Thursday, 25 February 2021
Treasury Laws Amendment (Reuniting More Superannuation) Bill 2020; Second Reading
An honourable senator interjecting—
'Death Tax Timmy' keeps interjecting. You'll need to tone it down a bit, mate. As I said last night, the superannuation industry really is like the 1930s Chicago gangland gangster wars. We've got a bunch of crooks out there running around, gouging $40 billion out of the Australian economy and the Australian worker every year, and it's about time we stood up to that. It reminds me of a scene in The Untouchables. Sean Connery was playing the role of retired cop Jim Malone, who was out to get Al Capone—who could easily be played by Senator Tim Ayres, actually. Just before the scene where he gets gunned down, he says to the criminal gangster, 'Isn't that just like a wop—you bring a knife to a gunfight.' He tells him to get out, and, of course, just as he's about to get out, he gets gunned down.
This legislation is a bit like bringing a knife to a gunfight, in the sense that it doesn't really go far enough in cracking down on the superannuation industry. We've got $3 trillion out there sloshing around in the ivory towers of Sydney and Melbourne, lining the pockets of the wealthy and the blowhards, while the battlers out there in the regions and the metropolitan suburbs of the cities are basically losing 10 per cent of their income every week. I'll have a go at my own party here. We think we believe in free markets, but markets are actually predicated on the risk-reward paradigm. This is the problem with superannuation—there is no risk-reward paradigm; there is no downside risk for fund managers. Basically, fund managers can lose the entire lot of someone's superannuation and not be held liable for the loss of capital. If we're going to get serious about increasing productivity in this country, we need to get serious about matching risk and reward. That's certainly not the case with superannuation, which, in my view, doesn't really help anyone other than the wealthy end of town.
Superannuation also provides up to almost $40 billion in tax concessions. Of course, most of those tax concessions also go to the wealthy end of town. I'll quote you some numbers. It's estimated to be about $40 billion in tax concessions. There are 13 million workers in Australia. If we were to give them a $3,000 tax cut, that would cost $39 billion. A $3,000 tax cut, from the bottom up, could basically lift the tax-free threshold from $18,200 to, off the top of my head, a bit over $30,000. Most of that money would be pumped back into the economy. You could probably get the tax-free threshold up to $35,000 or $40,000. That would be a great way to incentivise people to get back to work. I think we have a crazy system in this country. We give businesses a tax deduction for the cost of doing business but we don't give PAYG workers a tax deduction for the cost of living. It's silly, in my view, to be taxing low-income earners earning below $35,000 to $40,000 for their cost of living if we just have to give it back to them through social security. Why not let low-income earners keep that money in the first place, especially if we can give all these tax concessions to superannuation? You have to earn the money in the first place before you even pay superannuation. It would be better to actually let people earn that money in the first instance.
If you add up the $40 billion in fees and the $40 billion in tax concessions, the cost of this superannuation comes to about $80 billion. The cost of the pension is $52 billion. You've got to ask yourself: are we spending $80 billion to avoid paying out more of the pension? Really, I think we'd be better off raising the pension, getting rid of superannuation tax concessions, raising low-income tax thresholds and cutting the tax rate for low-income earners. That would enable everyone to have a better safety net when they retire, rather than having this: 'Anything goes. Pick your super fund and, if your super fund does a good job, you might get your money back, but, if it does a bad job, you don't get your money back.'
What I love about super funds is that they're allowed to short shares! I will give credit where it is due: AustralianSuper and QSuper have stopped short selling shares, and that's a very good thing. I urge all other superannuation fund managers to stop shorting shares. I am lobbying the Treasurer on this. I think shorting is a heinous practice. Fund managers have a fiduciary duty to protect the interests of their clients, and shorting shares creates a lottery. If the day you come to retire and have to cash out your super to pay off your home loan is the same day a super fund happens to shorts shares because, at the same time, a fund manager has to retire and cash out to pay for his house because he hasn't been able to pay for his house throughout the course of his lifetime because he has had to put 10 per cent of his earnings, which could be 100 per cent of his savings, into super rather than his house, you would lose out. This shorting practice is an example of how superannuation funds aren't protecting the interests of their members. It is a heinous practice, and it should be abolished.
It has been almost 30 years now since Paul Keating brought in superannuation. If we look at the number of people on the pension, including the part pension, it has dropped by only a couple of per cent in that time. You've got to ask yourself: what is the point of giving away $80 billion in tax concessions and fees, which is only lining the pockets of the wealthy and white-collar fund managers in their ivory palaces in the city and hasn't done the job it is supposed to do? It hasn't really reduced the reliance on the pension. What's worse is that, since 1992, the number of people retiring with a mortgage has increased from 10 per cent to 40 per cent. That is clear evidence that superannuation is actually making it much more difficult for people to pay off their homes. There is no greater way to retire—no better way to retire—than to have your own home. At least, if you've got a roof over your head, you know you have some security in retirement, unlike the stock market, which is extremely volatile. If you look at the last 12 months, it has been bouncing around like a buoy on the ocean. It's not effective and it certainly doesn't provide a lot of security.
The other thing about superannuation—and I think this is a really important pointer to why the pension is a much better way to protect and provide a safety net in retirement—is that it is not universal. It's not there for stay-at-home parents. It's not there for people on the disability pension or people who get unemployment benefits. It doesn't help out volunteers. If you want superannuation, we've got to get everyone back to work. What concerns me is: if everyone goes back to work, who's going to man the school tuckshops? Who's going to do all the volunteer work in the community that has to happen 24 hours a day, seven days a week? It's one of those things. I know, from when I took four years off and helped raise my children, that there's a lot of community organisations out there that do a lot of good work throughout the week. This idea that we have to get everyone back into the workforce is going to destroy our volunteer community. There's a lot to be said for having a universal pension which covers everyone, including those on a disability pension and stay-at-home parents. I think that's something worth considering. However, this bill is a step in the right direction. I would like to go a lot further. It's like taking a knife to a gun fight. Personally, I would like to bring a bazooka and a few other things.
