Wednesday, 16 June 2021
Treasury Laws Amendment (More Flexible Superannuation) Bill 2020, Treasury Laws Amendment (Self Managed Superannuation Funds) Bill 2020, Treasury Laws Amendment (Your Future, Your Super) Bill 2021; Second Reading
I rise to speak on the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020, the Treasury Laws Amendment (Self Managed Superannuation Funds) Bill 2020 and the Treasury Laws Amendment (Your Future, Your Super) Bill 2021. Well, here we are yet again—another day in the Senate and another bill about superannuation. The government have an ideological opposition to superannuation that defies rationality. This is in their DNA. As an opposition backbencher in the 1990s, Mr Tony Abbott described superannuation as 'a con'. All that has changed since then is that they have got marginally better, only barely, at disguising their antipathy towards working people and their representatives having a say over their own future.
That is why ordinary Australians listening to this debate ought to be concerned when the government comes in here and does what it's done tonight—that is, to steal into this chamber under the cover of darkness with a dirty deal to extend hours, with no notice. This is a secret deal which no-one in this chamber, at least on this side, has any information about whatsoever. The bills we're debating tonight will not be the bills that proceed to the committee stage, because the crossbench senators who support these bills—that's the only reason they are being rushed through—have done a deal. Those crossbench senators, the ones who voted for the hours motion tonight, need to come into this chamber and explain the deal they have done. If the Senate is about anything, it is about scrutiny and it is about transparency. Without information about the debate that will take place tomorrow, it is very difficult for senators participating in this second reading debate tonight to understand exactly what it is they will be asked to vote on tomorrow, when these bills are crunched through.
But we do know one thing: this government cannot be trusted on super—ever. If you are a high-net-worth Australian with a self-managed superannuation fund, you probably have nothing to worry about. If you are running an underperforming for-profit fund, you probably have nothing to worry about. But working Australians hoping for a decent, dignified retirement have learned by now that the government's endless tinkering with superannuation is motivated by nothing but animus. Instead of focusing on the data and the evidence, these bills, like every other bill on super that's been put before us over the past eight years, enact measures that reflect the hostility of the coalition government to industry super. These people simply cannot bear the idea that working people and their representatives will have control over their own money. It is true that the capacity to direct investments into all corners of the Australian economy confers a power on trustees. So why shouldn't that power be exercised by business and by workers in the interests of the Australian economy?
I had hoped to speak on each of these three bills. There are important matters of detail and of principle that deserve to be aired. But, instead, the government has done what it loves to do—cut down the time for debate and scrutiny in this place. I will start with the Treasury Laws Amendment (Your Future, Your Super) Bill 2021. This is a very poorly drafted bill. It will have adverse consequences for vulnerable Australians, it will damage retirement outcomes for ordinary Australians and it will subject our superannuation system to considerable risk. Stakeholders from the ACTU to the Ai Group and the AIST all raised concerns with this legislation. True to form, the government has failed to even engage with these concerns let alone address them. Labor will be moving amendments to try and remedy the worst of the government's legislation. But without these problems being fixed, Labor stands by these stakeholders in saying that this legislation should not be passed unless its worst aspects are removed.
Let's just have a bit of a talk about the problems. In the House we were able to convince the government to remove a directions power. This was a power that would have given any Treasurer the power to cancel investments that he or she didn't like. This could have been applied to cancel investments in solar power. It could have been applied to cancel investments in coalmines. Even coalition backbenchers were appalled by this power and by the overreach. But in the legislation before us tonight the government have retained a backdoor regulation-making power in the bill that lets them do exactly the same thing by declaring a payment or an investment as not being in the best financial interests of members. For anyone playing along at home, this is in schedule 3, items 2 and 10. Labor's amendments will remove these backdoor regulation-making powers and ensure that funds are only required to act in the best interests of their members, not in the best political interests of the Treasurer of the day.
The government made a commitment to concerned National Party MPs that they'd fixed this problem. They have not. Minister Hume should explain why she is trying to pull one over on her coalition colleagues to give a future Treasurer the power to prevent any particular investment that they choose to oppose—a windfarm perhaps, or maybe a coalmine in a sensitive electorate.
Labor believes that no-one should be stapled to an underperforming fund. Of course, people should be attached to superannuation funds that deliver for them and their family in retirement. That's not what this bill does. One of the very first concerns identified in the economics committee inquiry related to the prospect of up to three million Australians being stapled to underperforming funds. The ACTU has described these provisions as a poor way to achieve the bill's goal.
The Australian Industry Group also raised concerns about the sequencing of the reforms that would see employees stapled to funds prior to being notified if those funds had failed the new performance test. They said:
The approach to reducing multiple accounts is flawed.
Treasury stated that 21 out of the 77 MySuper products are underperforming, and these products hold over $100 billion in assets across three million accounts, charging $1.2 billion in fees annually. Of course, there is also an unknown number of Australians who may be holding underperforming choice accounts. This government's bill completely fails to engage with this problem and raises the prospect of people being stapled to underperforming funds in perpetuity—directly the opposite of what the bill purports to do.
The government also seeks to introduce the best financial interest duty. It imposes a positive duty on superannuation trustees to prove that any particular payment made by a superannuation fund is in the best financial interests of members, with no materiality threshold. The Law Council said of this:
In our view, trustees already have a duty to act in the best interests of members.
The Association of Superannuation Funds of Australia noted:
The risk is that this system will not just create a burden in terms of accounting, documenting, attesting and providing assurance around that; in the absence of a materiality test, it will also see a vast amount of resources and efforts going into documenting, within a very narrow scope, the costs and benefits of every single decision—failing to take account of the cumulative impacts, the interdependencies et cetera.
How can this be a good decision? How can this be a decision that would support a high-performing superannuation sector?
Stakeholders have also raised concerns that the stapling measure may result in workers in high-risk industries missing out on insurance provisions tailored to their industry, and as a result they may not qualify for payments in the event of death or total or permanent disability. The ACTU has commented that the impact is even worse under these proposed laws should the worker be one of the millions who move from a low-risk industry to a high-risk industry. Is there any indication from the government that they intend to fix this problem? No, there is not.
