick, have also argued against increasing compulsory employer superannuation contributions from 9.5 per cent to 12 per cent between 2021 and 2025. The spurious argument they put up was this would somehow reduce wage increases that Australian workers need. It's the first time I have ever heard anyone on the coalition side of the chamber actually care whatsoever about wage rises for Australian workers. Every time we see a minimum wage case before the Fair Work Commission, what do we see? We see the Liberal Party and National Party come out with their allies in big business and say why pay rises can't be granted to working people. But all of a sudden, when it comes to superannuation, they say they care about pay rises. Need I remind government senators that over the entire period that this government has been in office, under their stewardship, we have seen wage rises in this country stagnate. We have seen the lowest wage rises that this country has ever seen. So don't try and come in here and pretend that increasing peoples' superannuation is going to take away their wage rises; you're already doing it. This government is already presiding over the lowest wage rises that this country has ever seen.
What is it about Australians retiring with more money in their bank accounts that the Liberals and Nationals don't like? It only gets worse from here. In November last year, Queensland Liberal senator Gerard Rennick described superannuation as a 'cancer'. Do you have to take some sort of—
Senator Bragg interjecting—
It's not funny, Senator Bragg. You and I both know people who are dying of cancer, so to liken superannuation to a cancer is yet another grossly insensitive remark from Queensland Liberal senators in this chamber.
Senator Rennick accused his own side of politics of having sold out on personal responsibility by allowing superannuation to continue. In February this year—I think this occurred on one of the Sky News interviews that I do miss, Senator Rennick; they are my amusement and shock for the week—Senator Rennick reasoned in an interview that Australia had survived 200 years without super, assuming for a moment that Australia has only survived for 200 years, and that's why we didn't need to worry about making superannuation compulsory right now. What absolute garbage, what absolute rot from Senator Rennick! To that I say we survived nearly 200 years without Medicare. We survived over 200 years of white occupation of this country without paid parental leave. Do you think we'd actually want to get rid of those kinds of things as well? We survived without the NDIS. We survived without iPhones, but they're kind of handy to have in life these days, just as superannuation is kind of handy if you want to have a dignified retirement. So if it's good enough to get rid of superannuation because we apparently survived 200 years without it, does that mean that the coalition also wants to get rid of Medicare, get rid of the NDIS, get rid of paid parental leave and get rid of all sorts of other benefits that Labor governments have brought into this country to ensure that working people, the kind of people that Senator Canavan dresses up to try and pretend he cares about, get a decent standard living? I don't think that the government is going to get rid of any of those things, and nor should it get rid of superannuation in the way that so many of its extreme right senators seem to be committed to doing.
Even more recently, during the terrible COVID outbreak, we have seen again this government make decisions and interfere with people's retirement savings in a way that will make the possibility of their having a dignified retirement that much harder. We've seen the government allow superannuation to be used as an alternative to the government's actually doing its job and making sure that working Australians and people who've lost their jobs have the support that they need to survive the COVID-19 pandemic. In addition, we've seen government action which has opened the door to people having their superannuation accounts defrauded by criminals. Thanks very much yet again! That's how much you care about working people. Instead of providing the support that people require, you set up a scheme and do it in a way that allows criminals to get in there and defraud people of their retirement savings.
From 20 April this year, this government allowed Australians who were suffering as a result of the COVID-19 pandemic to apply for early access to their superannuation. This scheme would allow people to access up to $20,000 over two years. So far already over two million Australians have accessed this scheme, with over $13 billion in personal retirement savings having been withdrawn. I want to make clear that I make absolutely no judgement whatsoever on the individual Australians who have made the decision to access their superannuation early, but I do make a judgement on this government for forcing Australians into the position where they had so little support from this government that they were left with no choice but to go and raid their own retirement savings. I've forgotten the exact number, but there are many, many superannuation accounts which have actually been emptied, so people now have no retirement savings whatsoever, because they were forced into the position of having to access their superannuation early because this government refused to provide the support that those people needed.
We've gone on a lot in this chamber about the fact that the government excluded well over a million short-term casuals, they excluded dnata workers, they excluded university workers, they excluded arts and entertainment workers and they excluded migrant workers. They excluded all sorts of categories of working people from receiving the JobKeeper payment. These sorts of decisions have a consequence, and one of the consequences is that people are left with no choice but to access their superannuation savings early, meaning that they have very few funds for their retirement. To the bean counters on the other side, who are more obsessed with government budgets than about actually looking after their fellow Australians: you might want to think about the fact that that might have some impact on the age pension down the track. If all of a sudden you are going to have all sorts of Australians without sufficient retirement savings, because they have been forced to access their savings early, what do you think they're going to need when it comes to retirement? They're going to require the age pension. Well done! More economic illiteracy from this government that says it has economic credibility. Let's not even go into JobKeeper and the bungles with it that have consequences for Australians. It is an absolute disgrace that the figures that we received at the COVID committee hearing, as of 21 May, indicated that the government had paid out $8.1 billion in JobKeeper payments but, in contrast, Australians had had to access over $13 billion in their own superannuation funds. So, again, deliberate decisions of this government to exclude whole categories of workers from receiving the JobKeeper payment have meant the government has kept its JobKeeper bill down and actually transferred the cost of surviving, of putting food on the table, into the hands of Australians having to raid their superannuation funds early.
This is going to impact on people's retirement. It will increase the cost to the public in the longer term in the form of more age pensions, and that is a direct result of decisions this government has made which have, in the end, been directed by its ongoing ideological war to tear down our superannuation system, a system that is the envy of the world. So many other countries around the world just wish that they had had the sort of far-sighted Labor government that we had back in the eighties and nineties that introduced and enhanced superannuation to make sure that people had a dignified retirement. But that's not what the Liberals and Nationals want. They say they care about working people and about middle Australia, but every time they come down here they slip in more and more measures to try and take away people's superannuation rights, along with their pay and conditions. We've also learned through the COVID inquiry that there's been wide-scale fraud committed on the early superannuation scheme. I don't have time to go into that in detail, so that might have to wait for another day.