I think it's worth discussing some aspects of this bill which are worth doing. This bill seeks to increase the accountability of underperforming super funds. It also takes aims at ERFs, which historically have served the purpose of temporary holding funds designed for lost, small or inactive superannuation accounts. This racket has been going on way too long. We have multiple accounts and we don't have portability in the superannuation industry. Why it has taken this long to fix it up is beyond me. It has just added more to the superannuation fund managers' rivers of gold at the expense of hardworking Australians. That is certainly one good thing about this bill.
But, ultimately, we've got to ask ourselves whether we want to continue the superannuation facade in this country or provide a true safety net for those in retirement through a universal pension which is guaranteed—unlike superannuation, which isn't capital guaranteed. It also raises the issue of whether superannuation is actually legitimate under the Constitution; people haven't ever been given the option of choosing whether they want to lose their hard-earned earnings. That's really one aspect of superannuation where we should look at New Zealand—and I know the Left love to quote New Zealand. New Zealand had a referendum on compulsory superannuation and they voted it down 92 per cent to eight per cent. We have had property rights destroyed here; people's wages have been taken from them without their permission. I make no secret of it: I strongly encourage a discussion on it. Personally, I would like to see a referendum on whether superannuation should be compulsory. It should be optional. People should have a choice as to how they spend it, especially if they want to pay off their home loan or their HECS debt.
When we send our kids to university they rack up tens of thousands of dollars in HECS debts. Then they come out and work and, if they earn $100, they pay $30 tax and it might cost them $50 to live. They might be lucky to save $10 or 20 out of that $100 and then they will lose most of that to a superannuation fund while their HECS debt keeps accumulating. At the end of the day, we have to put the horse before the cart: pay off your HECS debt, own your house and set yourself up for a good family life when you have your own children. When your children have grown older, you can focus on your retirement knowing you have a strong and secure safety net in the form of the universal pension.
This bill is a step in the right direction. We still have a long way to go, but I commend the bill to the Senate.
That was extraordinary. I wouldn't believe it if I hadn't been sitting in here: we have someone from the government benches saying, 'We don't want everyone in a job because who's going to man our tuck shops?' For goodness sake!
I rise to speak on the Treasury Laws Amendment (Reuniting More Superannuation) Bill 2020. This bill contains a single schedule that amends the Superannuation Industry (Supervision) Act, the Retirement Savings Accounts Act and the Superannuation (Unclaimed Money and Lost Members) Act 1999 to facilitate the closure of eligible rollover funds by 30 June 2021. ERFs were designed to look after unclaimed super. Balances are typically low and accounts are inactive. This measure addresses recommendation 5 of the 2019 Productivity Commission inquiry into superannuation, which recommended that the ATO be responsible for holding lost superannuation accounts and that APRA oversee the wind-up of eligible rollover funds. It will allow the ATO commissioner to reunite superannuation accounts they receive from eligible rollover funds with a member's active account.
These changes build on the Protecting Your Superannuation 2019 legislation which saw low-balance and inactive accounts transferred by trustees to the ATO, not ERFs. Fund trustees transferring inactive or low-balance accounts to the ATO have made ERFs redundant, and this legislation provides that timetable to wrap up those remaining ERFs by 30 June 2021. The ATO have successfully reunited more than 2.1 million lost or forgotten superannuation accounts. This is a greater success rate than AUSfund over a 10-year period.
Labor will be supporting this bill. It is sensible and logical that lost super should be reunited with its rightful owner as quickly and as simply as possible without establishing any additional funds and additional accounts. Labor continues to support measures that target duplicate accounts with a stronger, fairer superannuation system. It is clear that the ATO matching has been more successful than AUSfund and it's in the members' best interests.
Let me be very clear: this bill, if it passes this chamber today, represents just one flicker of light of logic in the murky ideological darkness that is the Morrison government's attitude to superannuation and ensuring that Australians have dignity in retirement. We just heard a snippet of that from the senator in his speech prior to me. The best thing that this government could do to ensure that dignity and to work in the best interests of Australians is to move our country towards 12 per cent superannuation as legislated. That move, already delayed by this government twice and costing workers retiring today between $60,000 and $100,000 in their superannuation balance, is vital to ensure that all working Australians achieve a dignified standard of living in retirement. Australians are living longer in retirement. The changing nature of work, rising aged-care and health costs, and declining home ownership rates in retirement are key reasons why ordinary working Australians will need 12 per cent super to retire with dignity. Yet we see the Morrison government quibbling and prevaricating.
When Australia's compulsory superannuation system was first established more than 25 years ago it was done with a simple clear objective in mind, and that was to provide working Australians with some savings at retirement. Before that, most people had no nest egg at all, other than their home. Superannuation was largely the domain of higher income earners and the Public Service. Millions of Australians had nothing in super and could only look forward to the aged pension—if that's anything to look forward to.
As the cornerstone of Australia's retirement income system, compulsory superannuation is now one of our greatest success stories. The miracle of compound interest has created a significant pool of capital that is now benefiting our economy and financial system. It is a key mitigating factor against wealth inequality and it is enabling people to have a better life in retirement. But something fundamental is shifting in our country. In 2017 the Australian Institute of Superannuation Trustees report No place like home: the impact of declining home ownership on retirementnoted the impact of Australia's falling home ownership rates on the retirement wellbeing of future generations. The report found that more people were retiring with mortgage debt or having to rely on private rental housing, with twice as many retired households paying more than 30 per cent of their income for housing. Older retirees are forced to rent, many of them single women. They deserve both housing security and a decent income. This is further argument for the superannuation guarantee to rise as legislated.