In his second reading speech on this bill the Treasurer said that every Australian should demand the highest level of accountability and performance from their superannuation fund. Hear, hear to that. That's a sentiment that we can all agree on. But the three million members in the for-profit funds who will receive no protection whatsoever from this bill won't meet that test set by the Treasurer for his own legislation, and that is because of the government's insistence of always focusing on the politics and never on the evidence before them.
Finally, this bill will make significant changes to the administration of super in Australia. Every employer around the country is going to need to make changes to their payroll and their employment systems, and super funds will need to make changes to their systems too. Stakeholders across the board have raised concerns about the capacity of all these organisations to be ready for a 1 July commencement, for employers to implement the necessary changes. This bill should not be passed in its current form. If the government were more concerned with protecting Australians' retirement savings and less concerned with prosecuting their ideological agenda they would withdraw it and fix it.
The Treasury Laws Amendment (Self Managed Superannuation Funds) Bill 2020 is also to be crunched through in the hours motion agreed to this evening. This is another bad bill. We know this because it is what countless submitters to the Senate economics legislation inquiry told us. The evidence was that the bill would primarily benefit high-wealth families, could contribute to undermining the industry super sector and could lead to poorer outcomes for Australian retirees. It's very on brand for the Morrison government. It shows a great deal more enthusiasm for measures that loosen the reins on the financial services industry than measures that are designed to protect consumers.
Labor is concerned that one of the biggest beneficiaries of this bill will be unscrupulous financial advisers who are not working in the interests of fund members. You might ask, quite reasonably, exactly whose side is the government on? Evidence provided to the committee also showed that financial advice had been overwhelmingly not in the best interests of clients and did not comply with the requirement that advice be appropriate. That's coming from ASIC, that's coming from the government's own regulatory agencies, and yet the government persists with the bill. They are deaf to the evidence. They continue to bring forward bills like this, bills like the national consumer credit protection amendments—bills that do not put the interests of Australian consumers at the centre of the government's agenda. Labor has made a series of recommendations as part of the Economics Committee inquiry process and you will be surprised to hear they too have not been taken up by this government.
I turn now to the more flexible super bill. At the outset I can confirm that the opposition will be supporting this bill. It makes a series of technical amendments to the operation of our superannuation system. But I want to note a curious point about an amendment that has been circulated. The Pauline Hanson One Nation Party has moved an amendment to this bill to increase the superannuation concessional contribution cap for people aged 67 to $32,500. That all sounds pretty technical doesn't it? This is an issue that is very dear to Senator Hanson. The thing is that many senators breach this cap every year. They usually have to pay thousands of dollars to reconcile their tax bill. This amendment will save senators aged 67 and over a fair bit of money. Can people guess how old Senator Hanson is? Does anyone in this chamber know the answer to that question? I can tell you that Senator Hanson is aged 67. What a coincidence, Deidre Chambers!
In fact, I think she may well be one of the only people who voted for the hours motion. She may well be one of the only people in this chamber who voted for that motion and who will directly benefit from this amendment.
What I am curious about is whether this is part of the deal. If it is, people should come in here and say so, because I will be very interested to see if Senator Hanson's amendment, the one that benefits her directly, will be supported by the government as part of their dirty deal tonight. When it comes to debating super in this place, you can be absolutely certain that it is not the interests of the Australian public that are front of mind for this crowd over there.
Because of the antidemocratic hours motion supported by the government and One Nation earlier today, I'm expected to give three speeches in the second reading debates on three complex pieces of legislation—the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020, the Treasury Laws Amendment (Self Managed Superannuation Funds) Bill 2020 and the Treasury Laws Amendment (Your Future, Your Super) Bill 2021—within 15 minutes. I want to place on the record that that is democratically fraudulent, and the Australian Greens simply will not be able to express our views satisfactorily on these three pieces of legislation tonight.
I heard a critique of a decision of the Senate, which I think is historically in order. I didn't hear the word 'fraudulent', but I'll listen carefully to Senator McKim. If he did say that, I would ask him to withdraw. But the critique I heard was generally allowable within the terms of debate. Senator McKim.
Thank you, Mr President. Firstly, on the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020: this bill is yet another in the growing list of little fiddles to the superannuation system that this government wants to make that are simply designed to make the rich richer in this country. I want to be very clear that all of these small and apparently boring tweaks to superannuation only help those who have enough money to benefit from them. I will go into more detail on that legislation if I have time in the 14 minutes remaining to me.
On the Treasury Laws Amendment (Self Managed Superannuation Funds) Bill 2020, which would allow the size of self-managed super funds to be increased from four members to six members: again, it's yet another little tweak to the super system that will be of benefit to the wealthy and next to no use to anyone else. That's perfectly to type for this government, because they are very fixated on the rich getting richer in this country—the rich getting a bigger slice of the pie, which means, of course, poor people in this country get a smaller slice of the pie. This government wants the wealthy to get wealthier, because the wealthy are their mates and the wealthy are their political donors.
I want to make a more detailed critique of the government on the 'Your Super, Your Future' bill. It wasn't so long ago that the Liberals were all for superannuation, because the game plan was clear: jerry-rig the system so that the vertically integrated banks could get their hands onto a good chunk of the nearly $3 trillion in retirement savings which exist in this country. The money-grubbers were very eager for a big compulsory super system. This view was espoused by people like Senator Bragg, in his former life as a lobbyist for the Financial Services Council. There, Senator Bragg openly advocated for a rise in compulsory super contributions, not just to the legislated 12 per cent but all the way up to 15 per cent. At that time, Senator Bragg was all for super because he was working for the banks and the banks saw an opportunity to get their hands on a large chunk of money. But then the facts got in the way.
Firstly, the Productivity Commission review found that not-for-profit industry funds performed better than for-profit retail funds, including those run by the banks. Secondly, it found that keeping super in a default product was likely to yield a better return than if you exercised choice. In other words: the government's own economic rationalist think tank found that most people were better off not playing the market because their default super fund was being well managed by a not-for-profit industry body with union and employee representation on the board.
