Wednesday, 17 June 2020
Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019; Second Reading
The Greens are particularly interested in focusing, in my contribution today in the second reading debate, and also in the committee stage, on the bill's implications for defined benefit schemes and what that means to employees at Australian universities. The amendment under consideration today applies very narrowly to defined benefit schemes currently admitting new members. I understand that there are very few defined benefit schemes still open and admitting new members. This Senate has dealt previously with schemes in relation to Public Service and especially military personnel. The Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019 has very serious implications for at least one of these schemes, which is UniSuper, who made a number of submissions to the Senate Economics Legislation Committee. While this amendment has narrow application, I should point out an inconsistency in that other defined benefit schemes provided by the Commonwealth, states and territories are not exposed to the same risks. Section 15 of the Superannuation Guarantee (Administration) Regulations 2018 already carves out government schemes.
Without this amendment, from what I know about adverse selection, it seems likely that new employees in the university sector will not be given the chance to join UniSuper's defined benefit scheme. That has implications for the next generation of researchers, scientists and lecturers. I think we all agree in this chamber that the university sector plays a very important role in both public education and world-class research. The Greens have a vision to support a well-funded, high-quality and sustainable university sector. A number of my colleagues have made this contribution over many years—most recently and most eloquently, of course, Senator Faruqi, who is our higher education spokesperson.
I will just provide a little bit of context as to why I'm especially interested in this bill. I myself worked at the University of Tasmania for nearly 10 years, on and off, as a lecturer, including full time in the last couple of years before I came into the Senate. The University of Tasmania has a direct link to this bill today, especially to UniSuper, because UniSuper was actually formulated and established at the University of Tasmania. The Tasmanians in the chamber would be well aware that the University of Tasmania is one of the largest employers in the state. It used to be the biggest employer; at the moment it's the second-biggest employer. Nevertheless, in my home town of Launceston, where my electorate office is, it is the biggest employer. It plays a critical role not just in the economy but also in the community.
I would also like to put on record while I have the opportunity that the Greens are currently campaigning—I know Labor have been supporting us, and I understand there's sympathy from my Tasmanian colleagues—to make sure we have long-term continuity in funding for our scientists and researchers at the University of Western Australia, the Institute for Marine and Antarctic Studies in Hobart, the Australian Antarctic Division and other institutions, to keep the fantastic, world-beating work that they do there going. That funding faces significant uncertainty. It will fall off a cliff in 2022 due to research decisions that have been made recently. That is a critical part of the community in Hobart. We need to make sure we get the government to commit to long-term funding for Australian Antarctic science, Southern Ocean science and, of course, climate science in Tasmania.
We're also very concerned at the moment, given the COVID situation we find ourselves in with this pandemic, that the universities, and university workers and employers, have been particularly hard hit. Universities themselves are facing immense fiscal challenges with a drop-off in international student numbers, and we're not sure when they're going to get that certainty back. We understand it's going to be a very difficult recovery for universities, yet university workers, including casual workers, have been excluded from any kind of stimulus payment by this government. It's made it extremely difficult for university workers. So they face almost a perfect storm of pressures on them at the moment with the risks they face into the future, and we need to do everything we can to help employees at the universities.
We are concerned that this bill, without the amendment that has been circulated in the Senate, piles more uncertainty into a sector already in limbo—a sector fighting to overcome the loss of billions of dollars in income and facing a government determined to avoid its responsibilities to assist this industry at a time of unprecedented crisis. I'm not sure why the government hasn't wanted to assist university workers, but I will say this: it's been really obvious to me in the eight years that I've been in the Senate that the government has continued to reduce funding to universities. They've continued this push for privatisation and commercialisation of universities. We've seen significant job losses at universities right around the country. My brother, who lectures at a major university in Western Australia, is continually talking to me about the pressures that his university has faced over many years in this push to essentially privatise education services. The Greens have often advocated in this place for free higher education to provide exactly what I had when I first went to university, a free degree; to try to give young Australians the certainty they need without their having to pay significant amounts of money back to the government; and, of course, to provide the numbers and the funding that are needed to keep employing staff at these universities.
So not only are universities facing significant uncertainty with major losses of revenue from student enrolments, the inability to access JobKeeper and impending job losses, especially of insecure casual and fixed term workers, but university staff are now facing uncertainty about whether or not they will have access to defined benefit schemes, which have been among the key features of university employment for nearly 40 years. For those following this debate, defined benefit schemes essentially set a guaranteed payment for workers and for staff that will go into their retirement.
Unfortunately this will have flow-on effects for the recruitment of new staff, particularly in the regions and the rural areas. As a Tasmanian, I am acutely aware of the challenges faced in recruiting good staff to regional universities. Getting good people to move to the university has been one of the major challenges in moving the University of Western Australia up the rankings. It's an extremely competitive space. This will make it harder for universities to attract and retain top staff, and it's unhelpful, to say the least.