The guarantee is legislated to increase from 9.5 to 10 per cent on 1 July this year. It will then increase in 0.5 per cent increments to 12 per cent by July 2025. But the federal government is yet to officially commit to this year's increase, with Mr Frydenberg saying in recent months that a decision will be made in the May 2021 budget. He has announced that the legislated increase of superannuation to 10 per cent in 2021 will be reconsidered following the public release of the retirement income review, along with the economic impacts of the COVID-19 pandemic. A group of coalition backbenchers have publicly expressed opposition to a rise in the super guarantee. We heard some of that just a moment ago.
The Morrison government has let it be known that it is mulling over a proposal that would allow Australians to substitute future increases in the superannuation guarantee for higher take-home pay. The Prime Minister, Mr Morrison, and the Treasurer, Mr Frydenberg, should stop using this pandemic as an excuse to come after wages and super. They should stop pretending that they want workers to choose between higher super or higher wages, when the truth is that the government wants neither. Workers have already lost $40 billion from their retirement savings through the government's COVID early superannuation release measures. This will translate to $100 billion over their full working lives. So we need measures to build up super savings to assist Australians who have accessed their super due to financial pressures—measures to rebuild superannuation savings, not to cut them further.
The Industry Super Australia deputy CEO, Matt Linden, has crunched the numbers and they don't look good for ordinary working Australians. This idea that the government is floating of making future superannuation guarantee rises optional not only would reduce workers' super savings but also would increase the amount of tax that they pay. This is because superannuation contributions are taxed at 15 per cent, while the average worker has a marginal tax rate of 32.5 per cent. As a result, an average family today consisting of two 30-year-old parents would pay $20,000 more in taxation over their working lives if they opted out of the superannuation guarantee rises and would have up to $200,000 less in their superannuation by retirement. Removing the 'guarantee' in the super guarantee and making it optional is a recipe for higher taxes, lower lifetime incomes, less dignity in retirement and a red-tape nightmare for business.
It is very clear that this government is exploring as many underhanded ways to renege on the superannuation guarantee as it can. In the May budget, Mr Frydenberg will reveal how far he has succumbed to the ideologues in his party, those who seek to cut workers' wages through the current IR bill, those who seek to undermine the guarantee that is designed purely to give ordinary working people security and dignity in retirement. A rate of 9½ per cent simply isn't going to get this country to a place where hardworking Australians can accumulate sufficient funds in their super accounts to have a secure, dignified retirement, and the government knows it. Leaving super at 9.5 per cent would consign low-income workers as well as millions of women and men with broken work patterns to financial hardship in retirement. It would also lead to more Australians needing to rely on the age pension. Let us all acknowledge that everyone, each elected representative in this chamber today, is receiving much more than that; we're all receiving 15.4 per cent. To deny the rest of the country a rise in their super would be the absolute height of hypocrisy. The Morrison government should acknowledge that we have a first-class retirement system and allow the superannuation guarantee to rise to 12 per cent as legislated. The Minister for Superannuation, Financial Services and the Digital Economy, Senator Hume, sits in this chamber, and she's sitting here today. She should commit to doing that today. I call on her to do so.
I urge Australians listening to this and Australians reading this in the coming weeks to seriously consider Senator Rennick's speeches last night and just a few moments ago, because, while Senator Rennick is held up to ridicule in public from time to time because of his more extreme utterances, the truth is that he does say what the majority of the Liberal Party backbench are thinking; he does represent the view of most of the people in the Liberal Party. And what a shallow, cold-hearted, miserable view that is.
Superannuation in Australia is a national achievement. It's an achievement wrought through struggle and sacrifice; through collective bargaining and legislation; through Australian employers and unions, workers and government working together to establish a $3 trillion pool of national savings.
There is much more work to be done to build a stronger bedrock of retirement savings for Australian people. I know that many people in the Liberal Party want to see working people go back to where they think working people belong—that is, dependent upon others, dependent upon the age pension, worried about their retirement security. That's where the Liberal Party want people to go back to, where they think they belong. But we on this side, and I think every working Australian, will continue to fight for a retirement savings system that treats people with dignity; gives people opportunities; allows people to continue to build a system that actually creates jobs; deepens and diversifies our national pool of savings—it is the envy of countries around the globe—deploys productive capital; and, despite all of the Liberal Party's efforts, can still invest in national infrastructure. It is easier for a Canadian super fund to invest in Australian infrastructure than an Australian one. I know the Liberal Party don't like it; they don't like the fact that workers' money can build jobs and build infrastructure in Australia. Over the next three years, industry super funds will invest $19½ billion in projects, create 200,000 jobs and save the federal budget $3 billion.
Indeed, our system does contain inequities that need reform. The gender pay gap is compounded in superannuation. Women retire with 42 per cent less super than men, and women live four to five years longer. Ensuring that Australian women in retirement are independent and have their own retirement income should be a key objective of reform. That's a direction of useful reform that the Liberal Party could engage in, but they are beyond reform; they are only interested in pursuing their ideological prejudices and biases in government and in maintaining government. If that means sopping up to Senator Rennick or Senator Hanson, they will do whatever is required in government to persist, but they will not do genuine reform in the interests of the Australian people.
Low-income workers are more vulnerable to superannuation theft. That should be an objective of reform for this government. Low-income workers are much more likely to have used the early access scheme. Billions of dollars were ripped out of retirement incomes, mostly of low-income workers. And the government continues to make it harder for Australian super to invest in Australian infrastructure. That should be an area of reform.