Then we had the banking royal commission, to which superannuation was added with a view to providing some cover for the absolute walloping that the banks were expected to get, and did in fact duly receive. But that backfired too, with a procession of misdeeds uncovered in bank-run and other for-profit super funds, mostly in the form of excessive fees and keeping people in underperforming funds, with there being not much more than some lavish marketing by one industry fund uncovered because—heaven help us!—industry funds might woo clients in the same way as the rest of the corporate world. So after the Productivity Commission and the banking royal commission, the Liberals had to change their tune—openly spruiking bank-owned super wasn't working for them anymore. So now what did they try to do? That's right: white-ant the entire superannuation system.
The likes of Senator Bragg, who has gone to the trouble of writing a book to demonstrate his mea culpa, are now pushing ideas such as super is the reason wages aren't rising, super should be voluntary for young people and—this is one of his best efforts—there isn't enough money in the housing market already so why don't we let people spend their super on housing too? Of course the super-for-housing push is just a reinvention of the aforementioned goal of allowing the banks to get their hands onto super. The trouble for the government is that the public aren't buying this rubbish. By and large, Australians understand and support the system of compulsory retirement savings funding long-term investment. And, secondly, they simply don't trust the likes of Senator Bragg. It's not surprising, given their total about-face and the unpalatability of their actual aim, that this government has served up yet another half baked, bits-and-pieces investment-seminar-buffet piece of legislation. It's all in the name: 'Your Super, Your Future'—signed copies available at the door.
Schedule 1 of this bill seeks to eliminate duplicate accounts by stapling workers to a single superannuation fund. So, instead of automatically getting a new account when you get a new job, you'll keep your existing account unless you make an active choice to change accounts. This was a recommendation of the Productivity Commission and was agreed to by the royal commission. But, importantly, the Productivity Commission also recommended changing the system of how workers are allocated to a default fund. But this legislation doesn't propose any changes to the way that workers are allocated to a default fund. It is absolutely half baked.
The Australian Greens are not suggesting that the existing system of creating a new account every time someone gets a new job, unless they choose not to, should be kept as it is; it shouldn't. A lot of people don't know what super they've got where or what to do about choosing a new fund, because—believe it or not—most people don't spend very much time thinking about superannuation. People don't tend to exercise choice with superannuation, which is why introducing stapling, while keeping the existing system of allocating default super through industrial awards, is a back-to-front way of dealing with account duplication.
This bill also offers up a more sinister possibility. Don't put it past the banks to contrive a way to sign up children, potentially 12-year-olds, to their first superannuation account just so they can be stapled to a bank owned fund for life. This bill could usher in Dollarmites for super.
Schedule 2 introduces an annual performance test for default products. There's a two-strike process for products that fail the test. When the first strike happens they inform their members, and when the second strike happens they're closed off to new members. But they still get to keep existing members, who will continue to remain in an underperforming fund that they are now stapled to, thanks to schedule 1. Again, it's a half-baked scenario where schedule 1 and schedule 2 are basically not talking to each other.
Stepping back, how is underperformance actually being determined? The bill sets out that it is an eight-year average of the fund's investments, measured against relevant benchmarks. The relevant benchmarks named in the regulations are mostly indexes created by two giant global investment firms, the FTSE and the MSCI. Both are massive cogs in the global financial system and have become enormously powerful in the wake of the GFC. The indexes and their creators are anything but unvested, apolitical or free from corruption. If nothing else, the Australian super system, and industry super in particular, has provided a store of patient capital in a world that is trying to flip returns at an ever faster rate. But, instead of trusting the existing long-term investment approach for a retirement savings system that spans a person's working life, this bill will force Australian funds to follow the rest of the herd, including straight over the edge of whatever cliff the London and New York index fund managers might lead them to.
Finally, schedule 3 seeks to require super trustees to make decisions not just in the best interests of members but in the best financial interests of members. This one is not half cooked or half baked; it is simply and purely bad legislation. Even with the government's amendment to knock out the investment kill switch, this one is an absolute shocker. To start with, it's in direct contradiction to the royal commission. Are we starting to see a pattern of ignoring royal commission recommendations emerge here from the Liberal and National parties? Yes, we certainly are. As usual, Commissioner Hayne was abundantly clear about his findings. He said:
I consider that the existing rules, especially the best interests covenant and the sole purpose test, set the necessary standards. Those standards should be applied according to their terms and—
this is the important bit—
without more specific elaboration.
Remember, this government didn't want the banking royal commission to start with and, to be frank, it's not really interested in its recommendations. The inclusion of the word 'financial' in the best interests duty implies that money is all that matters. Just how this will affect a super fund's decision to make investment decisions on a moral basis is unclear. For example, could a fund choose not to invest in tobacco or arms manufacturing or fossil fuels, or, if it does so, are trustees then liable for civil penalties? The bill also reverses the onus of proof in civil proceedings against a trustee. If APRA were to decide that a trustee wasn't acting in the best financial interests of the fund's members, the trustee then has to prove that they were. This is bad legislation, and it could have significant impacts on ethical investment.
This bill continues the time-honoured tradition of the Liberals doing whatever they can to funnel money towards the rent-seekers in the financial system. This government positively detests that not-for-profit industry super funds, with worker and employer representatives on the board, have been successful and are now seen as the natural managers of the country's retirement savings. But they can't go at it head on, so they have to try and undermine the whole system with bills like this.
In conclusion, this bill introduces a bodgie way to get rid of duplicate accounts. It puts investment management in the hands of global indexes and it outlaws impact investing or any other decision by a fund that is not purely for the greatest financial gain. Senators will have heard this saying before: a person who knows the price of everything, but the value of nothing—
An honourable senator interjecting—
Thank you. That was, indeed, Oscar Wilde. I was paraphrasing there, I hasten to add. But the point here is that there is more to life than money. I've made choices in my superannuation, whereby I know that my retirement savings are going into things that I support and are not going into things like arms trafficking or tobacco sales or fossil fuels and a range of other things that I don't want my superannuation going into. That is actually freedom of choice, and here we have the government trying to take it away and trying to say that a super fund has to manage funds only in the best 'financial' interests. Well, I don't want my super managed that way. I want my super to be managed in an ethical way so that my investments are made into ethical products that help drive the transition out of fossil fuels, rather than continue to invest in them.