As I mentioned earlier, I'm proud to note that UniSuper is a Tasmanian led innovation. The fund was conceived by a group of senior administrators at the University of Tasmania in the late 1970s, and the university provided the corporate vehicle to sponsor the establishment of the trustee company known as UniSuper. The provision of a national and fully portable defined benefit scheme has been of considerable assistance to all Australian universities, and this outstanding achievement continues to assist with the recruitment and retention of qualified staff, especially, as I will mention again, in remote and regional parts of our nation.
I'd also like to point out that this amendment is not an exemption from choice. I can see the minister nodding to that. The amendment ensures that all defined benefit schemes are able to operate on similar terms, while ensuring that those fortunate enough to be offered a defined benefit scheme will still be eligible for choice. This amendment allows a contribution to be made in compliance with choice if an enterprise agreement provides for an employee to join a fund for which the relevant person is eligible to become a defined benefit member, and only where the fund's governing rules permit the relevant person, within a period specified, to choose not to remain a defined benefit member and to choose another fund.
When I spoke in this chamber on the Treasury Laws Amendment (Protecting Your Superannuation Package) Bill back in 2018, I expressed concerns about making insurance and superannuation opt-in rather than opt-out. I think the principle applies equally here. Under the proposed amendments, members are able to opt out of defined benefit arrangements within a two-year period. Without these amendments, it is extremely unlikely that anyone will ever be offered a chance to opt in to a defined benefit scheme, owing to the adverse selection risks that have been well documented.
It would be a tragedy if a durable and highly performing fund were sacrificed to an inflexible, one-size-fits-all cookie-cutter all-choice regime. Doing so would deal enormous blows to product diversity in an industry dominated by the same style of largely uniform accumulation-style products. Rejection of this amendment would be all the more ironic, as it would signal the government had opted to deny the choice for defined benefit funds to continue to provide first-class retirement benefits in the best interests of their present and, importantly, future members. No arguments have been advanced that could possibly justify endangering arrangements which have served the higher education sector exceptionally well for many decades. I urge senators to support this amendment.
The Greens have circulated amendments through the chamber. I look forward to talking them and the Labor Party amendment when we go in committee.
I rise to speak on the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019. I am delighted to talk on the great Labor achievement that is our modern superannuation scheme, which has ensured that all Australian workers now have a right to a dignified and prosperous retirement. I want to acknowledge the contribution of Senator Whish-Wilson in his remarks around the university sector. Like Senator Whish-Wilson, I spent some time working in that sector and I am very much apprised of the very significant challenges faced by that workforce pre-COVID and particularly during the COVID period. I put on the record that I am a continuing member of the National Tertiary Education Union, which was my union when I left that workforce to come here to the parliament.
This bill amends the Superannuation Guarantee (Administration) Act 1992. It ensures that employees under workplace determinations or enterprise agreements have the right to choose their superannuation fund. This applies only to new workplace determinations and enterprise agreements made on or after 1 July 2020. The bill will allow employees to select the fund that best suits their own circumstances. A lack of super choices can mean that employees who have changed workplaces can end up with multiple super accounts, which can lead to high fees and charges and to them potentially paying multiple insurance premiums. More specifically, the bill will allow employees to choose their own superannuation funds, where they are employed under a workplace determination or enterprise agreement that is made on or after 1 July 2018. New employees to whom such a determination or agreement applies must be provided with a standard choice form, and if there is no chosen fund for a new employee the default fund arrangements apply. An employer does not have to provide existing employees with a form unless requested, once a new determination agreement is made. Where there is no chosen fund for an existing employee, an employer that continues to make compulsory contributions for that employee to the same fund in accordance with the previous determination or agreement will comply with the choice of fund requirements.
Labor has always been supportive of super choice and is committed to ensuring that every Australian worker is in a high-performing fund and that adequate information is available to empower consumers with the information that they need to make choices in their best interests. But I am worried that this bill proposed by the government—the Liberal-National party, who has so often taken to superannuation to cut it, to contain it, to diminish it, to abolish it—will not meet those criteria without significant amendment.
While this bill will have relatively minimal impact on the super sector, given that Industry Super Australia estimates that of those employees covered by an enterprise agreement only 7.4 per cent have no choice of superannuation fund, which represents 1.9 per cent of the workforce, the bill will have a significant effect on the retirements of that 1.9 per cent should it pass without amendment. Labor will move an amendment to ensure that there is a provision that allows workers to bargain for a single fund or set of funds where it is determined by the Fair Work Commission to be in their best interests. This amendment proposed by Labor is a commonsense measure that was highlighted in Labor's dissenting committee report on this bill. The report also noted the evidence that the ACTU and UniSuper provided to the committee and enabled the highlighting of the detrimental effect that the bill, if unamended, could have on their default defined-benefit product offering. The amendment that UniSuper provided at paragraph 2.63 of the committee report addresses their concerns and, indeed, many of my concerns about the effects that this bill could have. Any risk to defined benefit offerings lessens choice, rather than enhances it, and would achieve the opposite of what this bill claims it seeks to do.