Our test on superannuation reform is very simple: we will support measures that make the system stronger and fairer. To that extent, we will support the legislation that's before the Senate. The bill will allow the tax commissioner to reunite superannuation accounts with amounts they receive from eligible rollover funds which have become redundant. ATO matching has recovered millions of dollars of lost superannuation so far. But the bill doesn't represent the scale of reform that's required to rebuild our superannuation system after the Liberal Party robbed it during the coronavirus pandemic. It doesn't represent the scale of reform that's required to fix the inequities that exist in the system. It doesn't begin to repair the damage done to the system by Mr Morrison, Mr Turnbull and Mr Abbott.
The Liberal Party have only bad ideas for superannuation, only prejudiced ideas, only ideas that are about their own shallow ideology. They opposed compulsory superannuation when it was first proposed. Who can forget Mr Howard's period as Treasurer, where he basically pushed Australia off a cliff in terms of our economic performance? At the time, he said:
The Government has decided not to introduce the scheme of' national superannuation recommended by the majority of the Committee.
… … …
The major transfer of resources to the aged implied in a national superannuation scheme of the type recommended could substantially impede the Government's ability to meet other social welfare priorities.
Further, he said:
In addition, the Government believes that the freedom of choice individuals currently enjoy in arranging their affairs in respect of income in retirement should be retained.
What a miserable, straitened, confined view he had then of the possibilities for the Australian economy. And there's a straight line between that and where the Liberal Party and the Morrison government are today on superannuation. They've got the same bigoted attitudes to working families now that they had then. He drove the Australian economy off a cliff in the late 1970s and early 1980s. He was on the wrong side of history then; the Liberal Party are on the wrong side of history now. The Liberal Party were on the wrong side of history when they ransacked the superannuation system last year, forcing ordinary Australians to raid their own retirement savings so that the government could scrape through the recession. It was not in the interests of ordinary Australians but in the interests of the fiscal position of the Morrison government. And the backbench enthusiasm, which reaches right into the minister's office, for Darwinian superannuation proposals means that they will be on the wrong side of this debate for decades to come.
The Morrison government are consistently wrong about superannuation because they don't understand it; they don't get it. They are incapable of empathising with the interests of ordinary people. They see $3 trillion of workers' savings and they can't understand how it got there: 'Why isn't it in the hands of our mates in the banks? Why isn't it with the spivs and the speculators?' Instead, it's supporting decent retirement incomes for Australians. It enrages them that trillions of dollars are managed cooperatively, efficiently and effectively by boards that are run cooperatively in industry sectors, by unions and employees working hand in glove in the interests of the members of the superannuation funds. Nothing gets the Liberals more twitchy than hearing about the history of superannuation and about Laurie Carmichael and Bill Kelty and Tom McDonald and Mavis Robertson and Paul Keating and the thousands of other Australians who fought to build the system, because that's not the constituency that they represent. They represent the spivs and the speculators in the finance sector.
Superannuation is a threat to their entire worldview, so when the coronavirus struck and the economy shed a million jobs in a week they decided not to let a good crisis go to waste. It was a chance to strike at the superannuation funds they'd hated for so long. The early access to superannuation scheme was a ram raid. It is reported by APRA that nearly 3½ million Australians withdrew from their super a total of $36.4 billion, and counting. Many people emptied their accounts and will retire in poverty as a consequence of the Morrison government's decision. Its target wasn't the superannuation accounts of the wealthy. CEOs still get tax breaks on their self-managed super funds. Its target was the people already struggling through the super system: casual workers abandoned by the government in terms of JobKeeper in hospitality and tourism, young people, women. They were all abandoned. Fifty-three per cent of the jobs lost in the first months of the pandemic were held by women. Women withdrew higher percentages of their superannuation balances. Most likely, most of the people who withdrew their account balances were women workers, and, as far as the Morrison government is concerned, that's a good outcome because it weakens the superannuation system.
Why did they do this? There was a spillover of anger from people like Senator Bragg. These backbench ideologues will never have to make the kinds of decisions ordinary Australians have to make. They will never have to work multiple jobs in struggling to save, or make tough decisions about which bills to pay and which bills to defer. They will never have to choose between a job that breaks their aging bodies and possibly decades of poverty. They will never have to sell their own homes to fund the specialist aged-care services that they need. The people on that side, they've got their trusts, their big houses, their 15 per cent superannuation courtesy of the taxpayer, their multiple investment properties. We've learnt from the example of the former member for Dunkley this week that they've always got a cushy job lined up around the corner—sometimes even before they have left the parliament.
I've attempted to read the book by Senator Bragg. I sent someone from my office to go and ask for it. Apparently the office didn't want to hand it over. I think it's in a safe out the back. It is a book that is full of distortions and mistruths, most of them deliberate. I've read the quotes where he makes outrageous, dishonest claims about the interaction between superannuation funds and the political system. He claims that they are big donors to political parties, which is a deliberate mistruth. Everybody knows it's a mistruth, but, in some wacky Trumpian sort of approach, people on this side think if they continue to tell a lie that it will somehow become true. Senator Bragg said, 'Since super started in 1992, every single age group has experienced lower levels of home ownership.' Well, that is a deliberate misrepresentation. The reason home ownership has declined is that the investor share of new mortgage lending has grown from 10 per cent in the early 1990s to 40 per cent. The reason young people aren't buying homes is that they have been priced out by investors and there isn't enough supply in the market. But he is determined to shift the blame somehow to the superannuation system, which is miserable indeed. Compulsory superannuation hasn't affected the capacity of people on the other side to purchase multimillion dollar properties.