Honourable senators interjecting—
Boy, oh, boy! You know when you've hit a nerve in this place because the hard Right arc up from their seats. I am just going to say very clearly that I know I have found a nerve in this government in what I am saying today.
We are aware that Senator Patrick has amendments to this legislation, as does the opposition. We will be supporting those amendments because they go a long way towards fixing the problems in this bill, so much so that, if they are successful, the bill will barely resemble what the government has served up. As such, we'll be reserving our position on this legislation until we see how those amendments travel tomorrow, or whenever they ultimately end up getting put to the Senate. But we will not support the bill as it currently stands. I simply say to the government: could you please get with the program and understand that superannuation is critical for this country.
I simply make the point that superannuation is the greatest bet that Australia has ever made in terms of forcing people to put almost 10 per cent of their salaries and wages into a scheme for the past 30 years which has not worked. This is a scheme that was created by ideology without any proper framework for its success, and here we are 30 years later with a scheme that costs more than it saves, a scheme that will never return a net positive position to the budget and a scheme that, in 2050, will still have almost every Australian on the pension. This is a failed scheme. It was put in place by ideologues 30 years ago. In fact, I'll quote the Treasury official, Paul Tilley, who wrote a history of the Treasury department, in which he said, 'In the early 1990s, Treasury was not actually well equipped to do the necessary long-term work and that the modelling done for super was done on the back of an envelope, which was subsequently thrown out and lost to history.' The whole thing was created without a framework.
That means that, 30 years later, we are coming in with a proposal to try and put a proper framework in place so that the scheme will actually work, because we're not wreckers on our side. We believe this idea could work for Australia and for Australian workers, and we want to fix it. We don't want to throw it in the bin. So the Your Future, Your Super bill is really all about putting that proper framework in place. It's not just me saying that the system is broken. This is the advice of the independent people like Grattan, Treasury and Choice. They're all saying that it's broken.
The problem with this debate—and it's been very good to come in and hear some of the contributions already—is that almost everyone who has a view about super is conflicted. They have been bought out and owned by the wall of money which is super. This is a scheme that receives $100 billion of workers' money each and every year. They open the door and the money just pours in, and they take out $30 billion in fees every year. A hundred billion dollars comes in and $30 billion comes out in fees. With that money, they buy power and influence. They buy power and influence in the financial sector, in the union sector and in employer groups. We saw this week the Ai Group, which has received $1 million from AustralianSuper in the past year, disgustingly come out and defend the system without even declaring their conflict. So it shows that the big super industry can buy anyone.
This is not about sectoral gains. It's not about comparing the finance sector or the union sector or whatever. This is about Australian workers getting the best possible value for their own money. Of course, we are heavily invested in this scheme as taxpayers, as people and as citizens. This scheme is costing the budget $40 billion a year in forgone income tax revenue. So we actually want the scheme to work. Otherwise, it is, as I say, the biggest bet we've ever made that has no prospect of ever really paying off.
So this bill is a really important structural change. It will improve the system. It will do three things: it will put in place a stapling regime so that people have one super fund for life unless they choose to do something else; it will put in place a best financial interests test which will stop the waste and the rot; and, thirdly, it will put in place what should have been there 30 years ago, performance testing. For 30 years, these people have been able to take our money and do whatever they want with it—all the funds—and they have spent our money very poorly.
No, I don't. Thanks for that interjection. No, I just don't support it.
Senator McKim interjecting—
No, I don't.
Senator McKim interjecting—
No, I don't.
In terms of the single default, what I would say is that the modern workforce is very different to the workforce of 1992, yet we are stuck with a rigid system from 30 years ago which basically assumes that you work for 30 or 40 years and you're retired for a few years. Now we have an economy where people are working multiple jobs and can work flexibly. Obviously, the advent of the gig economy has created more opportunities than were there in the past. So what this system will do is ensure that there is only one default fund for each Australian worker unless they choose to do something else. From 1 July this year, employers will have to pay into the worker's default fund. That is their fund, and that is the fund that they will have until they choose a different one. People have been concerned about the burden on employers. Employers have reported that they can do this. Because of the advent of straight-through processing, this is apparently quite an easy thing for employers to do through the ATO.
We have about 100 default funds today. People have said, 'Jeez, wouldn't it be bad if we had 10 big industry funds?' Would I be worried about that? No, I wouldn't be worried about it, because I have a view that, the more people have in super and the better the system is, the easier it will be to engage with. People will decide to do something else. We shouldn't be trapped into this mindset that the whole thing has to be designed for the default person, for the disengaged person. I know that suits the Labor Party and the Greens, who like people to be disengaged from their own money so they can basically take the money from the black box, as they've done for 30 years. In the last year, $30 billion in fees has come out of the super system, and there's been another $20 million paid to unions.
Very few people come to this debate with clean hands. I have worked inside the system. I have seen how broken it is. I have seen how crooked it is—and it is crooked. The whole idea of the Labor Party defending the position that people should have multiple accounts is disgusting. Multiple accounts means twice the fees and it means lower returns. But do you know what it means for the Labor Party and their mates—the unions? It means more money and more fees. That is why they are defending it. Who would have thought that the party that proclaims to stand for the workers is wanting to defend a system which takes away the workers' money—because, of course, they have to pay double the fees? The whole idea of this is to say that you have one fund. It doesn't matter whether it is a retail fund, an industry fund or whatever; that is your fund. You can choose a different fund—that's fine; we all believe in choice—but that is the backstop that we have. I should say that $2.6 billion a year is lost through multiple accounts. I know that's a lot of union subs. I know that union membership has fallen down to 10 per cent and this is how unions are keeping afloat—but it is really not appropriate. So don't forget: $30 billion a year in fees.
