Tuesday, 25 August 2020
Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019; In Committee
We seem to have some audio issues. Temporary Chair Brockman, I wonder if you might clarify with Senator Waters whether she is presently speaking to the Australian Greens' motion on sheet 8981, which has previously moved by Senator Whish-Wilson?
No, we do have some amendments before the chair: amendments (1) to (3) on sheet 8981, moved by Senator Whish-Wilson. They are currently before the chair, so we do need to deal with those before we move on.
The CHAIR: The question is that amendments (1) to (3) on sheet 8981, moved by Senator Whish-Wilson, be agreed to.
I table a supplementary explanatory memorandum relating to the government amendments to this bill, and I seek leave to move amendments (1) and (2) on sheet UD113 together.
I move government amendments (1) and (2) on sheet UD113 together:
(1) Schedule 1, item 5, page 4 (line 2), omit "1 July 2020", substitute "1 January 2021".
(2) Schedule 1, item 6, page 4 (line 4), omit "1 July 2020", substitute "1 January 2021".
Question agreed to.
by leave—I move Australian Greens amendments (1) and (2) on sheet 8971 together:
(1) Schedule 1, page 3 (after line 27), after item 4, insert:
4A Subsection 27(1)
4B Subsection 27(2)
Repeal the subsection.
(2) Schedule 1, page 4 (after line 16), at the end of the Schedule, add:
8 Application provision
Despite the repeal made by item 4B, subsection 27(2) of the Superannuation Guarantee (Administration) Act 1992, as in force immediately before the commencement of this Act, continues to apply at and after that time in relation to an employer for an employee if the employer is entitled to a jobkeeper payment (within the meaning of the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020) for the employee during the calendar month.
As I was saying before, the purpose of these amendments is to remove the $450 threshold below which workers don't get paid superannuation. People might recall that back in, I think, 1992 this threshold was inserted. Essentially, if you are a worker who is earning less than that each month you don't get paid superannuation by your employer. The reason that we have long thought that this was inequitable and needs to be removed, which is what the amendment would do, is that it has a disproportionate effect on a number of workers, and in particular it has a disproportionate effect on women workers. We already know, sadly, from many Senate inquiries and many studies, that on average women retire with approximately half the superannuation of their male counterparts. One of the contributing factors to this enormous discrepancy in superannuation balance is this $450 threshold rule. There was a purpose to it originally and it was to align it with what was the then tax-free threshold but that's since increased, as is appropriate. We've also got the low income super tax offset, or LISTO, which also obviates the need for this threshold to continue.
In short, this threshold disproportionately affects women, disproportionately affects casual workers and disproportionately affects workers that have multiple jobs, because the threshold applies per employer. For example, if you are a young person who in this economy is lucky to have a job, or several, and you're earning less than $450 a month from each of those employers, none of them have to pay you superannuation. This is part of the reason why this is an inequitable rule—
Senator Waters, we might have to just ask you to pause again. Your connection to us is breaking up. I'm not sure if there is anything we can do about that. Minister, you have the call to respond to so much of Senator Waters' points as you wish to. We will try to and re-establish that connection in the meantime.
The government will be opposing this amendment that removes the $450 rule. Senator Waters is right; the $450 rule has been included in the superannuation system since compulsory superannuation began in 1992. I agree that looking at the $450 threshold rule does merit some consideration; however, now is not the time.
When it was first established it was established for two reasons: one was because there was a feeling that those who earned below the tax free threshold should not necessarily have to participate in this compulsory superannuation scheme and the other was that it was an administrative burden for businesses. Those issues have changed, but there are still many issues to consider around moving that threshold. There are implications for small businesses. Without the implementation of a policy to ensure that members are only defaulted once into superannuation products, removing the threshold may in fact result in more duplicate and low-balance accounts. The government has agreed to implement the recommendations of the financial services royal commission in that a person should only have one default superannuation account.
The TEMPORARY CHAIR: Thank you, Minister. I will just try and go back to Senator Waters, if she can hear us.