Mr Wilson's new campaign is 'Home first, super second'. The only policy Mr Wilson can muster to the unequal housing situation is more speculation in the housing market. It sort of makes sense if you've led the life that Mr Wilson has led, if you've had the access to wealth and property and power that Mr Wilson has had. But he also enjoys a 15 per cent superannuation contribution. Perhaps his position ought be to really be 'Four houses first, 15 per cent super second', or perhaps 'Holiday homes first, family trusts second'. It's an inspiring message for the hardworking people of Australia: the opportunity to die in poverty because you are forced to raid your super in your 40s to scrape together the deposit to beat some joker who is backed by a tax exemption on his seventh investment property. That idea that capital belongs in speculative property markets rather than in workers' retirement incomes is a shallow, venal, narrow, cold-hearted approach to the many millions of working Australians who are relying upon government. It lacks ambition. It lacks imagination. It's all about ideology and a shallow, narrow sense of the future for working-class Australians.
Labor has always served the interests of working Australians and we continue to seek to put people first. There are so many examples of this, one in particular being the establishment of superannuation and the superannuation guarantee under the leadership of former Prime Minister Paul Keating, a measure which helped to ensure that every single Australian, regardless of their place in the workplace, was able to retire with comfort. It's not hyperbole to say that Paul Keating's stewardship of our superannuation program, as Treasurer and then as Prime Minister, will leave a lasting mark on the lives of Australians for generations to come. Thanks to the super guarantee, Australian workers now have retirement savings of close to $3 trillion. For most, they no longer have to fear the uncertainty of retirement or having to rely on the pension; indeed, it is true to say that our system is the envy of the world. Many countries wish that they had set up a superannuation scheme like this country's many years ago.
I, along with my Labor colleagues, support the Treasury Laws Amendment (Reuniting More Superannuation) Bill and that's because we truly understand the value of super and what it means not just for individuals when they retire but also for the broader community. As we know, superannuation funds do a lot more than just manage super funds; they also invest back in our community. On this side of the chamber, we know the importance that super has to retiring workers in retail stores, in factories and building sites. Indeed, in my time before entering this place I saw firsthand the value of this system to Australian workers, especially those workers in retail. The Shop, Distributive and Allied Employees Association, where I worked, continues to remain one of the largest trade unions in Australia, representing workers in not just retail but also fast food and warehousing. The members of the SDA are often low-income earners, with the median weekly earnings of all Australians in 2018 being 34 per cent higher than retail workers. But for many, their retirement will still be reliant on the old-age pension and rent assistance as well as what little super they may have. The decisions made in this place about super have a direct impact not just on their lives but on the lives of their families.
While this bill will very likely prove useful to many Australians in managing multiple superannuation accounts, it is important that we don't forget that right now, in this place and in the other place, the coalition is also trying to undermine the superannuation system, an assault on the retirement security of working families. This is no surprise for some of the strongest opponents to super, and we've had quite a number of contributions in this place this morning as prime examples. Superannuation is a bedrock for many but, unfortunately, among those opposite, with the contributions we heard earlier, there are a number of senators who would like to dismantle the system.
On the surface, perhaps, some of the reforms explored in the draft could be interpreted as being of benefit to workers but when we dig just a little deeper into them, we learn that this is unlikely. In fact, the draft includes measures that directly contradict some of the recommendations and findings of the Hayne Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. As the SDA noted in their December 2020 submission to the retirement income review, with these measures, the government estimates a typical young Australian entering the workforce in their 20s could be around $87,000 better off at retirement. However, the implementation of this plan as outlined in the exposure draft presents significant barriers to achieving this projected benefit.
For five years now, the coalition has promised and failed to deliver a retirement income covenant that would ensure workers' best financial interests are put first in their retirement. The Treasury Laws Amendment (Reuniting More Superannuation) Bill supports measures that target duplicate superannuation accounts through the ATO. Labor believes that the ATO matching is in the best interests of fund members. We support measures that are in the best interests of working Australians, again, unlike many of those senators opposite.
In submission after submission to the retirement income review, stakeholders have reminded the federal government of the value of our compulsory superannuation system. For example, in a February 2020 paper, Rest Super noted:
The achievements of the compulsory superannuation system, particularly for lower-income Australians, cannot be overstated. Even for members who retire with an account balance lower than retirement adequacy standards, having access to a lump sum or superannuation pension can provide them with valuable security and an ability to plan and manage this stage of their lives. Before compulsory superannuation, these workers typically had no income in retirement beyond the Age Pension.
Surely, we all understand that making people more reliant on the age pension will: (1) cost the taxpayer more in the long run: and (2) leave future older Australians more vulnerable and living in stressful financial circumstances. Surely, it's just common sense that retaining and supporting Australia's compulsory superannuation system should be a goal actively pursued by all sides of politics.
There are some representatives in the federal coalition ranks who seem to believe that owning a home and saving for your retirement are mutually exclusive goals, and I simply do not accept that. We should be aiming, as a nation, to make it possible for working Australians to own their home as well as save for retirement. We can do both and we have shown that. We should do both; not doing both would be absolutely reprehensible.
Owning a home, the Australian dream, is a worthwhile goal. A home provides security, warmth and a place to put down roots. In retirement, having worked for a living and made a contribution to the community in whatever form, Australians should be able to enjoy a comfortable retirement in their home. I'll never accept the view that we should force people to choose between a home and a comfortable retirement, when we in this place have the opportunity to make both possible.