The performance testing should have been a feature of the system. The fact that there have been so many poor-performing funds over the last 30 years really is an embarrassment to all of us. I think we all share a collective blame there. We shouldn't be compelling people to put their money into a scheme that isn't working. Where people have been able to get great returns, fabulous—that's great, and we want more people to get that. But there have been serial underperformers. As far as I can see, the bulk of these have been in the retail sector. These are not funds that should be able to receive compulsory contributions.
This is an outsourced pension scheme. People sit in here and talk about the liberties of the superannuation scheme. Give me a break—this is a compulsory scheme. The only reason the system exists is because of Canberra. This is not the free market in operation; this is a compulsory pension scheme—which doesn't work. So I think the underperformance test is a good idea. I know there are different views about whether or not the metrics are right. For the record, my view is that it should be simple, clean and comparable. People need to be able to see that the calculation that has been done on their fund is fair, reasonable and comparable. The way that is to be done is obviously through the regulations. People know that. It's not in the bill. What the bill sets up is the framework to assess super funds.
I find it unfathomable that people would come into this chamber and argue against the principle of being tested. What are people afraid of? We are making people put their money into these locked boxes. They should be tested. They should be the best possible funds. If they can't perform, if they can't even meet their own benchmark, they shouldn't be taking compulsory contributions. And lest we forget: these are the same people, largely, who come in here every day running the lines from the super funds. They can't think for themselves. If you watch them tonight, they will read all their speeches. It really is pathetic. Last year, as Australia faced the greatest economic shock in 100 years, those opposite were saying that people shouldn't be able to have access to their super in an emergency—that people couldn't have access to their own money; that they couldn't be trusted to touch their own money. Such is the depth that the Labor Party, the unions and co will go to defend their financial benefactors and the super funds.
Senator Sterle interjecting—
That is true. I look forward to your contribution. Maybe you can do it without having to read it.
Senator Sterle interjecting—
Thankfully, we have people in this place who will stand up for the workers. You just want to do the bidding of the unions and we are trying to get a better deal for workers. There are people in this place who want to throw this whole system in the bin. We don't want to do that; we want to fix this. You have a vested interest in making this thing work.
Senator Sterle interjecting—
The longer it doesn't work, the longer there will be microscopes on scrutiny on this scheme, it is being busted. It's breaking the budget. It gets no-one off the pension. The fees cost an arm and a leg. We are trying to get those fees under control. We are trying to make this scheme work. I don't think that's too ideological. The regulations will be made by the minister and, like everything else in this place where I've had an opportunity to make a contribution—
Senator Sterle interjecting—
I don't think that the regulator should be making these regulations. It's important that ministers who are accountable to this chamber make the regulations and that they can be disallowed. That is yet to be established. But they must be comparable, they must be easy to understand and it must be easy for workers and members to compare super funds. This performance testing, which Labor and the unions are so afraid of, will be an important feature, I think, going forward.
Let's finish on the point about the best financial interest duty. Again, Labor doesn't want super funds to work in the interests of workers, which is just extraordinary. Around $100 billion a year flows into the funds, of which $30 billion comes out in fees. By 2030, $30 million will be paid to the unions. This is the cash cow for the unions, and they're all here, all the union people who have been appointed to the Senate to defend the union interests. It really is pathetic. I reserve my criticism for the directors as well and for the employer groups that have got their snouts in the trough. Super is the best thing they ever invented, because it keeps them all alive. There's no other purpose for employer groups and unions, and the banks have been just as bad. They have been proven by the Hayne royal commission to have had their snouts in the trough and to have too often put the interests of shareholders before those of members.
These are the words that Labor don't want to hear, but the fact is that the whole system has underperformed. It is a system that should have had more safeguards to protect workers and to protect people's money, but that wasn't done by the Labor Party at the time because they were so desperate to hand over the cash to the unions and the banks. That's what Keating does; that's why Keating is still so defensive about this scheme. He comes out and attacks common old backbenchers, which is a sign of his defensiveness.
This scheme is not working and we want to try to get it on track. The best financial interest duty is the centrepiece of this bill, and my view is that reversing the onus, to make sure the trustees can demonstrate that the money that they're paying to the unions, or for directors' fees, or for advertising, or for political donations, or to the banks or related parties, is in the members' interests. They have to prove that, otherwise why are they doing it? Now that is reasonable. There will be record-keeping arrangements put in place, and APRA will have to enforce this law.
I have to say again, for the record, that it's regrettable that we need to put a new, tougher fiduciary-style duty in place. There is already a best interest duty and there is already a sole-purpose test, but, as we've seen from Senate estimates, APRA has presided over a system which has allowed workers' money to be stolen by the super funds, the banks and the industry funds, and that is wrong. So, yes, the best financial interest duty will clarify. It will tidy up. The trustees, collectively and individually, will know that they can no longer take away the workers' money and waste it on union boondoggles or send it off to the banks. They can't do it anymore. But APRA will have to enforce that law vigorously.
If this bill passes this chamber, I will make it my personal objective to ensure that this law is properly enforced, because we've had 30 years of just wasting money. Who could imagine a scheme that was concocted 30 years ago in Canberra—whose modelling was thrown out because it was done on a coaster, a scheme that was done without a framework, without a proper objective in place—could be a scheme that has taken 10 per cent of people's wages, that has no prospect of ever becoming net positive to budget, no prospect of ever getting most people off the pension and, if Labor had their way, no prospect of ever really getting the fees down?
So the only plan to fix super is this plan. It's the only plan. Today we see the end of Labor's policy integrity. They are now only a party of vested interests defending the tired old union movement, and I cannot wait to hear the pathetic contributions in all the speeches that are to be read tonight.
A quorum having been called and the bells being rung—
Senator Bragg interjecting—
Senator Sterle interjecting—
There's a formal process to interact across the chamber. Some discretion has been granted from the chair. I urge both Senator Bragg and Senator Sterle to cease and desist.
Senator Bragg interjecting—
Senator Sterle interjecting—
Senator Bragg and Senator Sterle! Thank you.
Senator Bragg interjecting—
Senator Sterle interjecting—
You didn't even count to 10, either of you—Senator Sterle and Senator Bragg.