We know that we cannot trust this LNP government with superannuation. I have seen many colleagues—members of the government, on the other side of the chamber—who have previously lambasted Australia's world-class superannuation scheme for a quick social media grab. I note Senator Rennick from Queensland, who claimed in a speech last year in this chamber that superannuation is a cancer. He actually said that. To describe superannuation as a cancer is a disgusting slur on all those who have suffered cancer, and as the co-chair of Parliamentary Friends of Cancer Care and Cure, I was revolted and sickened by that comment. It was ill-judged. Super is an enhancement of people's lives. No-one thinks that about cancer.
Superannuation has allowed thousands of Australians to share in the dignity of a retirement funded in full or in part by the benefits of superannuation, formerly a privilege that was restricted to public servants, politicians and senior managers in the banking and finance industries. I can tell you that, when I grew up on Curran Road in Blacktown and Aurelia Street in Toongabbie and then Kingsclare Street in Leumeah in Campbelltown, there weren't too many conversations over the back fence about how the superannuation was ticking over. There weren't too many conversations about what a defined benefit was. That gap in the difference of financial literacy was taken seriously by only one party, and that is the Labor Party, who instituted superannuation. That's why we have to watch so carefully what this government seeks to do. They were never committed to delivering superannuation for every Australian. They were quite happy to preserve it as a right for the well-employed in the Public Service and the wealthy who could afford the advice to set up such structures.
Senator Rennick bemoaned the management fees taken by superannuation firms and consultants, but he's been silent on the billions of dollars that this government forks out to consultant firms while sacking thousands of frontline public servants like our posties. Shame on this LNP government! I also note that Senator Bragg from my home state of New South Wales was reported recently as suggesting in his book that workers raid their super to purchase a home. It reveals what a total lack of understanding they have and that a continuing ideological push against the benefits of superannuation for Australia still resides in this government.
This raid on superannuation was also the Liberal and National parties' answer to economic privations in the pandemic, which saw $14 billion ripped out of the super scheme—out of people's future savings, out of people's retirement—to be spent on a range of things, including, sadly, online gambling and needless purchases. That is even before the next phase of the raid is undertaken, and it's because this government is so loose with how it handles money despite its rhetoric about being great money managers. People should not forget that this is the party that lost $60 billion in a few weeks. Their figures were out by $60 billion. They could've left people with their super intact. They could've supported the Australian people better through this COVID crisis, but they failed. They have compromised people's futures and retirements with regard to super by the actions they have taken in their ideological bent.
The contribution from Senator Bragg to the debate on superannuation in recent times only serves to undermine a system that is responsible for giving millions of workers a comfortable retirement. I also notice that the Prime Minister's scheme to allow Australians to withdraw super to pay bills was so riddled with fraud that it had to be temporarily frozen in order for a correction to be made to that structure. My office had to help locals who had thousands of dollars stolen from their accounts by criminals. The government have not yet revealed exactly how many fraudulent claims have been made, because they don't come into this place and transparently reveal the truth. In fact, question time is an exercise in watching them painfully hide from the truth. Neither do we know yet what the government are doing to compensate victims after the ATO directed their super fund to make a payment to a fraudulent account.
This government has form on the shonky ways of moving Australians' money away from them in unedifying and unpalatable ways. Think about robodebt: illegally constructed debts, sent by this government to hundreds of thousands of Australians, which it now needs to repay. They don't care about helping Australians manage their money in ways that are sage and sensible. Rather, they take any opportunity they can to raid Australians' savings and to make them more at risk in terms of their finances.
Labor supports the concept of choice, but choice is not the most pressing issue right now in the superannuation sector. Rather, it's a retirement savings gender gap. According to the national advocacy group Women in Super, an older woman generally retires with 47 per cent less superannuation than a man, and yet women will very likely outlive men by at least five years. They're also likely to be the family's most active caregivers as well as the ones most likely to take time off to care for children or elderly relatives, further denuding their super compared to men. This is a problem far more pressing than the issue of choice of super for 1.9 per cent of Australia's workforce. But that is not what the government is choosing to focus on and that is not the legislation before us. Rather, we have this. Instead of solutions we have crickets from the government opposite.
Superannuation firms have also been active in addressing the gender wage gap and its knock-on effects in retirement savings. With lower earnings, breaks from their careers to begin families, and longer life expectancy, women face a far different picture to men when it comes to superannuation. Yet some superannuation funds are taking up that challenge. I want to acknowledge, in particular, the work of the SDA and the super fund REST, who have both campaigned very hard to support their majority female workforce in their goal for equitable treatment in retirement.