In conclusion, compulsory superannuation, created by Labor, is a national achievement which sits alongside Medicare and the NDIS. These are initiatives that have made our nation stronger and our society fairer. Too many Australians still retire without adequate retirement savings and are forced to rely on sometimes inadequate government pensions, which is why our superannuation system needs to be supported, strengthened and protected, not undermined. We will resist every attempt by the government to do so. (Time expired)
When I came into the chamber to make my contribution on the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019, I did a bit of a double take, because I thought I heard Senator Watt say that he is supportive, or that the Labor Party are supportive, of this bill. I thought, 'Well, that's news,' because we have been trying to provide more choice for Australians to determine how their own money is invested for basically five years now, and the Labor Party have fought tooth and nail for those five years against those workers' rights to choose where their money is invested. It's a pretty simple choice for people to have. It's their money. They've worked hard for it and accumulated it. They should have some choice, you would think, over where that money is invested. I thought, hearing Senator Watt, 'Well, maybe the Labor Party have seen the light and have realised five years later, after losing two elections since, that maybe, if they want to represent workers' rights, they might actually make some decisions in favour of workers and in favour of an individual worker's right to decide where their money is invested and goes; maybe they've had that epiphany.' But I find, after checking with the minister's office here, that apparently I'm completely wrong, Senator Watt was trying to pull the wool over all of our eyes. The Labor Party are not supportive of this bill, of workers' choice or of individuals being able to invest their money as they would like to do it. What they're really going to try do is amend the bill in the committee stage so it doesn't actually provide that choice. They can have a fig leaf of saying they support choice, but they're really going to try once again to deny workers their right to invest their own money and try to stymie this bill once again.
As I said, this has been a long road, trying for five years to provide something as simple as workers' choices. This bill came from recommendations that were made by the Financial System Inquiry way back in 2014. This was an inquiry that was established by the incoming coalition government when it was elected in 2013, a root-and-branch inquiry into the financial sector. I think it was the largest inquiry into the financial sector since the Campbell inquiry in the early 1980s, which presaged the financial sector reforms of that era. The Financial System Inquiry final report came back in late 2014, and it recommended that there be greater choice given to workers in where their super is invested, particularly where, currently, that choice might be taken away from them through an enterprise agreement. That recommendation by the Financial System Inquiry was supported by the government, hence this legislation.
Subsequent to the 2014 Financial System Inquiry final report, it was also supported by the Productivity Commission in their 2018 report. They also highlighted issues with an existing lack of choice among members in enterprise agreements and some practical things too; practical things that Senator Watt wouldn't realise because he never goes to a factory or a mine, or talks to real workers—and I'll come back to the Labor Party, what they really think and why they're really passionately against this bill. The practical thing of this is that a lot of people end up locked into multiple superannuation accounts because they don't have choice, because they're told through their employment contract where they will invest. An account is established for them without their choice and, if they happen to change jobs, if they happen to have a few jobs over their working life, they can end up with a variety of different superannuation accounts that they've had no choice over but are left with and anchored with through to their retirement.
The issue with that is that it's not just a complexity for them. The issue is that it often leads them to paying much, much more in fees to the financial industry than they would have otherwise if they'd just had a consolidated one or two, or only a few, accounts. By making workers accumulate multiple accounts, the winners here are the financial industry. They're the bankers. They're the people in the big buildings in Sydney that go up 40 or 50 flights of stairs—now they don't use lifts so much—to nice views of the city. They're the people who benefit from that complexity, not your average worker; not your average person just trying to earn a wage every week and put a little bit away each side for their retirement. They don't benefit from that complexity, the banking industry does. And by opposing these changes here today, the Labor Party show their true colours: that they're really on the side of the bankers, not the workers. That is the position of the Labor Party on this bill, because the people that benefit from a lack of choice for the workers are the financial industry who, through complexity, can charge more fees on more accounts and more bonuses for themselves every year when those fees accrue.
Surely we could agree on something as practical as that—as simple as that—that we should reduce complexity, help workers out and ensure that they don't get saddled with excessive and unnecessary fees through their working life. Surely we could all agree with that? But we can't, because the Labor Party cannot bring themselves to provide that choice, in part because they're supporting this big financial industry. But that wouldn't really give you the reason why they'd so passionately—and it was a passionate speech from Senator Watt before—fight against such complexity. Why would a once-proud workers party, the Labor Party, be passionately in favour of bankers and the banking industry? The reason is that they're part of that industry now; that's the reason. They're part of it. They used to fight against banks. They used to want to nationalise the banks. They used to hate the banks. They used to hate the financial industry. But now, the modern Labor Party is a sold-up subsidiary of the Australian financial industry. That's why they're passionately against it, because they're part of it.
They get board positions on superannuation funds; they get a little bit of a clip of the fees. We all know how the financial industry works: you just want a little bit of the crumbs. You just want to have lots of transactions. If you get a few of the crumbs that come off the table, you make a lot of money. The Labor Party are all part of that, sitting at the bottom of the table and eating those crumbs that come off the contributions that the average Australian worker makes. That's why Senator Watt and the Labor Party so passionately defend this industry, because they benefit from the industry. It is like mother's milk for the Labor Party. Superannuation fees, banking fees—the whole banking industry is mother's milk for the Labor Party, because they suck on that teat time and time again and it helps all their mates out. And we've seen how they look after their mates in the Labor Party.
If we put aside all the ideology about super—and we had this large speech from Senator Watt about the super system: how retirement savings are 'at risk', apparently, if we pass this legislation—all this legislation does is allow a worker, an individual worker, to say: 'Look, whatever my EBA says, whatever has been agreed between the trade union and the business, I'd like my funds to go somewhere else. I'd like to have a self-managed superannuation fund,' perhaps, or, 'I'd like to have a different wealth accumulation strategy.' That's all it does. But, apparently, according to the contribution from the other side, that puts at risk billions of dollars of retirement savings and the very future of Australians' retirement in old age. What a load of absolute tosh! How could you draw those conclusions from this bill? You just can't. They don't stand up to scrutiny. It is an excuse being put here for the Labor Party to provide that protection to this broader industry.