No, I'm afraid I wasn't able to hear that. I've only just been able to dial back in. I suspect the minister and I don't agree on this issue. I'm just taking a wild guess!
The TEMPORARY CHAIR: I suspect you're possibly right, Senator Waters. Did you wish—
Could I just get a stick from the chair as to roughly at what point I cut out? There were a couple of facts and figures that I was hoping to get on the record. This is not a test!
The TEMPORARY CHAIR: Honestly, I couldn't say precisely. It faded out gradually. I would take the opportunity to get those things you want to get on the record on the record, Senator Waters.
Thank you, Chair. With your indulgence I will do that now. As I was saying, having the $450 threshold below which employers don't have to contribute to superannuation for their workers disproportionately—
The TEMPORARY CHAIR: I think we might go to Senator McAllister. I think we will just see if we can get those technical issues ironed out before we go back to Senator Waters. Senator McAllister, you have the call.
Labor of course is extremely concerned about the retirement income gender gap. It was Labor senators who championed the inquiry which resulted in the report 'A husband is not a retirement plan': achieving economic security for women in retirement. I think it proved to be a very important inquiry. It was conducted by senators from all parts of the chamber and resulted in a unanimous report with many recommendations to improve retirement outcomes for women.
I listened carefully to Senator Hume's response. I note Senator Hume does not intend to support this Greens motion, and Labor does not intend to support it either. We will consider a wide range of policy options before the next election to tackle the challenges faced by women in retirement to improve their economic security, but this is not the bill where we will make that decision. We will make that decision as part of our considerations in the lead-up to an election. However, I did listen carefully to Senator Hume's response, and I make this observation: the government can point to very few things that it has practically done to support women's outcomes in retirement.
The government likes to come into this chamber and say that this is a priority, to provide comforting words to women that the government is concerned about their economic security in retirement, but it is difficult to identify a single measure in the last seven years that has actually gone to the issues that were canvassed in the report and that are routinely raised by women when you speak to them. The only measure that the government ever points to that in any way goes to these issues is the capacity for people to contribute above the cap in terms of voluntary superannuation contributions.
The truth is that most women are not in a position to make contributions above the cap. Most women do not have tens of thousands of dollars lying around, and most women are not, therefore, advantaged by a system that allows large volumes of cash to be popped into a super account as a one-off. That doesn't help, but it's the only measure that Liberal senators ever point to when these concerns are raised in this place. I say to the government: it is not good enough. You have been here for a long time. You are in your eighth year of government. Government provides marvellous opportunities to actually make real change in the lives of Australian people, and in this instance you have had the opportunity to make real change in the lives of Australian women, and it is immensely disappointing there has been no progress in the seven years you've been in power.
Obviously, we're unable to hear from Senator Waters due to some unknown technical issue. My suggestion is that it is unfortunate that that's the case but I don't believe that the Senate can sit around and wait indefinitely until the technical issue is sorted; so, if I need to, I will now put Senator Waters's amendments or suggest that you put Senator Waters's amendments to the chamber.
The TEMPORARY CHAIR: I will if there are no further contributions. Senator Patrick?
Sorry for the late arrival. Minister, you say that the government is considering this. What's the time frame? What's the time frame in which you are going to come to this chamber with legislation that deals with this threshold?
Thank you for that question. I can't give you a time frame. What I can say is that this issue was specifically recognised as part of the terms of reference in the retirement income review. That review has reported to the Treasurer, and that report is with the Treasurer right now.
I go back to Senator McAllister's point. This has been a long time in place. It's been talked about for a long time. Indeed, we've been dealing with this piece of legislation for some period of time. Are you not in a position to make a firm commitment to the Senate as to a time frame for introducing amendments that deal with this issue?
Senator Patrick, I can't give you a time frame on dealing with that specific issue, but, as you know, this government has initiated and, indeed, implemented a series of reforms to superannuation over its last seven years in government and it will continue to do so until the system is efficient and high functioning, as it should be, to serve all Australians.