Super should be gradually increased as we face an ageing population and with healthcare and aged-care costs continuing to soar. I note the SDA union recommended several sensible changes to the current superannuation system, which would go further than anything this bill proposes to make Australia's super scheme more equitable. These suggestions offered by the SDA, in their submissions to important inquiries of this place, include:
… ensure superannuation is compulsory (through the award system) and universal (including through the creation of a new indicative model of retirement income with the first next step being 12% superannuation on all income)
… the removal of the $450 per month earnings threshold and ensuring superannuation is paid on parental leave
… application of representative governance model for all superannuation …
This is a result of the important civic work that the SDA, as an exemplary union, takes on on behalf of its members, in addition to supporting them in their workplaces and standing guard against the savage attacks on the working rights and the superannuation rights of these Australian people, particularly women.
These suggestions would attempt to balance the effect of penalty rates cuts on these workers as well as give millions more Australian women the opportunity of a dignified retirement. Currently, older women are the fastest-growing cohort of homeless people in Australia. According to census data, the number of women aged 65 to 74 describing themselves as homeless increased by 51 per cent in the five years to 2016. Shame on this government for presiding over that! Shame on them for their failure to respond to the housing needs of older Australians! Shame on them for taking away the opportunity for improvements in superannuation for Australian women, in particular! With a social housing waiting list in my home state of decades, not years, many will find themselves on the waiting list in their 50s and will die before they're ever near getting into a house.
This government continually incentivises people to pillage super for paying daily bills in an economic crisis rather than offer real and sustained government help. Like everything else, this government's answer is to throw everything out to the free market, to that perfect neoliberal goal of 'choice', which they dress up as something much greater than it can ever be. But, as Martin Luther King Jr said, 'What good is having the right to sit at a lunch counter if you can't afford to buy a hamburger?' Choice is all well and good, but it's hardly the most pressing issue that this government could determine to undertake with legislation.
I support the measures that will make this bill work in keeping that honoured tradition of collective bargaining alive. I support amendments to this bill that will allow workers to bargain for a single fund or a set of funds, as well as adding measures to ensure— (Time expired)
I am pleased to follow Senator O'Neill because she raises some very important points about this bill, the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019, and about the government's attitude towards superannuation. I want to add my voice to that debate today.
I've heard or seen comments from the government that Labor senators, or members opposite, are trying to waste the Senate's time by contributing to this debate today, and that couldn't be further from the truth because I think it's important to understand what the government is doing as part of this broader debate around superannuation. I know that it's very clever of the government to call this bill 'Your Superannuation, Your Choice', because it gives them an opportunity to get up here and talk about choice in super and beat their ideological drum about what they have planned for superannuation in this country. But it does concern me greatly that this is another opportunity for the government to talk about their plans to raid Australians' superannuation.
We know that this bill is limited in its scope. It is talking about the small number of workers who, at the moment, are covered by an enterprise agreement that directs the superannuation fund that they use, and the amendments to this bill seek to make sure that people are able to collectively bargain in their workplace while also supporting the principles behind the bill around choice. But we know that this is part of an ideological debate that the Liberals are waging against superannuation.
The Liberal and National parties opposed compulsory superannuation when Labor introduced it in 1992, and they have been fighting this war ever since. But they really have taken it up a notch lately, haven't they? They've really taken up the memes. They're even writing books about it. They're getting op-eds written in the paper about just what they're going to do to superannuation and to Australian workers' superannuation. They've said in this place that superannuation should be voluntary—and they've said that many times; that is not a one-off gaffe from one member of the Liberal Party; we've had many members in this place say that superannuation should be voluntary. Obviously, that is deeply concerning because we know that, for many Australian workers, superannuation is the only way that they will be able to afford a dignified retirement, and we know particularly that there are many women in this country at the moment who did not have access to superannuation or who worked in part-time positions for many years raising their children and who have severely depleted superannuation funds at this moment, compared to the men who were working at the same time as them. So I am deeply concerned about any attacks on compulsory superannuation that would stop Australian workers who desperately need to have money for their retirement saved for that purpose.
What the government is trying to do is to pretend that they care about the wages of low-income earners. We know that that is nonsense, because the Liberal-National coalition has never stood up for the working conditions of Australia's lowest-paid workers, and they never will. The coalition has opposed the advancement of superannuation every step of the way. They opposed it when we introduced it, and they've sought to undermine it ever since.
Compulsory superannuation is a national achievement created by Labor, and it stands alongside the NDIS and Medicare as a system which makes our country fairer and stronger. But I want to talk about one aspect of this debate, and that is the proposals from members of the government around extending early access of superannuation payments, because it's one of these ideological fronts on which the Liberals have been waging war. They've said that the coronavirus pandemic has actually shown that more people should have access to their super for more reasons. For example, Liberal John Alexander has floated the idea of using super to buy a home, and I'll talk further about that proposal a little bit later.