Senator Bragg interjecting—
Senator Sterle interjecting—
Senators Sterle and Bragg—really? Come on. It's Wednesday night. Let's—
Well, is there anything that the Liberal and National parties hate more than superannuation? It really is hard to think of anything that Liberal Party and National Party members of parliament and senators hate more than superannuation. And why? Because superannuation is about looking after workers, and that's what the Liberal and National parties have against superannuation. They don't want average workers to benefit from the kind of retirement that all of them will enjoy for the rest of their lives—especially those who, as Senator Sterle was talking about, were born with a silver spoon in their mouth. They're all fine. But average workers? No, they can't have a dignified retirement. They can't live comfortably in their retirement. They should go back to the old system before superannuation was invented by Labor and have to struggle through poverty in their retirement—that's what the Liberals and Nationals want for workers.
If you need any proof of that, just have a look at the history of superannuation in this country. When Labor created superannuation, the Liberals and the Nationals opposed it, and, pretty much every year since, they've launched attack after attack on our superannuation system, which is designed to give working people in this country a dignified retirement. Every time it has been legislated to increase, the Liberals and the Nationals come after it. We've seen that debate play out over the last 12 months or so, with all these Liberal backbenchers saying that we shouldn't have an increase in super and inventing ways for superannuation to be raided, and it's all because they want to launch attack after attack on superannuation.
That's exactly what's happening in this set of bills that we're debating at short notice tonight—the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 and others. They're just the latest salvo in the ongoing war of the Liberal Party and National Party against superannuation and against working people in this country.
But, in my remarks tonight, I particularly want to focus on the efforts of someone else in this parliament—someone else, in fact, in this chamber; someone else who has become known around Queensland as the LNP's best friend in Canberra. I'm talking about, of course, Senator Pauline Hanson. Senator Hanson, I hope you're watching what I've got to say, because you're going to be called out, once and for all, for the selfish fraud whose snout is in the trough that you are and you have always been.
An opposition senator interjecting—
I'm not surprised that a Liberal senator wants to defend Senator Hanson, because we know there's an alliance between the parties, but, if I have caused offence, I withdraw.
Thank you, Madam Deputy President Fierravanti-Wells. In my remaining remarks I want to focus on what Senator Hanson is up to in this debate and in this bill. Let's remember that it was Senator Hanson who provided the votes to this government only an hour or two ago to rush this legislation through and make sure that we dealt with it tonight when the program didn't have that happening. Why is Senator Hanson in such a rush to get this legislation dealt with that it has to be dealt with in a late-night sitting of the Senate tonight? What on earth could Senator Hanson be so interested in about this legislation? Let's have a look.
What we see here from Senator Hanson through this debate and through an amendment she's moving is probably the biggest personal rort I have ever seen in federal politics. That's what we're seeing in this legislation and in the amendment that Senator Hanson is moving. A lot of people haven't noticed this yet because it was just snuck in late today. Senator Hanson, on behalf of Pauline Hanson's One Nation Party, is moving amendment No. 8983. You actually have to understand a little about superannuation to understand exactly what Senator Hanson is trying to do with this amendment. It's all worded in very technical language about concessional contributions caps, dollar figures, years and things like that. But let's be very clear about what Senator Hanson is trying to do by moving this amendment right here. What Senator Hanson is trying to do by moving this amendment is to give herself a $30,000 pay rise over the next six years that she hopes to be in this parliament. That's right—$30,000 will go to Senator Hanson if this amendment that she has moved gets through.
Why does it only affect Senator Hanson? Because she has drafted this in a way that only benefits her and a very small number of other people in this chamber—or, in fact, in this country. This amendment will basically change the concessional rate of superannuation only for high-income earners—only for people who earn roughly $250,000 a year or thereabouts. What kinds of people in this country earn $250,000 a year or so? Oh, it might be senators! We happen to be very well-paid people, and Senator Hanson is one of those people. So this won't benefit a single battler in Queensland, who she says—the fraud that she is—that she's in Canberra to defend. It won't benefit anyone in Mundubbera, it won't benefit anyone in Gayndah, it won't benefit anyone in Eidsvold and it won't benefit anyone in Toowoomba or anywhere else in regional Queensland who is struggling to get ahead with no wage rises year after year. But, my golly, it's going to benefit Senator Hanson. Senator Hanson is going to get a $30,000 pay rise as a result of an amendment that she is moving. She put this to the government. This isn't some government engineered plan; this is something that has Senator Hanson's name on it because she wants the $30,000 pay rise.
As I said, the way it's going to be done is by changing the superannuation concessional contributions regime in a way that only benefits high-income earners. So she has herself in there, in the first instance, by being a high-income earner, but it gets better—it gets better! This benefit, this pay rise, will only be given to people who are aged 67 or over. Now why would you pick that year? Why would it be 67 and not 66, not 65, not 64, not 69, not 70 and not 71? Why would it be 67? Well, who knew? How old is Senator Hanson? She's 67! How about that! So Senator Hanson is moving an amendment to give high-income earners like her a $30,000 pay rise over the six-year term that she would serve in this parliament—but only if they're 67.
Now, I might look pretty old but I'm not 67. There aren't many people in here who are 67, but Senator Hanson is 67 and the beauty of this amendment which she's trying to move is that she won't only get a pay rise for one year she'll get it the next year and the one after that, the one after that and the one after that. In the first year she'll get a $1,500 pay rise; in the second year she'll get a $3,000 pay rise; in the third year, $4½ thousand; in the fourth year, $6,000; in the fifth year, $7½ thousand; and, again, $7½ thousand in year 6. All up, over six years, Senator Hanson stands to gain a $30,000 pay rise that won't apply to anyone who is under 67. But it just so happens that people who are 67 or older—maybe like Senator Hanson—will get a $30,000 pay rise.
I don't know about Senator Polley, I don't know about Senator Sterle, I don't know about Senator Urquhart and, to be fair, I don't know about members in the Liberal and National parties, but I did not get elected to come down and serve the battlers of Queensland by giving myself a pay rise. But it's very clear that that's why Senator Hanson is here. I've had a gutful of Senator Hanson running around Central Queensland and regional Queensland saying that she's for the battlers and then coming down here and, time after time, voting against battlers and voting to make it harder for coalminers who are working as labour hire as casuals. And now she's giving herself a nice $30,000 pay rise. That's not why I got elected, that's not why any Labor senator got elected and I doubt that's why many people from other parties got elected. But it is certainly why Senator Hanson got herself elected.