At the heart of that protection that the Labor Party is engaged in here is a complete lack of respect for an individual and his or her own choices. It's a lack of respect for an individual and the fruits of his or her own labour. That is the difference between the approach the coalition government is taking here, through this bill and to issues of superannuation more generally, and the stance of the modern Labor Party on these issues.
It does go to the heart of a philosophical difference, almost, between the two sides here. Generally speaking, when we talk about taxes and spending, and now people's savings, quite often we hear inherently in the contributions made by members of the Labor Party that they don't really believe that that money is other people's. They don't really believe that the taxes people pay come from their work. They don't really believe that the money we spend here, whether it's on JobKeeper or whether it's on the variety of other assistance packages we have provided through this crisis, is other people's money. They get confused and they start to believe that it's actually their money: 'Almost all money should stay with the government, and we will just give some of it back to you every now and again.' That's the fundamental difference between the Labor Party and us here in the Liberal and National parties; we believe that people have an inherent right to the money from the work that they do. We believe there should be an appropriate tax system to fund public services but that that should always be done with care and with the knowledge that we are managing other people's money, not ours.
When this crisis hit, when it became clear a few months ago that our economy would almost certainly enter recession—although that hasn't officially happened yet, it almost certainly will—and that people were going to come under great hardship, especially those sectors directly affected by this crisis, naturally we felt that people should have access to their own resources to help them respond to such a crisis. If you have accumulated and saved an amount of money through your super, and, rightly, you're trying to do your best to save for your retirement, and you're hit by an unexpected out-of-the-blue shock as we have been with coronavirus, you should have some ability to draw down those resources you have accumulated for that risk. That's exactly what you're doing for your retirement anyway; it's just more predictable than these other risks and eventualities that have occurred through the coronavirus crisis. What you're doing for your retirement is putting money aside for that time, because, as you know, at some stage you're not going to earn as much you do today. Putting that money aside for times when you don't have as many resources is not particularly different to what we've experienced here today; as I said, it's just more unexpected. What we've experienced in the last few months has been an unexpected income and wealth shock for many people. It makes absolute, abundant sense to allow people to draw down their own resources to help them in that situation. It's also fair.
I picked up from Senator Watt's contribution before that what he thinks should have happened is: 'Don't allow people to draw down their own resources; the government can just pay people. The government can just hand out money to people in those circumstances.' How fair would that be, though? If someone is sitting on hundreds of thousands, possibly millions, of dollars of superannuation in their account, why should the government—remember, it's other people's money; it's not the government's money—help bail that person out? Why shouldn't someone in that situation be allowed to first look at their own resources and how they can respond to such a situation before seeking assistance from others to do so? Keep in mind: we have provided that assistance. We do help and support those who can't and don't have their own resources to do so in the circumstances. But if you do have those resources it is actually fair to require that to occur first, and that's what has happened in this instance.
We've seen the popularity of this. We've seen that people do actually want to have control of their own money—surprise, surprise! A shocking finding, that people do have some inherent want and desire, when they're in bad circumstances, to say, 'I can draw down a bit of super right now and I might be able to catch it up later.' We trust people to be able to manage their affairs over time. They don't need to be led, and at times like this it's right and proper that we help them.
It's right and proper that we have a superannuation system that's actually designed for workers and their needs at an individual level, not the needs of the bankers in the modern-day Labor Party. They are full of bankers. There are not many workers in their ranks, but lots of people from the banking industry. They are tied to that industry now and that's why they're passionately opposing these changes, which would invest workers with choice, which would allow an individual to decide how their own money is invested and which would provide a little bit of scope for people to manage and control their own futures and affairs. That's why we passionately support these changes. They're simple commonsense changes that we'll keep trying to chip away at and, hopefully, eventually, this place—this Senate—will seek to invest individuals with their own choices and their own rights, not big corporations and banks.
I rise to speak about the government's Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019, in its current form.
False facts, lies and stooges for the banks. Here we are: in the middle of a global health pandemic; unemployment is up by six per cent and possibly on its way to 10 per cent; more than one in 10 workers are underemployed; and we have our first quarter of negative growth in nine years and the beginnings of our first recession in almost 30 years. The media thought the Prime Minister might be on the right track. He called for a new compact—a new accord with workers and employers. He asked for all parties to lay down their arms and proposed a dialogue between workers and employers on proposals to improve our industrial relations scheme. He proposed cooperation to foster prosperity and recovery for Australia.
But instead his government has continued an agenda of ideologically charged hand grenades thrown into the industrial relations landscape to blow away workers' and people's voices—working people's voices. The visions in this bill are wrapped up in the rhetoric of choice and may sound harmless enough. But they are just the latest attempts by the government, block by block, to undermine the most successful worker retirement scheme in the world. The establishment of award based superannuation by the Hawke government was one of the most profound and important economic reforms of the last 30 years. It created a new system for income for workers in retirement and reduced the pressure of an ageing population on the federal budget, all the while creating a huge new pool of capital available to be invested in Australian businesses and infrastructure. And it has never been so important as it is now.
Prior to the development of industry superannuation, most working people only had the pension to rely on. Up until the mid-1980s less than 40 per cent of the working population had superannuation. That figure was even less for blue-collar workers and women, at around 25 per cent. The introduction of the superannuation guarantee charge meant that for the first time many workers would be getting ongoing regular contributions for their retirement incomes. Since that time, industry super funds have become the leading providers of superannuation to Australian workers. More than five million Australians are members of industry super funds, with over $224 billion in funds under management.