As I've already stated, Labor will support the Treasury Laws Amendment (Reuniting More Superannuation) Bill because Labor supports a stronger superannuation system. Labor has always advocated for a stronger super scheme, and it is worth pointing out that a 12 per cent super rate was always the intention of former Prime Minister Paul Keating in designing the original compulsory superannuation model. In July 1991, as a member of the backbench, Mr Keating gave a speech to the Australian Graduate School of Management at the University of New South Wales. He argued that government should legislate a mandatory 12 percentage point charge to be paid by employers as part of the productivity sharing under the accord wage restraint model and, as he recalled in 2007, this speech remains the key speech in the forward design of the Australian super system. Labor believes moving forward with the already legislated increases to the super guarantee remains key to creating a stronger super system. Australian workers should be getting 12 per cent—in fact, they should be getting 12 per cent now, considering that most of us in this place enjoy the benefit of a 15.4 per cent rate.
Coalition senators, including many still here, voted against the legislation back in 2012. Today, in 2021, Australian workers are only getting 9½ per cent because the government have frozen the increases and, in arguing for the freeze, they told us it would drive wages growth. The proof is in the pudding: even before the COVID-19 pandemic, wages growth had stalled. Not only are Australian workers missing out on the future benefits in retirement that would come to them through increased superannuation; they are also missing out on increased wages, which would have been promised to them by those opposite, due to stubborn low wages growth that the coalition seems entirely disinterested in addressing.
Finally, as I've stated earlier, Labor will support the bill before us. But Labor also supports a much fairer system. Once again, this directly contrasts with the members of the coalition who continue to demonstrate, through their lack of action, that they do not believe in a fairer system. If they wanted a fairer system, we would see new proposals to address the super gender pay gap and reforms to address the fact that females are retiring with significantly less in their accounts. If they wanted a fairer system, we would see proposals to address the enormous difficulties that part-timers, insecure workers and gig economy workers are currently facing in our economy. But we don't see any of that from those opposite. Instead, we see proposals that will grow inequality, that will leave workers worse off. And we see continued attacks on our super system. But there is much more to do. Australians deserve a government that will act in their interests and they deserve a government that is on their side. It's only the Labor Party that will be able to do that.
Like my colleagues, I note our support for the Treasury Laws Amendment (Reuniting More Superannuation) Bill 2020, which seeks to make it easier for the ATO to reunite superannuation rollover funds with members' active accounts. This bill addresses a recommendation of the 2019 Productivity Commission inquiry into superannuation. I note also that the ATO has successfully reunited more than 2.1 million lost or forgotten superannuation accounts, assisting Australians to afford dignity in retirement, which was the objective of the policy of compulsory superannuation.
What we must not overlook, however, is the fact that this bill sits within the broader Liberal Party agenda that they are peddling when it comes to superannuation. They are doing practically everything they can to rip the guts out of Australians' retirement savings. This is the party that brought the misleading 'your super, your choice' legislation, which took aim at mandated super in lawfully negotiated enterprise bargaining agreements, a bill that was about giving employers more choice, more freedom to undermine the choices of their workforce, leading to poorer returns and outcomes for workers. As the McKell Institute found in their submission—if the government cared to read it; but it didn't fit their ideology—in review of the bill, 'Employers and employee unions who collectively bargain for a fund are most likely to select a high-performing fund.' By reducing the scope for employers and employees to negotiate around superannuation in their agreements, the government has restricted freedom of choice for these workers and left them at the mercy of predatory retail funds and aggressive employer actions. It was clear that this bill was just a thinly veiled assault on industry super funds, all part of the Liberal agenda to move billions of assets and funds under the management of industry funds, looked over by employers and worker representatives, over to the poorly-performing for-profit retail funds and their mates.
Senator Hume interjecting—
It was a bill based on shoddy research, driven by an ideological agenda.
Documents obtained by my office under freedom of information reveal the extraordinary lengths the government went to in order to build a case for this legislation. They provided no performance bases or rationale when selecting several funds for the Attorney-General's Department to investigate. They relied upon a sample analysis that was never intended as a representative sample. It was a select reading of enterprise agreements tied to the funds that government wanted to go after. Sadly, this bill did pass, clearing the way for the poorly-performing retail funds to seize the financial futures of thousands of Australians. The retail funds have regularly been caught out delivering poor performance and higher fees.
Senator Hume interjecting—
Senator McGrath, you're not helping the situation. Minister, I ask you to stop interjecting.
Senator Hume interjecting—
There's no point of order. Sit down, Minister. If you want to make a contribution at your time, you can do so, and you can raise the issues that you're interjecting on. Senator Sheldon, please continue.
I repeat: these retail funds have regularly been caught out delivering poor performance and higher fees. Year in, year out, these retail funds underperform industry funds. Of course, it begs the question: why are retail for-profit funds even allowed in the superannuation space?
The Liberals' war on superannuation doesn't stop there. Their mismanagement of the COVID-19 pandemic left Australians with little to no choice but to draw down upon tens of thousands of dollars from their superannuation accounts. The Liberal-National parties told people who lost their jobs, many of whom were denied JobKeeper, that they had no choice but to short-change their futures to meet the demands of the present. What is the cost of this government-sanctioned vandalism of retirement savings? Almost $38 billion has been taken out of superannuation.
Liberals like Senator Bragg tried out lines like, 'Super is people's money anyway; why shouldn't they use it in times of hardship?' But the language ignores the actual hardship. We're going through a global health pandemic. We're in the midst of a recession. It's not because of market failure. People weren't forced to raid their super because they had made bad financial decisions. The vast majority of Australians accept the necessity of measures limiting travel—border restrictions—and mandating social distancing. All of these were the correct responses to a once-in-a-lifetime pandemic. But there was never any justification for forcing people to effectively trade away their future now by running down their hard-earned retirement benefits. The truth is that this undermining of superannuation will hurt most of those industries who have been devastated by COVID-19, all because this government has failed to take responsibility for looking after people affected by the economic consequences of COVID-19. The Liberals like to talk about responsibility, how working people should be responsible for their lives. Well, when are the Liberals going to be responsible? When are they going to be accountable? They should take responsibility for the livelihoods of people whose jobs have been lost as a result of COVID-19.