I move my amendment (1) on sheet 8926 revised:
(1) Page 2 (after line 12), after clause 3, insert:
4 Review of amendments
(1) The Australian Prudential Regulation Authority (APRA) must conduct a review into the operation of the amendments made by this Act.
(2) Without limiting the matters that APRA may consider when conducting the review, the purpose of the review is to:
(a) identify any unintended consequences of the amendments made by this Act on the operation of defined benefits schemes, including the ongoing viability and profitability of defined benefits schemes; and
(b) consider whether amendments to the Superannuation Guarantee (Administration) Act 1992 or any other Act are necessary to rectify the unintended consequences identified under paragraph (a).
(3) In conducting the review, APRA must consult industry stakeholders.
(4) The review must be completed before the end of the period of 30 months beginning on the day this Act commences.
(5) APRA must give the Minister a written report of the review.
(6) The Minister must cause a copy of the report to be tabled in each House of the Parliament within 15 sitting days of that House after the report is given to the Minister.
(7) In this section, Minister means the Minister administering the Superannuation Guarantee (Administration) Act 1992.
This amendment requires the Australian Prudential Regulation Authority to conduct a review into this legislation. The purpose of it, really, is to provide a safety net. It requires the review to look at any unintended consequences of this legislation and, if any unintended consequences are found—and I note that it requires consultation with stakeholders to form that particular view—to make recommendations to the minister as to how to rectify those unintended consequences. The review must be completed within 30 months of this legislation coming into effect. The report must be written and provided to the minister, and the minister must then table the report within 15 days of it being given to the minister.
Thank you, Senator Patrick. The government will support this amendment. The government notes that managing the composition of their membership is an unavoidable operational consideration for any defined benefit scheme and doesn't believe that a change to the proposed bill is required at this time. However, as identified by the Senate committee's final report on this bill, new evidence may well emerge over time, and the government will be agreeing to Senator Patrick's amendment to require APRA to review the status of defined benefit schemes within 30 months to ascertain whether there have been unintended negative consequences.
I wish to indicate that Labor also will support the amendment. The committee did hear evidence, from a range of stakeholders who were in a position to know, that the scheme proposed by the government would hurt defined benefit schemes. The small number of witnesses who were in a position to tell us about that were unequivocal in saying that was the case. We believe there will be detrimental effects to defined benefit schemes and we support a review, but the fear, of course, is that it will be too little, too late and that, in fact, the damage will have been done by this needlessly partisan intervention into a perfectly functioning super scheme. Nonetheless, we support the amendment proposed by Senator Patrick.
by leave—I move opposition amendments (1) to (3) on sheet 1000 together:
(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.
(2) 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 January 2021; or
(ii) if the agreement includes a restriction on the choice of superannuation funds—made on or after 1 January 2021.
(3) Schedule 1, page 4 (after line 16), at the end of the Schedule, add:
8 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".
9 Paragraph 32NA(2 )( a)
After "the employer is making", insert "or will make".
10 Paragraph 32NA(2 )( b)
After "the contributions are made", insert "or will be made".
11 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".
12 Paragraph 32NA(9 )( a)
After "the employee is", insert "or will become".
These amendments seek to establish arrangements that will allow workers to retain the choice to bargain for a single fund or set of funds where it is determined by the Fair Work Commission that it is in their interests to do so. This is about protecting choice. This is about protecting the choices made by workers in the context of their workplace, along with their colleagues, and in the context of their union—their choice to collectively determine what is in their best interests.
The amendments we are considering will ensure that if an enterprise agreement includes a restriction on the choice of superannuation fund or funds available to employees it will go before the Fair Work Commission, and the Fair Work Commission must be satisfied that the restriction is in the interests of the employee who will be covered by the agreement. What this will allow, as was made clear by witnesses who appeared before the Senate inquiry into this legislation, is consideration of key factors that are essential to the proper functioning of our superannuation system. It will allow safeguarding against underpayment and it will allow features which are specific to certain workplaces or industries, which are attached to certain superannuation funds, to be retained. I commend the amendments to the Senate.
