Thursday, 18 June 2020
Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019; In Committee
(1) Schedule 1, page 3 (before line 5) , before the heading specifying Superannuation Guarantee (Administration) Act 1992, insert:
Fair Work Act 2009
1A At the end of section 187
Requirement relating to restrictions of choice of superannuation fund
(7) If the agreement includes a restriction on the choice of superannuation fund or funds available to employees, the FWC must be satisfied that the restriction is in the interests of the employees who will be covered by the agreement.
(8) For the purposes of considering whether the restriction is in the interests of the employees, the FWC must consider:
(a) the extent to which the employers who will be covered by the agreement have complied, or are likely to comply, with the requirements of the Superannuation Guarantee (Administration) Act 1992 ; and
(b) the features of the proposed default superannuation fund or funds, including matters such as insurance; and
(c) any other relevant matters.
This amendment relates to the Fair Work Act and Fair Work Commission consideration of what is in the best interest of employees. I went through Labor's thinking about this proposition in my speech on the second reading, and I don't intend to canvass all of those arguments again. Labor supports, in principle, the important role of collective bargaining in Australia's industrial relations system. Workers are better off as a result of collective bargaining. Labor is moving an amendment to the bill to include a provision that allows for workers to bargain for a single fund or set of funds where it is determined by the Fair Work Commission that it is in their best interests.
The government will be opposing Labor's amendment. We should be clear what this amendment is really about. It is, in fact, denying the premise of the bill, which is all about choice. It's really about providing assistance to individual funds, which are—let's face it—multibillion dollar companies. We don't feel that they need to be propped up or shielded from competition by removing an employee's right to choose their fund.
by leave—I move Greens amendments (1) to (3) on sheet 8981 together.
(1) Schedule 1, item 6, page 4 (lines 3 and 4), omit the item, substitute:
6 Paragraph 32C(6 ) ( h)
Repeal the paragraph, substitute:
(h) an enterprise agreement:
(i) made before 1 July 2020; or
(ii) to which subsection (6AAA) applies; or
[choice of fund]
(2) Schedule 1, item 7, page 4 (before line 7), before subsection 32C(6AA), insert:
(6AAA) For the purposes of subparagraph (6) (h) (ii), this subsection applies to an enterprise agreement that provides for an employee to join a fund in relation to which:
(a) the employee is eligible to become a defined benefit member; and
(b) either or both of the following are satisfied:
(i) the governing rules of the fund permit the employee, within a period specified within those rules, to choose not to remain a defined benefit member;
(ii) the employee may choose another fund.
[choice of fund]
(3) Schedule 1, page 4 (after line 16), at the end of the Schedule, add:
8 At the end of section 32F
(4) A fund (the selected fund ) cannot become a chosen fund for an employee or a person who will become an employee under this section if the person has become or is eligible to become a defined benefit member pursuant to an arrangement of the kind referred to in paragraph 32C(6) (h).
9 Subsection 32NA(2)
After "An employer is not required under section 32N to give an employee", insert "or a person who is eligible to become an employee".
10 Paragraph 32NA(2 ) ( a)
After "the employer is making", insert "or will make".
11 Paragraph 32NA(2 ) ( b)
After "the contributions are made", insert "or will be made".
12 Subsection 32NA(9)
After "An employer is not required under section 32N to give an employee", insert "or a person who is eligible to become an employee".
13 Paragraph 32NA(9 ) ( a)
After "the employee is", insert "or will become".
I think it's probably worth, considering there are a number of senators in the chamber, going through what I went through yesterday around the importance of the Greens amendments. There are very few defined benefits schemes that are still open in Australia and admitting new members. This bill has very serious implications for one of them in particular, UniSuper, who made a number of submissions to the Senate's economics committee. I mentioned yesterday that I'm particularly interested in UniSuper because this super fund was more or less born in my home state of Tasmania through the University of Tasmania, which is where it has its origins.