Unlike the superannuation schemes run by the big banks and finance businesses, these funds are only to benefit members. They are governed by trustee boards specifically representing employees and employers, and do not pay sales commissions to financial planners. They have sound investment strategies, which include long-term investment in Australian infrastructure. Returns from industry super fund have consistently outperformed private sector funds over many years. Over the last 15 years, the average retail fund has delivered around $36,000 less to their members than the average industry super fund.
The creation of universal superannuation was a signature component of the wages and income accord between the millions of working people and the Commonwealth government. It represents the collective decision of workers to set aside a portion of their wage increases at the time to set up a better retirement for them and their children. And yet the coalition have a history of opposition to this landmark reform. From the Hansard, this is what the Hon. David Connolly, Liberal shadow minister, said when the superannuation guarantee charge was introduced in 1992:
… it is clear that there are no economic, financial or social justifications for the Government's proposals which, if implemented, would cause even higher unemployment, reduce real wages, add to inflation and do nothing to provide genuine retirement income for the majority of Australians.
Was he right? No, he wasn't, and of course he isn't—as they aren't right now. Instead the complete opposite has happened, and the performance of industry funds established at the time has been nothing short of spectacular.
The benefits for individuals and the community have been enormous. The genesis of award based super is critical in understanding why these provisions put forward by the government should be opposed in the current form. It is clear who is behind this attack, who sets the priorities for this government. It's the big banks, the big players in the financial advice industry, and their stooges on the Liberal backbench. It's not a first-order issue we should be debating as we recover from COVID-19. It is petty point-scoring against people coming together to collectively manage people's retirements better than the big banks ever could.
This debate is promoted by the government on the basis that it will give workers choice. The word 'choice' is bandied about by the government like it should end all discussion on this matter. Choice takes many forms in enterprise agreements. It is not an either-or proposition. Some enterprise agreements provide default funds for those who do not nominate one. That is not removing someone's choice. Other enterprise agreements, bargained for and voted on by working people, might limit choice only to select funds that cater to the special needs of that industry, such as insurance or different investment strategies. That is not removing choice.
It is also the question of choice for who. Is it the real choice for the workers or is it the imposed choice of the employer? Is it choice informed in a hypothetical world of perfect information, is it choice pushed onto people by predatory retail funds offering too-good-to-be-true returns and benefits, or is it choice when dodgy employers exercise their choice to force their employees into the fund of their bank's choice?
Research from the McKell Institute's submission to previous inquiries set out the real facts about the impact of choice through enterprise agreements. They inspected a random sample of 3,483 enterprise agreements from 2014 to 2019, as well as 144 awards which had clauses determining fund selection. They then tracked how many workers were being defaulted into poor funds. The results of their analysis was that, critically, employers, employees and unions who collectively bargained for a fund were most likely to select a high-performing fund, and the award process is the second most likely—that is, to be clear, when choice is made through enterprise agreements, more workers go into better-performing funds. That's the research. Those are the facts.
This is in contrast to the shoddy research the government is attempting to use to justify this bill. Documents obtained by my office through freedom of information have revealed the lengths that the government has gone to in order to build a case for the legislation. From the outset, the government intended to attack and slander industry funds with no justification. They provided no performance basis or rationale when selecting several funds for the Attorney-General's Department to investigate. The FOI documents confirm that their sample analysis was never intended as a representative sample but rather a select reading of enterprise agreements tied to the funds the government wanted to go after.
When the government leaked this report to the AFR for a story that appeared on 6 December last year, the department contacted the minister's office to clarify that their research could hardly be considered a report—that it was purely a layman's interpretation and they had not had confirmed at all by employers any of the details of the agreements they investigated. It was a layman's interpretation, they didn't talk with employers and they failed to confirm the details.
When the minister gave his second reading speech in the House he said:
At least 14,000 employees are forced to contribute to one of seven funds identified by Super Consumers Australia as the worst performing funds as a result of the restrictions.
Instead, we found that this is not quite correct. It is unclear when Super Consumers had named those seven funds. Indeed two of them, according to the government department, weren't low performers at all. What's more, Super Consumers went on to confirm in the same AFR article that that didn't consider one of them—TWUSUPER—to be a poorly performing fund at all. Then the minister's office ignored the advice of the department when it came to defining what constituted forced choice. They ignored the department's advice about the superannuation fund provisions in an agreement between the TWU and TNT from 2017 in order to justify that figure of 14,000. So why did the minister tell the House that 14,000 workers were trapped in these funds?
Instead of a policy of transparency, this government has attempted to slander industry super funds with accusations that do not hold up. They have twisted figures and ignored the department in order to inflate numbers to justify the bill. And they have chosen to pin this bill on research that even the department couldn't characterise as rigorous or as a report. For those on the crossbench who care about transparency, if this does not give you cause for concern I don't know what will.
Now, more than ever, we need to ensure we stick with a system that has served us so well. Collective choice agreements, which would be outlawed by this bill, can lead to positive outcomes. They are the result of unions and employers negotiating in good faith arrangements for the choice of funds available to workers. It helps to ensure genuine choice, not the development of a sales culture where bank employees are under pressure to meet targets to sell superannuation products. This collective choice-making is a legitimate and democratic form of choice. The whole workforce benefits and, therefore, you as an individual worker benefit.
Finally, we must consider the role of retail funds in the Australian superannuation industry. We know from the many years of evidence of financial returns that directing workers to retail funds will leave them poorer in retirement. The track record of the banks and the performance of retail funds must be put under the microscope. They are driving the debate and are the biggest beneficiaries of these proposed changes. In its regular rating of superannuation funds, SuperRatings ranked the top 25 super funds over the last decade for a balanced investment option. It does not include a single fund run by a major bank, insurer or master trust.