The government will be opposing the amendments on sheet 1000. The government can't support an amendment whereby employees' ability to choose the fund that receives their superannuation contributions will continue to be restricted. Allowing choice to be restricted in circumstances approved by the Fair Work Commission fails to acknowledge that each employee has individual financial circumstances which impact on which superannuation fund is most appropriate for them. The key is that employees should have the power to make this decision—not the employer, not the superannuation industry and not the government. Individuals should not have to bear the consequences of holding multiple accounts, including facing multiple fees and multiple insurance premiums.
We should be clear about what these amendments are actually about. In the committee and previously, the opposition have said that it is about insurance risk. But the ACTU advised my office during just the last sitting period that this reform actually makes very little difference to insurance arrangements. It's really about providing assistance to individual funds, which are, let's face it, now multibillion dollar companies that Labor sees fit to prop up and shield from competition by removing an employee's right to choose their fund. You can't imagine these circumstances in any other part of the financial services industry. Imagine if any other financial services company unaffiliated with the labour movement approached Labor and begged them to be propped up by locking in customers and denying them choice. Imagine if a telecommunications company or an energy company came begging: 'Please prevent a customer from switching to another provider.' They'd be laughed out of the room and rightly pilloried in the media for doing so. The fact that Labor thinks it's okay for superannuation funds to do so, I think, is telling indeed. It speaks volumes about what is wrong with this industry—this complacency and entitlement. Make no mistake, this amendment is all about funds and it's not all about the members.
Furthermore, the operation of this amendment is ambiguous. It's not at all clear whether the choice of fund restrictions would apply to employers with compliance concerns or employers that fail to meet their SG obligations. If they did impose restrictions in these circumstances, the result is that employees would be stripped of their right to choose because of their employer's noncompliance. In other words, Labor's amendment would be punishing employees because their employers had failed to pay their superannuation. In any case, the amendment doesn't address the SG noncompliance. The government take SG obligations very seriously and believe that noncompliance is best dealt with through our targeted reforms to improve the overall integrity of the superannuation guarantee.
Yes. With your indulgence, Chair, I seek leave of the chamber to speak for a few moments on the substance of the amendment. I acknowledge that it has already been voted on, but unfortunately the link crashed so I didn't get to give the justification for the amendment nor was I aware that it was being voted on until after the link was restored.
I thank folk there in the chamber for their indulgence. As I was saying earlier, the amendment I moved would abolish the $450 superannuation threshold at which nobody gets paid super if they get paid less than $450 a month. This disproportionately affects women, who are 60 per cent of the people who earn less than $450 a month; it disproportionately affects young people, who often hold multiple jobs; and it disproportionately affects people in casual work. For all of these reasons, we think it's a very outdated and discriminatory threshold. Sadly, we know that women retire with, on average, half the superannuation of men, and this is one of the reasons for that. There are so many, but this is one of them.
This is an easily fixable situation. I acknowledge that the vote on this amendment has, sadly, already gone down, but I am informed that the government indicated that they are considering this issue as part of the Treasurer's response to the retirement income review. Certainly we would love to see some movement on this, and I'm informed that the Labor Party indicated that they would also consider this issue in the lead-up to the next election. So there's perhaps some cause for hope that the two big parties are taking this issue on. There's no longer a justification for making that superannuation retirement gap worse for low-income earners, who are disproportionately women.
On that point, in the context of the COVID crisis that has beset us all this year and the somewhat unfortunate decision by government to allow people to access their super, I've got some statistics here that I would like to put on the record, and this has a gendered element as well. I understand that, whilst more men than women have accessed their super through the early-release scheme, women are taking out a higher proportion of their savings from super, and that's probably also a result of the fact that their account balances are lower and therefore the amount they can withdraw is a larger proportion. Long story short: the existing super inequities have been exacerbated by the early-release scheme, and they have been exacerbated for the past few decades by this threshold of a $450 contribution. Women in Super estimates that 220,000 women and 145,000 men are missing out on about $125 million in superannuation each year because they're not meeting that $450 threshold.