Section 15 of the Superannuation Guarantee (Administration) Regulations 2018 already carves out government schemes, so without these amendments, from what we 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 benefits schemes. I know senators are thinking: well, what's the advantage of a defined benefits scheme? We could probably debate at some merit the pros and cons of defined benefits schemes versus other super schemes. However, it provides choice and, as I mentioned yesterday, it provides a recruitment tool for universities like the University of Western Australia because it can actually guarantee and predetermine returns, which, of course, in difficult times, can be quite attractive for a prospective employee. So it needs to be seen as part of an overall recruitment package.
The University of Tasmania in particular—and we have spent many years trying to attract the right people to move up the rankings of universities, and of course it's a very competitive space—is ranked very highly in some areas of study—for example, Antarctic and Southern Ocean science. The Menzies Institute for Medical Research is globally renowned for the work that it does, but in other faculties we admit that we need to do better to try to attract students and incentivise Tasmanian students to stay in Tasmania especially. That's something I feel, hand on heart, is very important to me as well; I have two children at university at the moment. My daughter is at Melbourne uni but, as a parent, I really wish that she had stayed in Tasmania, and I hope that my son will go to the University of Tasmania next year. But I know it's very competitive to keep students in their home state in Tasmania. So the universities themselves need to be competitive. They need to have good reputations and, of course, the rankings system is very important in that regard. Getting the right staff—the right lecturers and the right researchers, with the reputations and the published research—is critically important if you're going to start that chain of getting in the students and moving up the rankings.
I note the previous vice-chancellor at the university, Peter Rathjen, basically built a giant war chest to recruit some of the best researchers and lecturers anywhere in the world, to try and improve the university's rankings. In the packages that had to be offered, we know that there were significant financial inducements to get the right lecturers and the right researchers. The superannuation scheme is part of that, and being a defined benefits scheme, of course, it's a point of differentiation. I talked a little bit yesterday about UniSuper's defined benefits scheme. It has significant implications for the next generation of researchers, scientists, and lecturers.
The University of Tasmania is one of the largest employers in my home state of Tasmania. Indeed, I think now it's actually the second-largest employer in the state, and in my home town of Launceston it's actually the biggest employer. Let's cut to the chase here: it's been a very difficult time for universities around this country and, indeed, around the world. We know their revenues have dried up as student enrolments have collapsed, and we know that they're under significant pressure. And who bears that pressure? The staff at these universities do. We've had a plague of casualisation across universities. A number of university staff, be they researchers or lecturers or other staff, haven't been able to receive stimulus payments during this terrible period of pandemic. They haven't been able to receive JobKeeper. It deliberately wasn't extended to universities. No matter how many times the Greens and others try to extend JobKeeper to university employees, we haven't been able to achieve that. So they're really under the pump.
The new vice-chancellor at the University of Tasmania, just two weeks ago, made a public announcement about the negotiations with the unions. They are doing everything they can to try and retain their staff. If we make changes today that deny choice to prospective employees at university, that's only going to play against retaining good staff, because it will be extremely competitive. We are concerned that this bill, without the amendment presently before the committee, piles more uncertainty onto 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 responsibility to assist this industry at a time of unprecedented crisis.
Not only are universities facing significant uncertainty with major losses of revenue from student enrolments, but the inability to access JobKeeper payments—as I mentioned before—and impending job losses are making it more and more difficult to work in this sector. Undoubtedly, these kinds of pressures will have flow-on effects for the recruitment of new staff, particularly in the regions—and that's what Tasmania is. It's basically a giant rural electorate with a couple of big country towns, compared to the rest of the country. I'm acutely aware as a Tasmanian of the challenges faced in recruiting good staff to regional universities, as I am of the challenges faced by other businesses in my home state, and making it harder to attract and retain top staff is unhelpful, to say the least. I worked at the university myself for nearly 10 years as a lecturer, and I know that firsthand.
So why is this important, and why are we singling out UniSuper for discussion here?
I mentioned it was a Tasmanian-led innovation. The fund was conceived by a group of senior administrators at the University of Tasmania in the late seventies, and the university provided the corporate vehicle to sponsor the establishment of the trustee company now known as UniSuper, which, I understand, has taken off all around the country. The provision of a national and fully portable defined benefits scheme has been of considerable assistance to Australian universities, and this outstanding achievement, Tasmanian in origin, continues to assist in the recruitment and retention of qualified staff, especially in places like Tasmania.