The banks, of course, have been shown to be incredibly self-interested and Australia has lost count of the number of scandals they've been caught in over the last two years. It is timely to remind the Senate of just some of the headlines describing the behaviour of the banks and for-profit financial institutions: 'CBA agrees it is the gold medallist at fees for no service'; 'Banking royal commission told 90 per cent of financial advisers ignored clients' best interest'; 'AMP executive says company put profits before the law'. That unconscionable behaviour of the banks should not be rewarded by caving into their demands on the issue covered in this legislation. The wolves are at the door and the government wants to kick the door and let them in rather than protect Australian workers and their retirement incomes. The big banks, through their behaviour, should not be allowed to continue to provide superannuation products to Australian consumers. They ripped off so many workers and they've been caught out by regulators too many times. It's time to end their second, third, fourth and fifth chances when it comes to super. It is time to end their involvement in this sector.
That was quite an entertaining speech from Senator Sheldon, but of course what comes around goes around, so I thought I'd do a bit of googling myself on industry funds, particularly an industry fund by the name of Hostplus. The banking royal commission heard that Hostplus spent $267,000 on entertainment for clients and staff and another $220,000 on accommodation in the year to June 2017. The fund also spent $260,000 on tickets to the Australian Open tennis, where Hostplus CEO David Elia said his wife and two children were among his guests. Another $40,000 was spent on football tickets at Melbourne's Etihad Stadium, with some of the sports related spending covered by the fund's marketing budget. I found that on a website known as The New Daily, which happens to be funded by industry super funds. You've got to ask yourself what industry super funds are doing in the media. Are they actually making money here? To me, this looks like a clear breach of the sole purpose test. The sole purpose test is all about making sure that money invested is for the benefit of the members, not for the benefit of the union funds or the Australian Labor Party.
The one thing we did hear in the previous speech is that there is a clear choice in this chamber. This side of the chamber is all about choice, and that side of the chamber is all about control. And that matters, because superannuation costs the Australian worker $35 billion a year in fees. I'm not going to be judgemental as to whether it's the banks or the industry funds—that's a lot of money. When you think that that also comes at a cost of $40 billion in tax concessions, that's a whopping $80 billion cost to the economy. Compare that to the pension, which covers the bottom 70 per cent of earners. That costs $50 billion a year and only $6 billion to run. How is it that the Department of Social Services can run the pension for $6 billion, yet in private industry, whether it's industry funds or banks, the cost is $35 billion? And that's just the start. Of that superannuation, $600 billion is actually invested offshore.
What's interesting about that is that, in 1990, Bob Hawke said the money raised by superannuation would be invested right here in Australia. Well, according to the latest numbers—and I should qualify that by saying that it's pre COVID—over 20 per cent of the money invested in superannuation is invested offshore. Imagine the number of jobs we could create here. Imagine the number of dams and the amount of high-speed rail we could build. But wait—that's not all. The number of people retiring with a mortgage has increased from 40 per cent to 70 per cent. The whole purpose of superannuation was so that people could live well in their retirement. But how can you live well in your retirement if you've got a mortgage? It's counterproductive. The other thing, of course—and we saw this in Greece and we're seeing this with the defined benefit schemes in the US now—is that it's actually a Ponzi scheme. I will explain why.
People like me, my generation, will be the first generation with 40 years of superannuation. When 2030, 2035 comes around, we'll be able to pull out 40 years in one hit. Do you know what that means? We're going to need another 40 people coming behind my generation; for every person that takes out 40 years worth of super, you're going to need 40 people putting in one year's worth of super—assuming that contributions and withdrawals are the same per person, and I realise they're not. Otherwise withdrawals are going to start exceeding contributions. Do you know what that will cause? It will cause a crash on the stock market. That was actually discussed with respect to COVID. They were jumping up and down about how, if we allowed young people to access super, it would cause stock market prices to fall. Well, wait until you get people from 1970 onwards with a full 40 years of superannuation savings ripping out that lump sum in superannuation.
I'm glad to speak on the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019 because at the end of the day it's important to give people choice. Personally, if it were left to me, I'd make superannuation voluntary, because I think there are a lot of people out there right now who are doing it tough. We have this wonderful thing in Australia, introduced by the Protectionist Party, which is the forefather of the Liberal Party, called the pension. That is what I am happy to pay my taxes for. But I am not happy to pay my taxes for the government to tell me how I must invest my money.
The practice of forcing workers into a predetermined super fund is perverse, as it only encourages negative outcomes that include excessive fees, limited choice and perhaps even a loss of retirement income. That brings another thing into question, too. The Constitution says the Commonwealth can't take property from people without compensation, but what happens if you get to 60 and you've lost your money in super? Paul Keating brought in super in 1992. He never took it to an election. Tell me this: if he took to an election the proposition, 'I'm going to take 10 per cent of your money and give it to someone you've never met, and you may or may not get it back when you're 60,' do you think people would have voted for him? If I were to say to Senator McKim, 'Nick, I'm going to take 10 per cent of your earnings and give it to some white-collar blowhard in the banks, and I'm not going to promise to give it back to you,' would you vote for that? I don't think so.
That's the thing about superannuation. I won't use a figure of speech that comes to mind, but it's been like water boiling. The water's getting hotter and it's slowly creeping up and up and up. It started off at two per cent and didn't seem that bad. Then it became three, four and then five per cent. Now it's 9½ per cent of earnings and it's legislated to go to 12 per cent. Whilst it's 12 per cent of earnings, it may actually be the entire amount of money that someone has left over to meet daily necessities. For example, if you earn $100 a week and you pay $30 in tax and $50 in food and accommodation, you may only have $20 left. A lot of people haven't even got much left; they've got nothing left, yet the government forces those people to give up that last 10 per cent of their money and give it to someone else to manage until they're 60. Meanwhile, so many young people who'd like to be able to pay off their houses can't do that. Their ticket is being clipped twice—once by the banks, with bank fees, interest and mortgage charges on the loan, and another time with their superannuation savings. They're actually getting charged twice for what very often turns out to be no productive income.