People have known for a long time that, when Senator Hanson says that she comes to Canberra to help battlers, what she really means is she comes here to help herself. We have seen over the years—and this goes back to her days well before I was in this chamber—that Senator Hanson invented and got the practice of rorting electoral funds down to an art form. Now what she is doing with this amendment is trying to rort taxpayers' funds for own personal benefit, to give her a pay rise. It is a disgrace. Senator Hanson should be ashamed of what she is doing. Senator Hanson should apologise to every single battler in Queensland who she has tricked into thinking she is here for them when she is actually here to give herself a nice big pay rise. No other member of this chamber would treat battlers or Australians with such contempt. Senator Hanson has finally been caught out doing what many of us have known she has been about for a very long time.
The worst part is that this is all part of a dodgy deal that Senator Hanson has done with the government to get this legislation through. Senator Hanson, as I say, is the coalition's best friend here in Canberra. She lines up with them time and time again. They can always count on her vote, no matter what they want to do, whether they are coming after pensioners, workers or penalty rates. And now she will vote to give herself another big pay rise. This is yet another dodgy deal between the Liberal-National government and Pauline Hanson to rush legislation through and, this time, to give Pauline Hanson a personal pay rise of $30,000. It is a disgrace. Senator Hanson should be ashamed of herself. Senator Roberts should be ashamed of himself. If any government senator votes with Senator Hanson on this amendment, they should be ashamed of themselves as well. Those of us from Queensland should go back home and justify to Queensland battlers why they are voting to give Senator Pauline Hanson a $30,000 pay rise. It is a disgrace.
I'm pleased to speak in favour of the Treasury Laws Amendment (Your Future, Your Super) Bill 2021 and related bills before us tonight. Senators in this place will know, or should know by now after my having served in this place for two years, that I do not adopt a doctrinaire or ideological approach to the concept of superannuation—far from it. I absolutely do not. Every single Australian worker in this country should expect in a country as wealthy as ours to enjoy a comfortable retirement.
Personally, I'm actually a member of an industry super fund, AustralianSuper. I'm a very happy member of AustralianSuper. They have given me a very good return over a number of years, and I thank Ian Silk and his team. They have absolutely done a great job. I have absolutely no ideological conflict in relation to the concept of superannuation. Every single worker in this country, in a country as wealthy as ours, should have a reasonable expectation for a comfortable retirement. That's important. It's an important equity for this country, absolutely.
Having said that, I want to take three points in relation to this legislation. Senator McKim—and I always listen very carefully to Senator McKim when he speaks—spoke about the issue of ethical investment funds as opposed to other investment funds. The reality is—and I expect that Senator McKim is aware of this—that quite often ethical investment funds actually outperform other investment funds.
Senator McKim interjecting—
Exactly, Senator McKim. You are aware of it. I thought you would be. Hence the best financial interest test should instil no fear whatsoever in investors who want to invest in ethical investment funds. In fact, perhaps the converse is true.
In relation to that, I want to quote some research which Morningstar, a very reputable organisation, conducted that was reported in that extreme right-wing newspaper called The Guardianthat's sarcasm, for the Hansard record—under the heading 'Ethical investments are outperforming traditional funds'. Morningstar compared 745 ethical investment funds against 4,150 traditional funds. They found:
Over 10 years, the average annual return for a sustainable fund invested in large global companies has been 6.9% a year, while a traditionally invested fund has made 6.3% a year.
That's what the evidence suggests. So, as opposed to the rhetoric, when we look at the evidence, those Australians who, as a matter of principle but also as a matter of prudent investment, want to invest in ethical investment funds have absolutely nothing to fear whatsoever from the introduction of a best financial interest test. There is nothing controversial about it.
The second point I want to make is in relation to this concept of a single default fund. Senator McKim again made a very good point—that many Australians do not spend a lot of time reflecting on their superannuation. Too many Australians in this country have too many funds. Instead of having one superannuation account in order to minimise fees and charges, they have multiple accounts. Many times they are not even aware of the multiple funds they have, and many times those workers who have multiple funds are our most vulnerable workers. They're in transient employment; they're not long-term employees of a single employer. So we need to do everything we possibly can to promote the notion that the most prudent and efficient retirement strategy is to have one superannuation fund, to minimise the fees and charges which are taken from the fund. The scheme which is established through this legislation is, again, hardly controversial. Unless you exercise your choice as an employee, your one default fund follows you from job to job. If you choose to change your superannuation fund, then that's your right; you can change your superannuation fund. That is entirely reasonable, and hardly an ideological argument.
My third point is underperformance. The reality is that the evidence is indisputable that there are a number of underperforming funds. As Senator McKim said, too many Australians aren't focused on the performance of their superannuation funds. Perhaps over the last 18 months or so they have been more focused on it. We need to do something to protect workers, to protect all Australians, whose retirement is going to be materially impacted if they are participating in underperforming superannuation funds. That's the third pillar of the reforms introduced by this legislation.
In summary, I'm absolutely no ideologue in relation to superannuation. I want every single Australian to have the opportunity to retire in comfort. There are lots of great people from both the employer side and the employee side involved in industry superannuation funds. I think we can make the system better so that it works better for workers and for all Australians, so that we can provide a better retirement for Australians who work so hard during the course of their lives.
I rise to speak on the Treasury Laws Amendment (Your Future, Your Super) Bill 2021 and associated bills. Australia's income retirement system is the envy of the rest of the world, as a great legacy of the Keating government. Compulsory superannuation has seen a $3 trillion nest egg grow. These savings provide a boost to our national economy. They can go into infrastructure investment, which can go into strengthening our national sovereignty. That is something that should be applauded and celebrated by those opposite. Instead of that, we have this ill-conceived legislation before the Senate. We know that a dirty deal was done today. We heard from Senator Watt that the vested interest of Senator Hanson has been on full display, so I can't wait to hear her contribution.