I'd like to point out, as I did yesterday, that these amendments are not an exemption from choice. The amendments ensure that all defined benefits schemes are able to operate on similar terms while ensuring that those fortunate enough to be offered a defined benefits scheme will still be eligible for choice. It allows a contribution to be made in compliance with choice if an enterprise agreement provides for an employee to join a fund in which the relevant person is eligible to become a defined benefit member, and only when the fund's governing rules permit the relevant person, within a specified period, to choose not to remain a defined benefit member and to choose another fund.
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 anyone will ever be offered the chance to opt in to a defined benefit scheme, owing to the adverse selection risks which have been well documented and which I have outlined in my speech in the second reading debate and again today. It would be largely a tragedy if a durable, high-performing fund were sacrificed to an inflexible one-size-fits-all choice regime. Doing so will deal another blow to product diversity in an industry dominated by the same style of largely uniform accumulation style products. Rejection of these amendments would be ironic, as it would signal that the government had opted to deny defined benefit funds the choice to continue to provide for first-class retirement.
Thank you, Senator Whish-Wilson. I will deal with both of your sets of amendments separately, if you don't mind. On the amendments that you have presented on sheet 8981, which are largely about UniSuper: from what I've seen I think they were in fact drafted by UniSuper, because they approached me with a similar draft. The problem with those amendments is they continue to restrict the choice of fund where an employee is forced into a defined benefit fund. Once a member has set up their account, we want them to be able to choose to exit should they need to. The amendments would prevent an employee from ever choosing to join a different fund if that employee had previously been a defined benefit member under any enterprise agreement; that is a significant failure of the amendments. They permanently strip the right of any person who has ever been a defined benefit member to choose another super fund. We think that is a mistake.
UniSuper's fund is terrific. We have no problems with it. We have no problems with defined benefit funds. Indeed, we'd like people to be able to choose to go into defined benefit funds, and I would like to see a far greater proliferation of those products out there. That said, this bill is about choice, and that's exactly what these amendments deny. In fact, what they're really doing is simply propping up the business model of a fund that should be able to stand on its own two feet and on its merits.
Again, our concern is that people might want to leave; indeed, we have seen many examples where that has in fact been the case. I've had correspondence to my office from one academic, in my home city of Melbourne, who wrote to the government complaining that UniSuper's mandated fees and an automatic insurance premium eroded much of the small balance of superannuation he earned each month, and he wanted to get out but he couldn't. Another employee of a university in Victoria noted that not only was she wasting money on maintenance fees for a UniSuper account she didn't want; she also had to 'battle' with UniSuper by filling out extensive paperwork, enabling her to transfer funds to her main account each year. So it's actually forcing duplication of accounts, which is exactly what we're trying to avoid with this bill.
The other amendments that you have circulated, I should note, are quite similar to an amendment that the opposition put forward yesterday and that was defeated in the chamber. Those amendments, on sheet 8971, are about the removal of the $450 rule. The $450 rule, for those who are not familiar, says that an employer is not compelled to pay superannuation to an employee if they earn less than $450 a month. For those playing along at home, the $450 rule was included in the superannuation system when it first began in 1992; it was a Labor government at that stage.
I agree that looking at the $450 rule merits some consideration. In fact, that's why we've asked the Retirement Income Review to specifically include this in its mandate. The Productivity Commission also recommended it. However, there are some quite significant issues to consider around moving this longstanding threshold. There are implications for small businesses, obviously. But without the implementation of a policy to ensure that members are only defaulted into a superannuation product once, removing that $450 threshold may also result in duplicate low-balance accounts. So the government has agreed to the recommendation of the banking royal commission that a person should only have one default account. As I said, it's under active consideration by the Retirement Income Review. That's due to provide its final report to government in a matter of weeks. We think that should suffice and this is not necessarily the right bill in which to attach that amendment, so we'll be opposing that.
I want to place on record the opposition's position in relation to the Greens' amendment. The minister has correctly observed that it is quite similar to the amendment Labor moved yesterday. We naturally preferred our amendment on the same topic but, since the Senate has not supported that amendment, we believe that the amendments on sheet 8981 are preferable to having no amendments in this area at all. We don't accept the minister's characterisation of propping up a particular fund. UniSuper's been very clear about the actuarial basis for providing a defined benefit fund and the need for the maintenance of a broad pool and the need to avoid adverse selection. We think that amendments in this area are supportive of producing good outcomes for members—that is, retaining the ability to take advantage of the outcomes produced by a defined benefit fund.