I'm delighted to be supporting this bill in the Senate. Many young Australians get their first job at a supermarket, fast food outlet or department store. Many Australians go on to have rewarding careers in the retail and hospitality sectors, not only seeking financial reward in the pursuit of excellence but also enjoying the social aspect of such work. I imagine that my own children will one day get their first job stacking shelves, flipping burgers or serving coffee. These jobs teach responsibility and financial management and help teenagers to establish greater financial independence. They are critical in helping young Australians to mature as adults—to learn new skills, find careers and contribute to the workforce in different ways. It is unfortunate that many of these vulnerable young workers often find themselves on the front line when it comes to experiencing workplace intimidation and bullying. Quite often in these cases it is the union for retail, fast food and warehousing workers, the SDA, that exploits the vulnerability of young workers by insisting that they not only join that union but that they also sign up with a union-backed industry super fund that donates back to the union. After passing through union coffers, these rivers of gold flow on to fund campaigns to elect Labor Party candidates at state and federal elections.
In this day and age it astounds me that any organisation, especially a trade union, which purports to protect workers' rights, would seek to deny workers their choice of superannuation fund—remember that this side of the chamber is all about choice, not control; this is freedom and that's totalitarianism, a very stark contrast—and instead drive them to join a super fund that's effectively owned by the SDA, namely REST Industry Super. Only an anti-choice, anti-worker, corporatist bully would defend such piracy. After all, it is workers' hard-earned money we're talking about, not government, employer or union largesse. The money that goes into super belongs to the working men and women of Australia.
Adding insult to injury, REST Industry Super significantly underperformed many other funds. They ranked just 44th out of 64 comparable funds over five years. Yet, despite the fund's poor performance, the SDA was happy to lock young, casual and low-paid workers into that fund. This is nothing short of corporate robbery, as far as I am concerned. As a further kick in the guts to low-paid workers, the actions of their union also meant that workers who are really struggling to make ends meet and working a second job are forced to either shift that job's superannuation contributions to REST or be ripped off by two sets of fees. Unsurprisingly, the SDA directly benefits from REST, with employee representatives on the Rest board handing more than $300,000 in directors fees to the union in recent years. Wow!
Let's be clear about this. There is virtually no evidence that the SDA in any way, shape or form exists to represent the best interests of its hardworking members. Rather, the SDA exists to manipulate votes on Labor Party matters, and it does that by bullying young retail workers into SDA membership and signing them up to commitments that they don't understand, want or even need. The SDA uses its workplace dominance and position of trust to extort funds and funnel those funds into political campaigns, while they leverage high membership numbers as powerful voting blocs at Labor Party conferences and preselections. That's got a certain flavour to it at the moment, hasn't it? This is the SDA's business model, pure and simple. It is a model that is rife across the union movement, a model where the tendrils of trade union power reach out to entangle and thereby compromise the operational integrity of many industry super funds. Surely any Labor member or senator who may be aligned with the SDA should take a serious look at themselves.
Compulsory superannuation was originally conceived to provide a fair and affordable retirement savings scheme for all Australians, a scheme that would boost the income and financial security of retirees and make the age pension more sustainable, while offering contributing members a degree of flexibility and choice. It is a sad indictment that, in the main, compulsory super has done none of these things. Gee, I'm enjoying this speech! I can't say how much I'm enjoying this! It is fair to say that compulsory super was never intended to shackle low-paid workers to the likes of REST Industry Super simply because they worked a part-time job at a supermarket or fast-food outlet when they were 16. Why should those in the retail and hospitality sector—many of whom enjoy otherwise rewarding careers—be denied options available to workers in other sectors simply because their chosen industry is dominated by a dud union in cahoots with an underperforming super fund?
Superannuation is workers' money. It is not the employers' money, it is not the fund managers' money and it certainly isn't the unions' money. It's the workers' money, and it should be their choice and theirs alone as to where it is invested. This bill is straightforward. It's about standing up for the little guy. It is about ensuring that casual and part-time workers in our shops and restaurants are given the same opportunities to save and invest and get ahead. This bill does not stop enterprise agreements from nominating a fund as a default. It simply allows workers to choose an alternative fund if they wish to. I implore those opposite to look, for once, beyond narrow self-interest and ignore trade union instructions. This bill should rightly be supported by any sensible, fair-minded person. After all, what reasonable individual has a serious issue with allowing workers to choose their preferred superannuation fund?
The government would like us to believe that this Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019 is all about choice. But from the contributions that we're hearing today, and particularly from that contribution from Senator Rennick, I think we know that this bill is all about the government's choice to attack unions, to attack collective bargaining and to attack the retirement savings of Australian workers and their families.
The government says that this bill is all about choice: the choice to have your own superannuation fund. But what we all need to understand is that this bill actually removes the choice and the right of workers to choose their super fund collectively as part of their enterprise bargaining agreement. What we also know is that reports have shown that these collectively chosen super funds are really good. They're industry leaders and they can have big benefits when it comes to providing extra protections for workers and their families—protections like industry insurance; compliance and doing the right thing with super payments; above-superannuation-guarantee contributions; and also above-benchmark returns.
So this bill is actually less about real choice, as the government would have us believe, and more about the government's priorities—priorities of attacks on union members and their rights to bargain collectively, including for their own superannuation funds. And it's an attack on our superannuation system, one of the best retirement systems in the world. It's a system that, as we've heard today from the backbench—from Senator Rennick—some Liberals believe should be made entirely voluntary. We've heard before, from Senator Bragg, that the superannuation system should be made voluntary for people on low and moderate incomes. But today we heard from Senator Rennick that superannuation should be made entirely voluntary. Perhaps people who have worked hard their whole lives should just retire only on the pension, according to Senator Rennick today. That's not our view. Our view is that we should have a strong superannuation system and that people should be able to retire with dignity and with a strong superannuation balance, and they should be able to bargain collectively for the fund of their choice, when that works for them.