I thank the members of the crossbench who supported us on this amendment to remove that threshold. I'm disappointed that the big parties didn't vote for it but acknowledge that they've made some statements that indicate that perhaps this issue is under review, and we really hope to see some progress on it in the coming months. Thank you very much for your indulgence, Chair.
I move opposition amendment (1) on sheet 1001:
(1) Page 4 (after line 16), at the end of the Bill, add:
Schedule 2 — Superannuation contributions in National Employment Standards
Fair Work Act 2009
1 After paragraph 61(2 )( h)
(ha) superannuation contributions (Division 10A);
2 After Division 10 of Part 2-2 of Chapter 2
Division 10A — Superannuation contributions
116A Superannuation contributions
Obligation in relation to contributions
(1) An employer must make contributions to a superannuation fund for the benefit of an employee so as to avoid liability to pay superannuation guarantee charge under the Superannuation Guarantee Charge Act 1992 in relation to the employee.
Amount of contributions
(2) The amount of the contributions relating to the employee is to be worked out:
(a) in accordance with the Superannuation Guarantee (Administration) Act 1992; or
(b) if a modern award or enterprise agreement applies to the employee and provides for an amount higher than the amount applicable under paragraph (a)—in accordance with the modern award or enterprise agreement (as the case requires).
(3) The superannuation fund to which the contributions relating to the employee are made must be:
(a) if a superannuation fund is a chosen fund (within the meaning of the Superannuation Guarantee (Administration) Act 1992) for the employee—that superannuation fund; or
(b) if there is no chosen fund (within the meaning of that Act) for the employee and a modern award or enterprise agreement applies to the employee—the superannuation fund specified in the modern award or enterprise agreement (as the case requires); or
(c) otherwise—a superannuation fund for which the choice of fund requirements in section 32C of that Act are satisfied in relation to the contributions to the fund.
Salary sacrifice arrangements
(4) A contribution made by an employer to a superannuation fund for the benefit of an employee under a salary sacrifice arrangement (within the meaning of the Superannuation Guarantee (Administration) Act 1992) with the employee does not satisfy the employer's obligation to make contributions under subsection (1).
Superannuation Guarantee (Administration) Act 1992
3 After subsection 37(1)
(1A) Without limiting subsection (1), the Commissioner may amend an assessment if a court or tribunal has ordered the payment of superannuation contributions in relation to an employee and the order has been complied with.
Underpayment of superannuation is an enormous problem. And the problem that is not being dealt with by the government is that there are basically very limited mechanisms for individuals who find themselves being underpaid. The amendment that we propose would change the law to include a right to superannuation within the National Employment Standards, and that would give every employee the right to pursue their unpaid superannuation in their own right.
The problem is this: currently unpaid or underpaid employer superannuation contributions are a debt that is owed to the Australian Taxation Office rather than to the individual worker. Unless there is a specific clause in their award or their agreement—and I observe that the government does everything in its power to make it difficult for such agreements to be formed—workers can't chase this money, because the money's not technically owed to them; it's technically owed to the ATO.
By placing superannuation within the National Employment Standards in the Fair Work Act, all employees would be empowered to recoup unpaid super from employers through the Fair Work Commission or through the Federal Court. Individuals would be empowered to chase their own unpaid super, instead of waiting for the ATO to do it for them. Again, the Senate Economics Legislation Committee has previously heard evidence about the administrative problems—the delays and difficulties encountered by people who try to get the ATO to act on their behalf in relation to these matters.