I want to be clear—the minister might have misinterpreted—that I moved together, by leave, amendments (1) to (3) on sheet 8981 but I didn't move Senator Waters' amendment. You did refer to that in the $450 threshold in your response, so I just wanted to clarify that that was 'your bad'—not that it was very bad! I just wanted to make it clear that I am talking to my amendments. Senator Waters will get to talk to her amendments in a minute and we'll deal with that then.
As was just alluded to by Senator McAllister—and I went through this a bit in my speech—is that what is unusual about defined benefit schemes is that they guarantee the rate of return for employees. As I mentioned, there are not many of these around anymore. The membership of the funds is, obviously, tightly controlled—the actuarial studies that were referred to by Labor relate to that point—to allow for better planning of likely payment costs and to avoid adverse selection. Of course, having people join the fund just before retirement, to get access to better returns, is not in the interests of the scheme—you sign up to it and that is planned over a period of time. All we are asking for here is an amendment to give a new employee—and I stress 'new'—a 24-month period to decide whether they wish to stay in a defined benefit fund. Minister, you are correct in your response to us that they would not be allowed to join after that date. You said that was something that was reducing choice over all, but do you accept the difficulty of administering a defined benefit scheme? When people are joining just prior to retirement, the idea that they should not be able to join after the first two years is based on the actuarial needs to manage the fund. Do you accept that that is an important characteristic of defined benefit schemes?
I think we can safely say that defined benefit funds play a really important role as part of the suite of superannuation products out there. Indeed, I know there are a number academics, particularly, in UniSuper that really value the fund that they have and the fact that they don't face the longevity risk that other funds might have. But, that said, the premise of the defined benefits scheme, the premise of the request that UniSuper has put forward, is that it relies essentially on complacency and inertia or ignorance—for people to accidentally be put into that fund and then have to actively leave. They've got two years to leave a defined benefit scheme, which I think is interesting, but what they seem to be objecting to is people, rather than having to go into it and then actively withdrawing in the first two years, being able to not go into it at all in the first place, which should be a fundamental choice for academics.
We're not talking about tenured professors and vice-chancellors. We're talking about people that are tutors, and often those tutors have other jobs as well. They might have a job as a waitress or as a check-out person—whatever it might be—to supplement their income. Often, people tutor as a supplement to other income while they're in academia themselves or studying themselves. These are the people that are most likely to have those duplicate accounts. They're the ones that are most likely to be subjected to duplicate fees and duplicate insurance premiums. By forcing them into UniSuper—and I'm using UniSuper specifically as an example here, rather than all broad defined benefits schemes—this amendment would actually mean that they can never leave. It's like the 'Hotel California' of superannuation funds. And that's unreasonable, because I know a lot of people who work in incredibly different industries who were tutors, at one stage, at university, but you're forcing them into having duplicate accounts for the rest of their lives. That is kind of crazy and defeats the entire purpose of having choice in superannuation, which we believe is a fundamental right.
Minister, the complaints you referred to are not from defined benefit members; they're from members of the accumulation fund, which of course is totally different. That's my understanding. Are you able to comment on where you got that information from?
I have in front of me extracts from correspondence or summaries of correspondence that my office has received from the states of Victoria, New South Wales and Queensland and from the ACT. Admittedly, I didn't get any from Tasmania. I would love to be able to give you one from Tasmania. I do not have that. I do have eight different examples of correspondence that has been received by my office from people who are actually in UniSuper and would like to get out. One of them has actually said that she feels discriminated against—this is an interesting one. She's an academic at a university in Sydney who wished to move to a different fund but couldn't do so. She wrote to her local member—so it wasn't directly to my office; it came to my office indirectly—about how, as an academic, she felt discriminated against, as she did not share the same freedom as many other Australians when it came to superannuation providers. This is the sort of person to whom you're trying to deny the choice that everybody else has. I think that's kind of crazy, but I understand where you're coming from, and I want to say that this is not supposed to be an attack on defined benefit funds—quite the opposite. I would love to see a proliferation of defined benefit funds out there, because I genuinely think that they suit a number of Australians, but they have to be able to stand up on their own two feet without compelling people to be in there in the first place.