But I want to make this clear: the primary purpose of superannuation is to provide a dignified retirement for every Australian. That is the primary purpose of superannuation. That is why, right now, there are provisions that allow for early access to superannuation but only in very limited circumstances. These circumstances include compassionate grounds; severe financial hardship; and a terminal medical condition, which is very difficult. I know there are people who find themselves in that situation—getting that very difficult news about being terminally ill—and they know that they have their super there to count on in those very difficult times. Temporary incapacity and permanent incapacity are the other times when people are able to access their super. We know that super accounts have been used as a way to save for a home, by making voluntary payments.
The reason Labor have always argued to keep these reasons limited is that we don't want super to fix the policy mistakes of this government. We don't want people to not have super in their retirement or in those very limited circumstances, such as when they're very ill and they're given the absolute worst news—that they need to tie up their affairs. You may have had a friend who went through that. I've got a friend who has been given that news recently, and they've had to rely on their super. I cannot imagine what it would have been like to not have had that superannuation to depend on in those circumstances. Expanding the circumstances where super can be withdrawn will reduce the super balances of thousands of Australians. It'll increase the demand on age pensions, which will have an impact on the budget bottom line—that's what the government is always talking about—but also leave Australians with less money to use when they really need it.
Here's the other thing. Talking about allowing Australians to withdraw their super to fix a problem of the government's own making should ring alarm bells with people in the electorate, because, when we're talking about withdrawing super because housing has become so unaffordable, what does the government do? Do they build more social housing? Do they talk about how they're going to make housing more affordable? Do they make a plan to build better cities, to make them more connective, or to build better transport so people don't have to travel so far to their workplaces? No, they don't do that. They say, 'You can use your retirement savings for this instead.' Senator Bragg has even said:
The reality is a first home is much more important than super.
No-one is saying that a first home is not important. But what you're saying is that people don't deserve both—that they don't deserve a home and a dignified retirement. That's what you're saying to people like nurses and teachers who are out there working and saving. You're saying that the government doesn't want to do the hard work to make housing more affordable. What it wants to do is raid people's retirement savings. We know that Australian workers need those retirement savings later on in life. They will be relying on them. But instead of doing something to make housing more affordable, instead of trying to fix that problem, the government just wants to come in and raid superannuation savings.
It's lazy, it's pompous, it shows that you've got no idea what workers go through, it shows that you have no appreciation of how difficult it is for people to save for their retirement and it shows that you're completely out of touch with the purpose of superannuation in the first place, which is to provide a dignified retirement for Australian workers. I want Australians out there to be very careful when they hear this rhetoric from the Liberal-National government. When the government is saying to Australians that it wants to open up early access to super payments for other purposes, I want Australians to consider why that is and what policy failure by this government has created that problem in the first place.
We've seen the same thing happen with young workers during this pandemic. Instead of relying on government support, instead of being included in JobKeeper, many young Australians have had to rely on their superannuation to support themselves through this pandemic. This is a government which is setting up millions of younger Australians to be in a weaker position in their retirement. Already, we have seen that 500,000 young workers under the age of 30 have dipped into their super early. This makes up one-third of all early super applicants. In many cases, young workers have been left with no choice other than to empty all of their retirement savings. All of their retirement savings are gone, and that might not mean much if you're 25 years old and you consider that you've got a long time before your retirement but, again, what it points to is that this government isn't prepared to do the work to build the policies, to give the support to young people; instead, they have said, 'You can use your superannuation because we're not going to give you the support that you need.'
In the short term, this scheme is expected to cost the budget $1.1 billion in lost revenue. We know that this will have an impact on the budget. In the long term, it means fewer Australians will be able to support their retirement and that will mean more people demanding the pension system. We also know that this hasn't happened in a vacuum. Industry super analysis shows that in North Queensland alone 65,000 workers have been short-changed super and that government offered an amnesty to businesses that have systematically underpaid their workers. So not only do we have workers being asked to rely on their super during the most difficult economic time in their lives but it's off the back of years of underpayment of superannuation.
The coalition has used every opportunity to undermine super, including this pandemic, and that is completely disgraceful. We should be strengthening the systems that support people during this pandemic, not making them weaker. We even know that the government's incompetence has opened the door to widespread fraud in the early access super scheme. I was listening to triple j's Hack last night. Some people said the government just made it so easy to get this money that we've seen fraud as a result of this government's incompetence.
At the end of the day, superannuation is there for one reason: to provide Australians with a dignified retirement. Every time that the government come in here and try to reduce that access to a dignified retirement, Labor will come in here and show them out. We will stand in here and explain to people exactly what the government are up to. You can create your shiny memes, you can write your books and do your op-eds, but, at the end of the day, workers understand that superannuation is there for their retirement. We know that this government won't be supporting workers in their retirement; they will have to do it on their own.