This government has failed to deliver on some of the key challenges that are really confronting the superannuation system—issues like superannuation theft, for example. That's something that this government has not been able to address or attack. They continue to dither and delay when it comes to implementing the recommendations of the banking royal commission, which submitted its final report back in February 2019. I don't need to explain that that was over 15 months ago. But, while the government continues to waste time on those critical issues, it has no problem whatsoever in keeping up its attacks on the rights of workers in Australia. We know that workers are better off when they're able to bargain collectively. Choice is a good thing, and I support choice; but choice needs to include the option for workers to choose their superannuation funds collectively. Surely the whole point of choice is to make sure that Australian workers are choosing the best super funds for them—the funds that deliver the best performance and the best benefits. Often, for many workers, that fund is one that has been bargained for and which has been chosen collectively.
In its 2018 review report, Superannuation: assessing efficiency and competitiveness, the Productivity Commission concluded that the default funds chosen by workers to be included in their enterprise agreements had performed very well. Eighty-five per cent of those superannuation funds achieved above-benchmark returns in the 10 years preceding 2018. Particularly for those working in a high-risk industries, like electricians and construction workers, collective bargaining allows them to reach agreements with their employers to do things like pay insurance—critical insurance that protects their incomes through their super funds. These workers would lose the ability to negotiate for these protections if this bill passes without amendment.
This bill, without change, could have unforeseen consequences. It could actually put workers at higher risk of super theft or of being put on lower-performing funds. The banking royal commission, which I'll remind those opposite handed down its report some time ago, showed us that a lot of wrong can be done in the name of consumer choice. We've seen how financial institutions used choice to take advantage of Australians, leaving them worse off. In the bill's current form, there's little protection in this bill for workers who could get pushed onto poorly performing funds by unscrupulous employers. So we need to be making sure that workers are not forced onto funds without fully understanding the consequences or forced onto a fund that works in their employers' interest rather than in the interests of the workers who are being paid that superannuation.
Additionally, over the last few years, we've seen just how much of a problem wage theft and the theft of superannuation have become in this country. There have been countless high-profile examples of workers being ripped off. In the absence of any real action from the government to address these issues, collectively chosen funds make it easier for workers and their unions to track compliance because, right now, it's unions who are doing a lot more than the government when it comes to tackling wage theft and super theft, issues that have serious consequences for so many workers. Every year, almost three million Australian workers will experience theft of their superannuation through underpayment or nonpayment. A calculation done for the year 2015-16 estimated the amount of unpaid super to be almost $6 billion, and those affected workers are going to be facing real hardship in their retirement due to this theft.
While the government is concerned about a perceived lack of choice, what working people are concerned about is getting paid what they're owed. This is where government should be focusing its priorities, because the consequences of employers being allowed to get away with not paying super are extreme for everyday Australians. Workers will face lower living standards in their retirement if the government doesn't set its priorities on this problem instead of attacking the collective bargaining rights of workers and their unions to bargain for a fund which they believe gives them the best protection. Often it is those in lower paid jobs in industries like agriculture, cleaning and hospitality who are most likely to fall victim to wage theft and superannuation theft.
The theft of superannuation is all part of a larger problem that Australian workers are facing—that is, wage theft. Much like the underpayment of super, this is an issue that the government say that they care about and will act on, but, in reality, they just give us empty rhetoric and no real action. We have seen countless stories of wage and superannuation theft in this country. This is what the priority should be for this government.
Workers show a huge amount of courage when they come forward and tell their stories. Each of these workers really wants to know: what is government's plan to do something about wage theft and superannuation theft? So far, the government has been entirely unwilling and unable to be the tough cop on the beat that we need to address the real issue that Australians are facing with their superannuation—that of superannuation theft, not of collectively bargaining for funds that perform well for those workers who vote for them.
In some industries, like hospitality, the theft of wages and superannuation has become a business model. In 2018, the Fair Work Ombudsman found that almost three out of four hospitality venues were noncompliant with the award. This is the problem that is out of control—not unions collectively bargaining for good superannuation funds—and this is the problem that the community wants to see tougher action on against corporate wage and superannuation thieves. Working people shouldn't have to work for their wages and superannuation twice: once when they go to work and do their job on their shifts, and again when they have to fight to be paid what they earned.
While the government pretend to take action on these issues, their real priorities are placed elsewhere. Senator Rennick made it very clear that the government's priority is attacking the organisations that fight on these issues every day—the trade unions. The government's priority is attacking the organisations that are focused on the real issue people care about, the theft of their superannuation, not on this government's constructed problem of workers joining together to make decisions collectively about what fund they believe best suits their interests.
Unions, like Labor, have a proud history of fighting for a stronger and fairer superannuation system. I want to take a moment to acknowledge the contribution that the Australian trade union movement has made, together with Labor, in establishing our modern superannuation system. It was through worker led campaigns that superannuation—once the preserve of public servants, senior managers, politicians and executives—became a universal workplace right and one that everyday Australians rely on to have a dignified retirement. Of course, we are committed to any changes that continue to strengthen the superannuation system. The union movement is rightfully concerned about this bill and another move against workers' rights to collectively bargain—to make the choice collectively that best suits their interests.
The Prime Minister called on unions to put down their weapons and work with the government to help ensure a strong economic recovery post the COVID-19 crisis. Perhaps it's time that the government did the same. They may have shelved their ensuring integrity bill for the moment, but they need to shelve their obsession with chipping away at the bargaining rights of Australian workers and chipping away at our strong superannuation system built by Labor and built by the campaigns of working people in this country. It is disingenuous of the government to bring on an attack against collectively organising for the superannuation fund you want, when they are attempting to put forward a view that they want to enter into accord-like negotiations with the ACTU and the union movement.
If this government really cared about superannuation, they would stop their attacks on bargaining and start to address some of the issues such as super theft that I've spoken about today. But the question is whether they really care about superannuation. We've heard from government MPs and senators, including, very notably, today from Senator Rennick, that they want to cut super entitlements and make super purely voluntary. We don't need to think too hard to figure out what that would be like. Voluntary super would leave workers who are in desperate situations paying more tax on the income they divert away from their super contributions, and they'll end up with less super when they go into retirement. Those on the lowest incomes and with the lowest super balances would be hit the hardest. With those sorts of ideas floating around the Liberal Party room, it's really not surprising that they haven't tackled the real issues in the superannuation system, the No. 1 issue being the theft of superannuation from peoples' pay packets and from their retirement balances.