Not content with acts of sabotage, Liberals are now trying to present a false choice to Australian workers, telling them they must choose between higher wages today or dignity in retirement. It's a false choice. Since the former Abbott government, in 2014, delayed scheduled increases in superannuation, real wage growth has been marginal. In the past five years have workers been rewarded with higher wages because of the Abbott government's delay? No. In the last decade real wage growth has only exceeded two per cent in a single year—under their watch. There is little or no evidence that employers are miraculously or generously passing on the savings of delayed superannuation payments to their workers in the form of higher wages. Whenever the election is called, workers will be given a chance to deal with this false choice presented by the coalition. What the government is really proposing is that workers choose between dignity in their retirement or an unreliable promise of further wage growth. This choice is being pushed by the renegade Liberals on the backbench—the thinly veiled work of henchmen for the big banks, put into parliament by the vested interests of Australian financial vultures. They are here to do the bidding of the big four banks and for-profit retail funds.
This government wilfully forgets the central reason for superannuation's existence. It's not a piggy bank for the government to smash open during a crisis. It is not a rainy-day fund for the government. It is the savings of the Australian community. It is to supplement and as best as possible complement the age pension for individual Australians. Paul Keating, when speaking to members of Industry Super Australia in August last year, said that superannuation was:
… a great public bargain with the community: defer consumption for your working life [and] you will get a very low rate of tax [and] ownership of the funds.
Speaking of quoting Keating, the backbencher Senator Bragg, the coalition's superannuation wrecker in chief, who is doing his best to undermine Senator Hume, has been quoting Keating of late. He tweeted in August last year:
Keating told the 1992 ACTU Congress: "You are losing your industrial muscle; I have given you the opportunity to take on financial muscle. You will get that through your superannuation funds."
The only thing is: Keating never said those words. There is no record of him saying them. You want to know why? Because there was no ACTU Congress in 1992. But I will give the senator the benefit of the doubt. Maybe he's thinking of the 1993 ACTU Congress in which Keating spoke—except the transcript of that speech has been up for years, and there is no appearance of that quote. Maybe it's another speech by former Prime Minister Keating—except a pretty thorough check of all his published transcripts show no results for that quote. Maybe a Hansard search would turn something up? It turns out there's no reference to that at any time either. Could it be that Senator Bragg is mistaken? Has he had a Ronald Reagan moment? Could it be that Senator Bragg, in his relentless quest to undermine super and become the finance minister, has incorrectly and falsely quoted the former Prime Minister and Treasurer? Maybe it's another one of those conspiracy theories the senator thoroughly enjoys, like when he tweeted about the evils of George Soros and the Left's 'web of money'. Any senator caught in such a situation would, you'd think, immediately retract such a statement or offer the source for this quote. Instead, the senator sent a link to an article in the Spectator magazine that doesn't feature a direct quote, and decried all the fact-checking as 'spin'.
This is coming from the man who spent years before being elected advocating for and defending the most scandal-prone and worst-performing part of the finance industry—superannuation run for profit by the big banks. Back when he argued against a royal commission into the banks, he argued against the Future of Financial Advice laws that forced shonky financial planners to do the right thing by their customers. The only difference between then and now is that Senator Bragg is lobbying for the banks and their interests right now, while on the taxpayer's dime. Just one example of this phenomenon is Senator Bragg's bizarre attack on the news website of the industry-super-backed The New Daily and their commercial agreement with the ABC. He's a modern Liberal defender and protector of all things commercial—unless it involves the ABC and news content that he disagrees with. Bragg was happy to deliver the keynote at the 2020 FinTech Awards, where the top gong went to a payday lender, Beforepay, that charges only five per cent to lend up to $200 for a week—the equivalent of a 260 per cent annual interest rate. It says it all, doesn't it! That's the kind of commercial arrangement he likes. But he's unhappy with a commercial arrangement where a legitimate news website with respected journalists pays the ABC to use their content, just because he doesn't like their coverage. Well, presumably, he'll now go after the BBC and MamaMia—two of the many news outlets that have legitimate commercial arrangements with the ABC for non-exclusive use of their news content. Nothing has changed—different workplaces, same agenda.
He's not the only one. Bragg is joined in Canberra by the member for Goldstein, Tim Wilson, who is running an inquiry into the banking royal commission that isn't looking at the banks! Together, these stooges of junk retail superannuation are working hard to damage super, to trash the legislated superannuation guarantee—to cause as much damage as they can to Australians' retirement by opposing it rising. Their agenda is not in the public interest. Their agenda is partisan and designed to damage industry super funds, the best performing parts of the finance industry. They are on a wrecking mission, sent to this place by the banks to pursue their agenda—that's why they were sent here. But also the clutching at straws from the likes of Senator Bragg reveals how the stooges' war on super is really a culture war, based on ideological fantasies. It's absolutely not about workers and housing affordability, as they would have you believe; it's about vested interests. The stooges and the shonky end of finance are inseparable; they were inseparable before the Hayne royal commission and they are inseparable now. It begs the question: Who is running super policy in this government? Is it Senator Hume? Or, of course, is it Senator Bragg? Or is it the member for Goldstein? Are they running the show over there? It does look like the government is being dragged into lunacy by the stooges. It does look like a serious attempt to tear down superannuation, piece by piece. It does look like Minister Hume, the minister for ambivalence, has lost control of her own portfolio. With Bragg and Wilson's hands on the steering wheel, the minister for ambivalence has lost control.