I too rise to speak on the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019. Labor has a very proud track record when it comes to superannuation and will continue to fight for a stronger and fairer superannuation system. Compulsory superannuation, created by Labor, is a national achievement which sits alongside Medicare and the NDIS as major nation-building reforms. It has made our nation stronger and it's made our society fairer. Prior to the introduction of compulsory superannuation, most Australians only had the aged pension to rely on in their retirement. The introduction of compulsory superannuation was a revolutionary policy and achievement of the Hawke-Keating government. Labor and the union movement fought for and won compulsory employer-paid superannuation. We did this through national worker led campaigns, together with legislative action in this parliament, that today has resulted in a universal workplace right to occupational superannuation. This right was once only available to people like us—politicians, public servants, senior managers and long-serving employees in certain industries such as, let's remember, the banking and financial services industry. As I said, superannuation is a universal right and one that is enjoyed by all people in this building, not just those that sit in this place or in the other place, and it's available across every industry and sector.
Compulsory superannuation has been an incredible success. It provided a new system for funding retirement incomes. This not only creates retirement nest eggs for Australians; the savings are being invested in infrastructure and businesses which are generating wealth and creating jobs. Superannuation assets totalled $2.7 trillion at the end of the March 2020 quarter. Our super system is world class and has created a huge new pool of capital that can invest in Australian business. According to the Willis Towers Watson Global Pension Assets Study 2019, Australia remained the world's fourth-largest pension market, with Australia's superannuation assets rising to 131 per cent of GDP in 2018—up from 67 per cent a decade before. This latest ratio was the second highest among the 22 major pension markets covered by the survey.
We on this side of the chamber know that the Liberal Party has always opposed universal superannuation, and we are seeing it once again today. It was opposed by the then Leader of the Opposition, Mr John Howard, when it was first introduced, and he brought this opposition to government when he became Prime Minister. The Howard government's 1996 decision to abandon the Keating government's 15 per cent superannuation guarantee cost the average Australian worker roughly $250,000 in accumulation over their working life.
Fundamentally, superannuation is still opposed by the Liberals now. The Morrison government has used the COVID-19 crisis as an excuse to escalate the coalition's decades-long ideological war against super in general and industry super in particular. Coalition governments have used every opportunity to undermine superannuation, including the current process that has seen two million Australians resorting to accessing more than $13 billion in personal retirement savings. Why have they been forced to access these savings? Because of the gaping hole in government support.
This government's track record and ideological opposition to industry super funds causes me to be more than a little bit cynical about the reasons behind this bill, let alone its name. We know that those opposite come up with lovely, caring names for their bills. But we know that beneath the first pages of those bills there are often situations where workers are going to be worse off. I believe this bill is just a demonstration, once again, of the ideological opposition to industry super funds that, as I said, those opposite so often convey.
It's interesting to note that the ideological opposition to industry super funds goes even further amongst some members of the Liberal-National party caucus. We've seen Senator Bragg call for all kinds of superannuation to be made voluntary for people earning under $50,000 a year. He was backed up in that call, as the previous speaker, Senator Green, mentioned, by members of his caucus. On 13 November last year, Senator Rennick—yes, that very same senator who said, 'We do not want the hand of government reaching in and taking away our children's youth,' in a debate on early childhood education—called superannuation 'a cancer', stating in his speech:
Millions of dollars gets sucked out of the pockets of the battlers in the bush and sent to the blowhards in Sydney and Melbourne …
Let me just say that, as a cancer survivor, I was horrified to hear that comment. I don't think anybody from any party should refer to a benefit, especially a hard-won and hard-fought-for benefit for workers, as a cancer. I took great umbrage at that comment, and I'm glad to put on the record today how angry—and I was angry—that comment made me and other cancer survivors and cancer sufferers not only throughout my state of Tasmania—I know, because some of them spoke to me about it—but also throughout Australia.
So the government just refused to listen to advice, and that's why they put so much of the hard-earned superannuation savings of Australians at risk. We've seen billions of dollars taken from the accounts of our lowest waged employees. And of course we know that in early May the government was forced to temporarily freeze the scheme because of fraud. The Australian Federal Police have still not ruled out the involvement of organised and offshore crime in this fraud. I'm not quite sure what the government is doing, because they're yet to reveal how many fraudulent claims have been made or what the government is doing to compensate victims after the ATO directed their super fund to make a payment to a fraudulent account. It has also been reported that there is an alarming trend of super funds being plunged directly into online gambling—and we all know that that cannot be good. If true, the embattled government scheme may be boosting the profits of dodgy overseas gambling businesses instead of stimulating the economy and addressing cases of real hardship. But we know that those opposite don't care—and they certainly don't care about super.