I'm very pleased to have an opportunity to come down and participate in this committee stage of the debate, because I wasn't actually able to participate in the second reading stage of the debate. I have a number of thoughts I'd like to share with the chamber on this very important bill and perhaps a question or two that I'll ask the minister, given the opportunity.
One of the things that struck me about the second reading debate was the different philosophical approaches to the concept of choice. We had, on this side of the chamber, government senators, who I think correctly understand choice, which is that choice is something that individuals exercise themselves. They are informed by a range of sources of advice and information, they consider that carefully and then they exercise their choice to be a member of a super fund or a member of a different super fund, to shift from one super fund to the other.
On the other side of the chamber, we had Labor senators making some very interesting contributions on the question of choice. Labor senators, in fact, although they pretend to believe in choice, don't really believe in choice. They say they believe in choice. I think I heard Senator McAllister summing up for Labor senators at one point saying, 'As we have made clear in this debate, we believe in choice.' I'm not sure it was that clear in the debate that Labor senators believe in choice, because most of their contributions were about how workers really weren't best placed to make choices about their own financial future, they weren't best placed to decide for themselves how their retirement funds should be spent or where they should be placed and needed guidance and assistance in making the choice, and a concept of collective choice had to be exercised on their behalf, because they couldn't make informed choices themselves.
Of course, collective choice is not choice at all, if you dissent from the collective decision. If you are an individual worker and you want to place your retirement funds in a different super fund because you made the judgement it's in your best interest but the collective choice has been made on your behalf that you should not be allowed to do that, where is your choice? You don't get to exercise choice at all. That really comes down to the heart of this bill.
We on this side trust individuals to make decisions in their own best interest, appropriately advised, considering their retirement income, and those opposite don't trust them. Those opposite want to coerce them to do things they would not choose themselves and they want to pretend this is somehow collective choice. It's a very unusual approach to the idea of choice. So Minister, considering this issue of collective choice or individual choice, have there been any examples of workers who have tried to or have wished to exercise their own individual choice that's differed from the collective choice that was going to be imposed upon them? Have they been able to exercise that? If they haven't been able to, is there any way in which this bill might assist them to exercise that?
Yes. As I said, I do have a number of examples in front of me specifically regarding UniSuper members. I mentioned a couple of those examples before from my home state—our home state, Senator Paterson—of Victoria. I do have some from New South Wales as well. I mentioned one before, who said that she felt that she had in fact been discriminated against because she didn't share the same freedom as many other Australians when it came to superannuation providers. The fact that she felt she had been discriminated against, I thought was a profound statement in her correspondence. There was another employee of the University of Sydney who discovered after several months that a UniSuper account had been set up for her. She didn't know she had a UniSuper account, so it was done without her knowledge. It was against her express wishes, because she was a long-time member of another industry super fund, First State Super, one she was particularly happy with. So she realised then she had not only been contributing to a different account but had two sets of fees, two sets of insurances. She also found out that she discovered that the UniSuper account caused half of her contributions to be eroded in fees. I can't understand how that lack of choice could possibly be in the best interests of that member.
Another employee of a university in the ACT said that he was disappointed that he was forced to set up a UniSuper account rather than proceeding with his preferred choice of another industry super fund, Hostplus. As a member of Hostplus myself, I can safely say that I can understand why that might be. UniSuper is a perfectly good industry super fund—don't get me wrong. I think it has served its members very well indeed over time because it does have both a defined benefit as well as a defined contribution option. But Hostplus might better suit the needs of that particular person, not necessarily because one is an academic and one is a hospitality worker; that really shouldn't limit your choice.
In fact, we would like to see more funds diversify their membership base so they don't specifically work for a particular industry because that in itself, as we have said many times, is a systemic risk, and diversifying your membership base is just as important as diversifying your investment options, because that reduces the systemic risk of the superannuation system overall.