Unlike many on the other side of the chamber, Labor is committed to a strong and fair superannuation system. Superannuation is a great Australian tradition, and, while we support the principle of choice, that choice cannot be at the expense of workers' rights to collectively choose their super funds. This can all be fixed with Labor's amendment. I call on the government to drop their campaign against bargaining rights and to focus on the real issues in the superannuation system.
I rather like Senator Walsh. I think she's one of the brighter and more capable senators on the other side of the chamber that I have got to know. But I don't find it logical when she stands up in this chamber and says that the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019 is a bill about dismantling the ability to collectively bargain. How on earth could it be? It doesn't take away the rights of employees to engage in enterprise bargaining processes; they still have all of those rights. All it does is provide individual employees with the chance to choose their own super fund, even whilst they participate in enterprise bargaining negotiations or continue to work underneath an agreement. If an employee wants to bargain as part of a group, that's entirely their right. But so too is it their right to put their super where they would like to put their super. You know what? If the fund that is being recommended by their chosen union is the wonderful choice that those opposite say it is, it will be the obvious choice for all of the people under that agreement. So why do you need to take away the rights of individuals to choose? It just doesn't make sense to me.
One of the things that really stuck out in Senator Walsh's presentation a moment ago is that she described the Labor Party position as being about supporting the choice of workers to do what they want with their super, but in a collective way. That reflects a fundamental misunderstanding about what choice is. Choice is something we exercise as individuals. It's not a choice when some people who are conducting negotiations on behalf of the union for the people in your workplace decide it for you. That is not choice; that's subjugation. They're very different things, and to suggest that this is anything other than an opportunity to give working people more power, more opportunity and more choice and control over their own financial future—well, as I say, I really like Senator Walsh but this is not a speech that made an awful lot of sense.
Let me explain it with an example. There is such a simple example we can use here. Sarah is a young working person. She's studying to be a teacher, but, while she's studying, she holds some part-time jobs. One of them is at Kmart, and she gets forced into having her superannuation in the fund that has been chosen by the union that has negotiated with Kmart employees—fine. Sarah also has a part-time job as a waitress, and she's got to have another fund reflecting the agreements of that workplace. Then, as she moves towards the end of her studies and into the market in her chosen long-term profession, Sarah has to get another fund—again, not of her choosing. I can't help but think that, at some point in her career, Sarah should get some choice about what happens to her money. That seems to be what's getting lost in this debate. This superannuation money is important, but it doesn't belong to industry super funds, it doesn't belong to retail funds, it doesn't belong to employers and it doesn't belong to unions. No, this money, in this example, belongs to Sarah, and every day of the week it belongs to each individual working person. If we are to live up to our beliefs, no matter what side of the chamber we sit on, it must be something about which employees are given control. It must be employees that get to choose what they do with their superannuation money.
Those opposite have tried to cast this bill as some grand conspiracy to attack unions. That couldn't be further from the truth. This change was announced as a response to the Financial System Inquiry. That inquiry recommended that all employees be provided with the ability to choose the fund into which their superannuation guarantee contributions are paid. That recommendation was echoed by the Productivity Commission's 2018 report, in which they assessed the efficiency and competitiveness of superannuation.
These changes really matter. They matter in a philosophical sense, because it has to be right that individuals should have the right to choose what they do with their own money and that, just because they choose to bargain collectively, they don't cede the right to choose what they do with their own money, any more than they should cede to someone else the right to choose what they do with their weekly wages. The knock-on effect of denying this choice to working people is that we get reduced productivity, reduced performance and reduced efficiency from our superannuation sector, and do you know who bears the brunt of that lower efficiency? Working people.
So on this side of the chamber we make no apologies for standing up for the double benefit that comes from standing up for the right of individuals to choose what they do with their own money. The first benefit is when they get to choose a fund that works for them, with fees that reflect their interests and investment plans that reflect their choices. Then the second benefit comes when superannuation funds across the market perform at a higher level because they are getting the benefits of a properly competitive market, not being hampered by these uncompetitive arrangements.
This government has taken action through the Protecting Your Super package. It has addressed the existing stock of multiple accounts that people like Sarah have faced over the years so that they don't cop duplicate fees, and stealth insurance policies that they don't even realise they've got, being deducted out of their superannuation funds every year, often eroding those smaller balances down to nothing in circumstances where it may not even have been a product that they wanted or needed. This change is the next step in undoing the damage that unwanted multiple superannuation accounts cause. It delivers real choice for individuals who would otherwise be forced to continue to go on this merry-go-round of unwanted and duplicated accounts for which they pay multiple fees, from which they get lower returns and in which, fundamentally, they are denied their right to choose what they do with their super just as they should be able to choose what they do with their weekly wage. That's a principle we on this side of the chamber are happy to fight for every day of the week.
We've heard from Senator Stoker and we've heard from Senator Rennick, who is a sort of hallucinogen for the LNP over there. He's the truth drug. He's the guy who's prepared to say what you're really thinking. Senator Stoker, on the other hand, apparently says what's in the air around her. What a hateful, vile environment she must operate in if that's the kind of thing that she thinks it's okay to say to Indigenous Australians and to people around the world struggling over that issue! You should be ashamed of yourself. The only thing that you should do when coming into this chamber is apologise.
Government senators interjecting—
It was a mealy-mouthed apology. It was the most pathetic apology. She didn't mean it. She never does. She's very fond of saying the things that are hurtful. She's very fond of overstepping the mark, but she's not ever prepared to apologise.
I was actually turning to the Clerk at that point. When attributes are assigned to senators individually, that comes particularly close to reflections. When they are assigned to behaviour or an event, or when they are assigned collectively, that is less so. I'd urge the senator to refer to senators by their title or through the chair.