I call on the minister responsible and the Prime Minister to come clean with that information that needs to be asked about that fraudulent activity. We've got a government that is intent on attacking workers' wages, their conditions and their ability to better organise for better rights at work. But now it wants to destroy their retirement income. Do you just want everyone to end up on the pension—is that what it's about? I can explain to you that, with an ageing population, that's not going to be a very smart move on your behalf. The rate of the superannuation guarantee has been scheduled to progressively rise to 12 per cent in 2022 but, of course, it was frozen by the Abbott government in 2014. When the superannuation system was designed it was intended that the guarantee would rise. Analysis by Industry Super Australia shows that if the superannuation guarantee moved to 12 per cent, as the last Labor government intended, a 30-year-old male earning $85,000 a year would stand to gain $147,000 from their super by the time they reach retirement—compared with if the super guarantee was frozen at 9½ per cent. Separately, a 30-year-old woman earning $85,000 a year who takes time off work to have children could gain up to $93,000.
In the last 12 months $20 billion of superannuation assets have moved into the not-for-profit sector, with consumers in search of lower fees and higher performance. Choice is already happening. While too many Australians still retire without adequate retirement savings our super system needs to be strengthened and protected, not undermined. It's clear that every move this government makes is to undermine the most successful retirement savings scheme in the world. The bill we are debating today is entirely designed to continue this attack. The government wants to dismantle the system we have in order to advantage the mates of those opposite in the banking sector. Let me be clear: industry funds benefit members, not big banks as those opposite would wish to do. They outperform retail funds again and again. I would like to quote from a report by the McKell Institute. The report states:
… available evidence demonstrates a clear causal relationship between not-for-profit representative governance funds and higher levels of returns for members. Both raw and risk-adjusted research supports the proposition that the two governance models produce significantly different returns for their members.
The report also states:
In 2013, Industry Super Australia concluded that had all superannuation funds returned the 5.7 per cent long-term annual average of not-for-profit funds, Australia’s retirement savings would be $88 billion higher. In 2016, a similar analysis showed that if retail funds had earned the same returns as industry super funds between 1996 and 2015, Australia’s pool of super retirement savings would be roughly $105 billion greater; an increase of more than 5 per cent than the actual situation. Based on these figures, an individual member, with a starting balance of $20,000, could have been $36,000 better off by using an industry fund.
But those opposite want employees to be forced into slickly marketed funds which promise the world but in the end just return super profits to the big banks. They don't really care about choice. As I've said, it's entirely a cover for enriching their mates. They want to ensure that dodgy employers can force employees into the super fund of their bank's choice for the employer's own profit. If they did care about Australians having better retirement savings, they wouldn't have cut the super guarantee in 1996 and 2014 and they wouldn't have Senator Rennick over there saying superannuation is a cancer and should be made voluntary. In fact, they probably shouldn't have him over there at all, with some of the comments he's come out with.
Labor supports choice in superannuation, but we are also committed to making sure every worker is in a high performing fund and that adequate information is available to empower consumers with the information they need to make choices in their best interests. Labor remains concerned that there is a significant risk to defined benefit offerings, which will lessen choice and achieve the opposite objective to what the bill intends.
Labor referred the super choice legislation to the Senate Economics Legislation Committee to ensure the bill had no unforeseen or unintended consequences which left super fund members worse off or with less choice. In their dissenting report, Labor senators noted the ACTU's evidence highlighting the detrimental effects that the bill could have on defined benefit product offerings. The ACTU said:
Should the bill pass, some superannuation funds would need to re-evaluate how and if they could offer their products. UniSuper is one of the best performing super funds in the country. It offers one of the rarest and most valuable retirement products available, which is an open defined-benefits scheme. This is an incredibly generous product which guarantees retirement incomes for life, and that is why the National Tertiary Education Union bargains for this fund for their workers. Its viability is centred on longevity risk of each member and the fact that it is compulsory. If workers were to choose to be a member then this would be evidence of self-selection into the fund and thus would increase the risk of the product failing.
Should the bill pass, the fund could seriously reconsider the offering of the product to its members and potentially close off entry to one of the most beneficial outcomes for hundreds of thousands of members. The ACTU opposes this bill and is seeking amendments which would protect workers in circumstances where they would be better off having a single fund.
Labor also noted evidence from UniSuper, which similarly highlighted the detrimental effect that the bill, unamended, could have on the defined benefit product offering. UniSuper also provided to the committee an amendment that addresses their concerns. Labor will move amendments to address the issues raised by UniSuper relating to defined benefits scheme in order to ensure that the bill does not inadvertently threaten the viability of these schemes.