Hostplus, bless them, have done that. They were set up as an industry super fund that was specifically for the hospitality sector, but they have broadened their membership base to a point now where they aren't just reliant on the hospitality sector—and thank heavens for that. Thank heavens for that, because, quite frankly, the hospitality sector having been hit so hard by COVID-19, Hostplus managed to miss the worst of it. That's not to say that they didn't suffer at all from it, because, of course, there was extraordinary market volatility and there was an extraordinary switch from aggressive assets to cash within superannuation funds as well that super funds have had to manage, but Hostplus have seen themselves through the worst of the storm largely because they had that diverse membership base. UniSuper doesn't necessarily have that, because it is purely for academics, and, as Senator Whish-Wilson has pointed out—
I was actually responding to Senator Paterson's questions.
Senator Whish-Wilson interjecting—
No, Senator Paterson's questions are just as important as yours. We've already had a long discussion about the importance of hearing debate in the chamber. Now you've made me lose my train of thought—UniSuper. UniSuper actually has quite a distinct lack of diversification of members, but that doesn't mean it's a good fund and it doesn't deserve support.
Senator Whish-Wilson, potentially I was misleading the chamber, because I wasn't responding to your statement; I was responding to Senator Paterson's question. He did have a question. He had a question about whether I knew of any superannuation fund members out there who felt that they had been denied choice, particularly those that were part of UniSuper—which was pertinent to your amendment specifically, Senator Whish-Wilson, because it was in fact UniSuper that drafted that first amendment, or drafted the draft of the amendment that I think you then presented to the chamber today. And I know that because they presented the same draft of the same amendment to me.
We questioned them. In fact, I think I spent about an hour on the phone with UniSuper, just trying to understand what their objection was, and they couldn't explain it. They kept saying, 'It's difficult. It's the actuarial numbers; they don't stack up.' I was going, 'Well, explain it to us. Give us a good crack,' because we had a few actuaries in the office. Even the actuaries in the office said, 'No, I don't think you're right here.' UniSuper can't explain why their business model doesn't stack up—or it only stacks up if you deny choice. I don't think the government is in the business of propping up a business model that doesn't stack up without people wanting to get into it, without people choosing to get into it. And many people will choose to get into UniSuper, because it is a good fund. It does a good job. But I think it can continue to be a good fund and continue to do a good job without the need to compel people to go into it, compel people to have multiple funds and compel people to have two sets of fees and two sets of insurances. That just doesn't seem logical.
And, going back to what that member of UniSuper said, why would we discriminate against academics over anybody else? I find this very strange, coming from the Greens, because I know you are very big supporters of academia. Certainly, in your earlier line of questioning, Senator Whish-Wilson, you were explaining the profound importance that academia plays in our lives and how we want to be able to support the university sector. That does seem to be at cross-purposes with this amendment.
Sorry, I've ignored you, Senator Paterson. I didn't mean to do that, because I do have some more examples of employees who have felt that they would like to be out of a particular fund and would like to have choice, something that most Australians have—although around 800,000 or so Australians at the moment have either restricted choice or no choice at all. They would like to be treated as fairly as those other Australians who do have choice.
Another employee of an ACT university wrote to the government complaining about UniSuper's 'uncooperativeness' in rolling over her super into her main fund. She noted the significant fees that she being forced to pay to maintain an account that she did not want. Now, that is unfair. That is unfair. If we are to support people to work in academia, why would we treat them so badly? You're absolutely right; we want people to work in academia. But, if we're going to treat them like this, surely that would be a disincentive, not an incentive, to work in academia.
In Queensland, an employee of a Queensland university wrote to the government with concerns that UniSuper was engaging in political activities that she disagreed with. I really don't want to get into the ideological wars of superannuation—
Senator Paterson might, Senator Bragg might, but I don't want to do that. But why should you be forced to be in a fund that you fundamentally don't agree with? You would understand this too, Senator Whish-Wilson. I think that most of those in the Greens would. You might say, 'I only want to invest in an ethical product'—something that doesn't invest in fossil fuels, for instance—but you might be stuck in a fund that does invest in fossil fuels. How unfair is that? Denying you that choice would be unacceptable. So an employee of a university in Queensland wrote to the government with concerns that UniSuper was engaging in political activities that she disagreed with, pressuring companies not to provide services to Adani.