Because of the compounding nature of capital growth and every day a delay, an increase to the superannuation guarantee is money our country loses when it comes to funding our nation's retirement, our community. But there is more to be done than just pass the increase. We must look to end the inequalities in superannuation, extending superannuation to contractors and gig workers, and bridging the gap in retirement incomes for men and women to take carer breaks to support their families. This is what Labor is about. We believe in building power of working people. We believe in building power in the voice of working people. We believe in dignity in retirement for everyone, regardless of their income, not just for the Prime Minister.
I'm delighted that all of the amendments presented by One Nation to the government in relation to this bill have been accepted by the government. As always, we have carefully scrutinised the proposed legislation and our representation to the government was based on our acting in the best interests of the Australian people. The amendments allow for voluntary transfers by trustees to the ATO, ensuring better efficiencies for superannuation funds. The amendments have resulted from discussions with superannuation funds generally and, as requested, to improve the original government bill.
During consultation, it was revealed the law would prevent some amounts being transferred to the ATO. This is because the relevant legislation, the Superannuation (Unclaimed Money and Lost Members) Act 1999, relies on concepts of member and account to enable transfers. An eligible rollover fund is a fund that is eligible to receive benefits rolled over, as the name suggests, from another fund without member consent. During consultation, funds advised that some amounts they would ordinarily transfer to eligible rollover funds relate to former members who no longer have accounts. The amendments rectify this situation by providing trustees the opportunity to voluntarily transfer any amount for any member, former member or non-member spouse.
Currently, eligible rollover funds can only send accounts to the ATO if they meet very specific conditions under the unclaimed superannuation regime or the protecting your super regime. These amendments will allow trustees of eligible rollover funds to voluntarily transfer any amount to the Australian Taxation Office, the ATO. Furthermore, these amendments will provide trustees a broad capacity to transfer superannuation to the ATO in circumstances where this is in the best interests of the member. We are advised that there are currently over half a million accounts in eligible rollover funds.
The rationale behind these amendments is that, by facilitating amounts eligible rollover funds transfer to the ATO, it should more proactively reunify funds to account holders rather than via eligible rollover funds with members, active superannuation accounts or, where appropriate, directly into peoples' bank accounts. Plus, superannuation held by the ATO will be held in a fee-free environment and paid interest at CPI. Therefore, by reuniting those lost accounts' members more quickly, it will result in higher account balances and account holders no longer paying multiple sets of fees by being placed in a no-fee environment where they will earn interest at CPI. The amendments provide obligations on the ATO to pay amounts received to a single fund on being satisfied in accordance with 22(b)(2) of the amendments. One Nation is supporting the amendment and the bill.
First, I would like to thank those senators who have contributed to this debate and I acknowledge my engagement with Senator Hanson and other senators around the chamber. This bill, the Treasury Laws Amendment (Reuniting More Superannuation) Bill 2020 on eligible rollover funds, is a very important bill. It's part of a broader arc of very successful reforms that this government has undertaken. We know that our superannuation system has served Australians well, yet it is highly imperfect. There still remains a proliferation of duplicate accounts, fees are way too high, insurances have been inappropriately applied and there remains a tail of underperforming funds.
The government's arc of reforms over the last two to three years has been slowly but surely, and very intentionally, chipping away at these inefficiencies. Our first legislation was around protecting your super. That addressed the disproportionate erosion of low-balance accounts, capped fees on low-balance accounts and proactively reunited lost and small balances with individuals' active accounts. That was so successful that it successfully consolidated around $3.7 billion that was held in unintended multiple accounts on behalf of almost two million Australians. I want to remind the chamber that Labor opposed that reform. The putting members' interests first bill, which was passed on 19 September 2019, implemented further protections from erosion due to the application of unnecessary insurance, particularly for those who are under 25, allowing them to opt in rather than automatically opt out of insurance. The number of accounts below $6,000 with insurance has gone from around three million accounts to around 1.5 million accounts on 31 May 2020. Again, that was a very sensible reform that Labor opposed. The your super, your choice legislation, which passed last year, extended the choice of fund to enterprise agreements and workplace determinations. That started in January just this year. It's estimated that around 800,000 employees, representing around 40 per cent of the workforce that is covered by a current enterprise agreement, are now able to freely choose where their hard-earned retirement savings are invested. Again, it was a very sensible, common-sense reform that Labor opposed. The superannuation guarantee amnesty, which was passed on 24 February 2020, was so successful that 28,000 employers took part and a total of $760 million was paid into the superannuation accounts or banks of 700,000 employees. Again, it was a sensible reform that Labor opposed. In fact, the only legislation in superannuation that we have passed so far with Labor's support was for the early release of superannuation. Again, it was a highly successful program that ensured the financial stability and security of millions of Australians. For that, I thank Labor for their support.
I thank Labor for their support of this bill, which is a very sensible and common-sense reform that will facilitate the exit of eligible rollover funds from the superannuation system by 31 January 2022. It will also allow trustees to transfer amounts to the ATO where it's in the best interest of the person to do so. This bill is highly consistent with recommendation 5 of the Productivity Commission's inquiry into superannuation and builds on the policy intent of the protecting your super reforms to reunite lost and unclaimed super with its rightful owners. Through these changes, the government is building a stronger and more efficient superannuation system and improving outcomes for members.
Yes, Senator Sheldon is right, it may well have been a Labor government that invented compulsory superannuation but, make no mistake, it has taken a coalition government to reform it. I commend this bill to the Senate.
Question agreed to.
Bill read a second time.