All of us on this side know that workers are better off as a result of collective bargaining. Industry Super Australia estimates that, of those employees covered by enterprise agreements, only 7.4 per cent have no choice of superannuation fund. This represents just 1.9 per cent of the workforce. (Time expired)
First, I would like to thank those senators who have contributed to this debate today and yesterday. The Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019 addresses a long-running issue in the superannuation system and will mean better outcomes for many, many Australians. The Productivity Commission noted that the current system, which restricts choice of fund for some members, can discourage member engagement, and it concluded that this reform was much needed. The Productivity Commission report also highlighted the negative effects that unintentionally holding multiple superannuation accounts were having on millions of Australians, with duplicate fees and insurance premiums. Through its Protecting Your Super package the government took action to address the stock of these duplicate accounts, and this bill is the next step, ensuring that Australians are not forced into having multiple accounts because of their enterprise agreement or a similar determination. The bill will also encourage greater member engagement, promote competition and address situations where a member disagrees with the choice of fund their employer has made for them.
While choice is vital, as Centre Alliance pointed out in its additional comments to the Senate committee on this bill, informed choice is equally as important. Improving members' ability to make informed choices by providing simple and accessible comparison information about superannuation products was a key recommendation of the Productivity Commission landmark report on the superannuation system. While a number of recommendations from that Productivity Commission report have already been addressed, including a retirement income review, the Treasurer is currently considering a more comprehensive response to that Productivity Commission report and will issue that response in due course.
However, the government has committed to changing the way that people are defaulted into superannuation products, including to ensure that members are only defaulted one time. Preventing people from languishing in underperforming funds will underpin any changes that we make to default superannuation. This bill is the first step in providing choice, improving competition and improving outcomes for members, and the bill will commence on 1 July 2020.
I have listened very carefully to all the contributions to this debate, and they have been impassioned and they have been sincere, but, in all honesty, they have largely also been somewhat irrelevant, very ideological and often just plain wrong. I think it's important to acknowledge some of the straw men of this argument. This bill has nothing to do with the early release of super scheme, which is an initiative that was supported by the Labor Party and has been supported now by over two million Australians who have been grateful for the access to their superannuation in this temporary scheme during a period of financial distress. This bill has nothing to do with undermining enterprise bargaining negotiations. Unions can still collectively bargain wages and conditions. They can still name a default fund. This bill doesn't change the default system one iota. For those who don't choose a fund, their employer can still do it for them. This bill has nothing to do with the industry versus retail, versus public, versus corporate, versus self-managed super debate. Indeed, diversity within this sector is fundamental to the premise of this bill. Competition is good; it drives down fees. We want all sectors to thrive. In the same vein, this bill has nothing to do with the debate between defined benefit and defined contribution—again, quite the opposite. We would like to see more people be able to choose the fund that suits them best, including defined benefit schemes. This bill has nothing to do with wage theft, it has nothing to do with super theft, it has nothing to do with the extent of the rollout of Single Touch Payroll—an initiative, I might add, that this government has implemented, and it has been possibly the most effective deterrent to wage and super theft ever initiated by a parliament.
This bill—your super, your choice—has nothing to do with any of those things. If those are the arguments that this Senate is prosecuting here, you have either intentionally or inadvertently misunderstood this bill. It's about a basic and fundamental right, which is choice to do what you want with your own money. In the same way that we don't let our employers choose our bank account or our bank, and we make that choice a condition of employment, so too should we not let our employers choose our super fund. This bill removes the ability of an employment agreement to demand that you contribute to a particular super fund as a condition of that employment. This is even more important in a system where superannuation is compulsory. When the government mandates that nearly one dollar in 10 of your hard-earned wages must be quarantined, and potentially for up to 45 years, surely you should at least have some say as to where that money is invested and what it's invested in. So choice is indeed a logical and necessary corollary of compulsion. In Australia we compel people to vote, but we don't tell them who to vote for or force them to vote for someone that they don't want. Well, in Australia we also compel people to contribute to superannuation to save money for retirement, and, similarly, we shouldn't tell them where to save their money or which fund they should contribute to.
Moreover, the Financial System Inquiry, the Productivity Commission and, indeed, the Fair Work Commission have all made it abundantly clear that denying or even restricting choice has long-term impacts on superannuation savings, and casuals are particularly vulnerable. Hand on heart, despite what you may have heard from those opposite, I am a super believer, and all the things that I have ever said in this chamber, in public and in private attest to this. And to those opposite: you know it. But, if you think that the system we have now is perfect; if you think it's actually serving the workers that you represent as best as it could; if you think that high fees, duplicate accounts, inappropriately applied insurance, unnecessary opacity and complexity and persistently underperforming funds that, without this bill, will have the ability to lock disengaged workers into them for years and years of erosion of their retirement savings are all okay, then are you really doing the right thing by the people you claim to represent? I cannot understand why you are circling the wagons on this issue. Super is good. But it can be so much better.
This bill is not about dismantling super—quite the opposite. 'Your super, your choice' is about building a superannuation system that will serve Australians well for the next 30 years, and surely that is something that we all want. I commend this bill to the Senate.