Senator Whish-Wilson interjecting—
That's exactly right. But wouldn't you feel terrible, Senator Whish-Wilson, if you were forced into a fund that was helping Adani. If there was a fund that was supporting and funding Adani and cheering for Adani on the sidelines with a bunch of pompoms as Bob Brown drive past with his convoy, and you were forced to invest in it, that would be unfair on you, and we wouldn't want that to happen to you. We wouldn't want it to happen to anybody. But, due to this woman's enterprise agreement, she was prohibited from switching to a different fund.
There was another employee, also in Queensland, on a contract with a Queensland university, who wrote to her local member complaining about the money that she was wasting paying fees on her UniSuper account while using NGS Super as her main superannuation account. Of course, she was prohibited by her enterprise agreement from having her money paid to her preferred fund. There are many, many examples, even though UniSuper is a good fund. It's a good fund, it does a terrific job and we would encourage people to choose it should they want to, but only if they want to. If they want to put their money somewhere else, they should have the right to do so. There is no sector that is a sacred cow here, no sector that is so precious that we would exclude it from the right of all Australians to choose their superannuation fund.
This is something I haven't seen before in the Australian Senate: coalition senators coming in and asking questions to a minister during a committee stage—some scrutiny! This is really, really unusual. Let everybody behold what is occurring here.
A point of order, Temporary Chair: Senator Whish-Wilson is misleading the chamber. I myself have many times participated in the committee stage of debates and asked questions of ministers, and I will continue to do so today.
The TEMPORARY CHAIR: Thank you, Senator Paterson. Senator Whish-Wilson, the committee stage is open for all senators to come and ask questions.
I want to thank the chamber for their decision on that particular amendment. It is an important one, as is the next Greens amendment coming up, and I think I can safely pre-empt that, because I have already spoken on it before—accidentally, for which I apologise to Senator Waters. I think it is worth discussing because I know that Senator Waters is going to say that this is a position that I have supported in the past. I'd just draw it to the attention of the chamber, because there are some people who are sitting in the chamber now who might not be familiar with the next Greens amendment: the next Greens amendment is about something called the '$450 rule', which I think is actually a really important part of the superannuation system. It's something that's been around since 1992.
My understanding is that we're talking about fundamental changes to the superannuation system as part of the 'your super, your choice' bill. This is a fundamental change and also quite a significant change that is not necessarily related to the idea of choice, though. It is something that has been raised in the chamber before and I have spoken about it before, even though the amendment has actually been moved. It is fundamental to superannuation, as is the concept of choice.
I said in my summing-up speech in the second reading debate that choice is the corollary of compulsion. In Australia, we compel people to pay nearly $1 in $10 of nearly everything they earn into superannuation, whether they like it or not. We then shouldn't compel them to put it into a particular fund. Surely the corollary of that compulsion should be that they have choice as to where that money goes. In the same way that we don't compel people to put their money into a certain bank account, an employer can't dictate to an employee which bank account they should put their money into. We shouldn't also dictate which super fund an employee would put their money into. It makes perfect sense. It is the corollary of compulsion. In the same way, it is how in Australia you are compelled to vote but we don't tell you, we don't compel you, to vote for a particular party. No-one tells you who to vote for, but you are compelled to vote. This is not dissimilar.
The '$450 rule' is slightly different, because there are a small proportion of people in Australia who don't pay superannuation. They aren't compelled to put nearly $1 in $10 into superannuation, and they're people who earn less than $450 a month. Why $450? This is interesting: it is because if you multiply $450 by 12 it equals $5,400. Why does $5,400 ring a bell? I'll tell you why it rings a bell. It is because it was the tax-free threshold in 1992, when compulsory superannuation was introduced. At that time—and I tip my hat to Labor, because they were the party that introduced compulsory superannuation—the Labor Party said, 'If you don't earn enough to pay tax, neither should you then be compelled to put money into superannuation.' I think that's quite an interesting concept. If you don't earn enough to pay tax, should you have to take away nearly $1 in $10 to put it into a retirement savings vehicle?