What's before the chamber now is a significantly more practical proposal than the government's pathetic response to this issue. What did the government decide to do? Their only response to this issue has been to allow an amnesty in place for employers, who can actually claim amnesty as far back as 1992. You can have been not paying super since 1992 and get a tick from the government. The amnesty is coming to an end, but it is indicative of the pathetic and inadequate attempts by the government to grapple with these problems. They come into this chamber and cry crocodile tears about various aspects of superannuation and various problems for individuals. If they had the courage of their convictions, they would support this simple amendment, because it is an amendment that would give individuals the power to chase the money that is owed to them.
The government opposes this amendment. The amendment as outlined by Senator McAllister proposes to insert the superannuation guarantee into the National Employment Standards, which would mean, yes, workers would be able to pursue their employers through the Fair Work Commission on super issues in addition to the existing regulatory oversight by the ATO. The amendment that's proposed is identical to an amendment related to the Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019 that was defeated in this chamber on 24 February this year. As I advised the chamber at that time, on 24 February, I have committed to the crossbenchers that Treasury will examine this proposal in good faith and will brief the crossbench on the outcomes of that examination. That work is currently underway, and I am more than happy to offer any crossbench senators a briefing if they wish. As agreed to in my discussions with Senator Patrick, and also as followed up with the shadow Assistant Treasurer, the time frame for that work has been extended by six months to February next year, 2020-21. The reason for that is that the relevant Treasury resources were redeployed to work on the coronavirus response.
The amendment, though, contains a number of very complex issues that require some quite careful examination and aren't appropriate to be debated on the floor of the chamber today. They include things like the potential duplication by the Fair Work Commission of the regulatory work that is already undertaken by the ATO. This would create considerable uncertainty both for small businesses and for individuals, with small-business owners potentially facing duplicate penalties and with the presence of multiple regulators potentially causing confusion for workers and employees. That is why a proper examination of this policy and its consequences is required, and that examination is what I have instructed Treasury to undertake.
I just rise to make a short contribution here. I actually do accept the proposals put forward by Senator McAllister, but I also accept that there are some issues that need to be resolved in relation to this, that it could create issues. So I am taking on good faith the commitment that has been made by the minister to have a review completed by February. Very shortly after, I'm anticipating that we'll have legislation before the parliament that will remedy the very things that Senator McAllister is talking about. So I won't be supporting the amendment today. But certainly if we get to a point some reasonable time after February and the government hasn't acted I will change that position.
Thanks for the update, Minister. I note the blow-out, again, of another six months in acting on this issue that is so important for so many people who are being underpaid by their employers. I asked on the last occasion whether a briefing could be provided to the opposition. It strikes me as odd that some parts of the chamber could be briefed on this question and issue but the opposition could not be. Have you given any further consideration to that request?
I think the last time this issue came up I said that, if you agreed, as Senator Patrick had, to not support your own amendment, we would be quite happy to provide you the same briefings that we would provide the crossbenchers who were supporting us in not supporting your amendment.
I will make the observation that on occasion, just every now and then, we expect the government to rise to the task of actually trying to deliver for the Australian people, instead of playing political games and trying to get petty wins in this place. Now, that may prove to be optimistic—some would say the triumph of hope over experience—but I had thought, on this occasion, the minister might be willing to engage with the chamber on a matter that appears to be of interest to the whole chamber. I have, in fact, brought this amendment forward in this debate in good faith. And I bring it forward because I know that there are many, many people out there who are looking for an answer, who are looking for a solution and who don't want to be exploited any further; they want a remedy. That's actually what acting in good faith on behalf of your community looks like. I don't understand why the people who look to be represented by the opposition can't expect some kind of dialogue with the minister responsible for this issue.
by leave—I make the same request for the opposition.
The TEMPORARY CHAIR: The opposition wishes that its vote of no be recorded in Hansard to prevent the need for an actual division; we appreciate that.
by leave—I would like my position noted as well in the Hansard.
The TEMPORARY CHAIR: Senator Lambie is opposing the adoption. The question now is that the bill be reported.
Bill reported with an amendment.
The TEMPORARY CHAIR: The committee has considered the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019 and has agreed to it with amendments.