I'm reasonably ambivalent on this because $5,400 is no longer the tax-free threshold. In fact, the tax-free threshold is now $18,200. So should you be compelled to pay nearly $1 in $10 of your hard-earned wages into superannuation if you don't actually pay tax?
It's actually quite an interesting question, and one that I know that the Retirement Income Review, which is being headed by Mr Callaghan, is currently looking at. It was raised by the Productivity Commission in its landmark report into the efficiency of the superannuation system in 2018, and it does make sense. But it's not a binary proposition: everybody should pay superannuation from dollar one. Yes, that makes sense in a sort of simplification manner. And can I say that the only reason that you possibly could make that happen now is that this government introduced Single Touch Payroll, and Single Touch Payroll makes it much easier for small employers to pay superannuation from dollar one. But the question is: is it fair?
There are a number of people out there at the moment that are earning less than $450 a month—often, though, from multiple jobs. If you're doing multiple jobs and you can find the $450 per month, that would make sense; you would want those people to contribute to super. But, if those people are only earning $450 a month or less than $450 a month, should you then carve out nearly $1 in $10 of everything they earn, nearly one-tenth of everything they earn, and compel them to put it away into superannuation? Quite frankly, if you're earning less than $450 a month, I would imagine that you would be counting every single penny. Locking it away—potentially for up to 40 years, quarantining that money for 40 years—might not actually create the best outcome for those people today, who need the money right now.
So it is an interesting question. I'm very, very glad that the Greens raised it. It's one that I have pondered myself and that I've written about—I've been published on this issue. I spoke about it before I came to the Senate chamber, when I worked at an industry super fund myself, when I worked at AustralianSuper. It is an interesting one, and it does also disproportionately affect women, theoretically. However, there doesn't seem to be very much in the way of current data on that, which is something that I am desperately hoping the Retirement Income Review will address.
The Retirement Income Review, as you would well know, is going to create a fact base on which we can all agree, and then we can leverage that fact base and build superannuation policy on the basis of that. Let's face it: at the moment with superannuation, terrific as it is—a $3 trillion industry, bigger than the ASX, bigger than GDP; it's quite extraordinary—there are so many dissenting voices in this industry. Nobody speaks with one voice. I think we can genuinely agree that it is the most partisan part of the financial services sector, and it's very hard to find a voice in there without a vested interest behind it. We can speak of the funds, the industry bodies and even the think tanks—it's very hard to find somebody that doesn't have a finger in the pie. Even the Grattan Institute—and I love the Grattan Institute—is associated with—
An honourable senator: Do you, really?
I do; I love the Grattan Institute.
An honourable senator: With a love-hate feel.
A love-hate relationship, admittedly. They don't always agree with me, but that's alright—my colleagues in the chamber don't always agree with me either, and I love them all dearly as well. But even the Grattan Institute—they're associated with academia and universities, so they, too, speak with an academic industry super fund hat on. But, that said, what we would like to do is create a fact base from which we could then leverage future superannuation policy that doesn't have the lens of vested interest looking down into it. I can see I've got the attention of the opposition over there.
An honourable senator interjecting—
That's because, as you would well know, this is an industry that I feel profoundly passionate about. I have worked in the industry all my life. And I don't like to play favourites. I've worked in retail and I've worked in industry super. I heard Ian Silk—my old boss, my former CEO—on the radio, on RN, just this morning, as I'm sure many of you did, talking about the dangers of the flight to cash that we've seen in the superannuation sector just in the last few months. We want to make sure—I know this is very important to Senator Patrick—that people make informed choices, and I mentioned that in my summing up speech, Senator Patrick, as you would well know. We want to make sure people get a chance to make informed choices about their superannuation. But choice is what is fundamental here. Choice is what you're denying by putting forward this amendment. This amendment is all about denying or restricting choice, and we've got dozens of examples here—people might not have chosen UniSuper; they might be stuck in UniSuper. This particular amendment compels people who have ever been in UniSuper or any other defined benefit fund from ever leaving, from ever having choice in any fund. It doesn't matter whether they worked in a university when they were 18 as a tutor and now have gone off to run BHP. It doesn't matter. They're stuck in that defined benefit fund for the rest of their lives, and that is unacceptable.