The Liberals have never believed in universal super. They opposed it at the beginning, and they continue to undermine it each and every chance that they get. This bill implements the government's 2021 budget measure Your Future, Your Super. The government claims these measures will enhance the performance of superannuation funds and reduce the number of duplicate accounts in the system. We welcome the government's late commitment to action on serious issues such as multiple accounts and underperforming superannuation funds. However, this bill, as written, will not deliver better outcomes for Australian superannuation members. The evidence provided to the inquiry on this legislation makes it clear that the government's proposed approach to superannuation would damage retirement outcomes for ordinary Australians and subject our superannuation system to considerable risk.
They may have removed some elements of this bill, but we still cannot accept this legislation. The first schedule introduces a new system for stapling individual members to a single superannuation account, replacing the existing industrially determined superannuation default account system for any member who has a previous existing super account. The retail super funds are happy with this bill, as they usually get people first when they're 16 and in their first jobs. However, this could have unwarranted consequences. It could staple members to an underperforming fund, or it could mean that some employees will not receive insurance appropriate to their profession.
The second element of this bill introduces a new measure that will assess the performance of certain superannuation funds against benchmarks determined by the regulations and prevent funds that fail to meet those benchmarks from accepting new members. Labor strongly supports the implementation of a performance measure. However, the proposed measure in schedule 2 is significantly flawed. Some stakeholders have indicated that the government's proposed performance measures could reward underperforming funds, incentivise funds to increase administration fees or drive investment away from Australia's unlisted assets. The bill also ignores admin fees in the performance benchmarks. It just ignores them. It gives a green light to bad funds to increase their administration charges at the expense of members' accumulation.
The government's proposed benchmarks for its performance measures may actively penalise funds for investing in unlisted Australian assets, such as venture capital, private equity or infrastructure assets. These indexes will risk local investment. I can't emphasise that enough: this bill will put at risk local investment and, with it, local jobs and wages. So not only are they not doing anything in this bill that is really going to be beneficial for ordinary Australians but they are, in fact, putting at risk local investment, local jobs and wages. Does that sound familiar? I think it does to Senator Urquhart and Senator Brown, because it's in the Liberals' DNA. Whenever they can have a go at superannuation, that's where they'll be: first in line to have a go. If there's an opportunity to have a go at ordinary workers, again this government will be first in line.
Research from the Conexus Institute demonstrates that, if trustees of super funds design portfolios to explicitly account for Your Future, Your Super performance tests, many funds would need to significantly alter their investment strategy. The results of this research highlight the conflict trustees will face between managing for best member outcomes and prioritising the Your Future, Your Super performance test. David Bell, Executive Director of the Conexus Institute, has claimed:
If trustees continue with their current investment strategy, they expose themselves to a reasonable likelihood of failing the performance test at some point, simply through the short-term randomness of returns.
He went on to say:
These trustees would also face the prospect of having to modify their investment strategy in response to short-term performance, creating transaction costs while inadvertently reducing their ability to invest for the long-term.
As I said earlier, we do support performance measures, but, while the performance mechanisms proposed in schedule 2 will prevent new members from joining underperforming funds, they do nothing to assist members already in underperforming funds. It is pretty important, I would have thought, to protect those people as well. According to Treasury, this affects up to three million Australians and could potentially cost Australians tens of thousands of dollars in retirement savings. So they're putting at risk local investment, local jobs and local wages for Australian workers, and it could potentially cost Australian workers tens of thousands of dollars in retirement savings.
The third measure introduces a requirement that super fund trustees must act in the best financial interests of members, as opposed to the current requirement, which merely asks that they act in the best interests of members. Labor thinks superannuation trustees must also act in the best interests of their members, not the best interests of parent entities. We are glad that the government removed the regulatory kill switch from the bill, but there is still significant government overreach in the form of consequences for performance tests.
The measures proposed by the Morrison government are seriously flawed, and much of the detail has been left to regulations, which is becoming a habit of this government. Senator Carr, I and others have spoken about that numerous times in this chamber. This government is prone to leaving everything to regulation. I might add, by the way, that these are regulations which have not been finalised or set. Who knows what's actually going to be included? That is why you need to always read the fine print or look into what isn't in the bill, because this government cannot be trusted when it comes to superannuation and protecting Australian workers.
They are also limiting coverage of measures. The performance measures proposed do not extend to all choice products and will initially cover only MySuper products. The vast majority of underperforming funds are concentrated in the choice sector.
The government's bill will take effect from 1 July 2021, requiring Australian employers to scramble to implement the new system in less than a month. That is why Labor will be moving a series of amendments to fix the bill. We are not here to sink it. We're here to fix it, which is what we find we have to do on countless pieces of legislation. This is critical legislation and it must be fixed. But, if the government can't accept these simple fixes, we'll protect the interests of Australian workers by voting this poorly drafted bill down.
It is abundantly clear that the Liberals cannot be trusted with superannuation. They wanted to allow Australians to have early access to their super accounts so they could buy a house, a nonsensical idea as the supply of housing is relatively inelastic, meaning that, if you increase the demand for housing by allowing people early access to super, it will only drive up the cost. We must address the housing affordability crisis in Australia, but it must be done by addressing supply-side shortages. This is just basic economics 101.
Those opposite also allowed Australians to raid their super funds during the pandemic instead of giving them timely access to support. This meant that people were robbing their own futures when we should be encouraging people to put more money into their superannuation. We now have 600,000 people who will be left with zero—zero!—in their superannuation fund account, because the government refused to provide them with other support. People in casual work, and in particular young people, were encouraged to take money out of their superannuation because of the compound interest. It will have a large, negative impact on their retirement income. Not only that, it will also make a significant difference to our national economy, placing a greater burden on future budgets. Added to that, the number of people who accessed their super was twice what was predicted. It begs the question, was this responsible policy? Did anyone access their super who didn't need to, or were they not properly informed of the consequences of early withdrawal? These are very basic questions that I don't believe were put to people.
Wages have effectively been frozen for eight years under the Liberal government, and, as was revealed in the budget, over the next four years they're going to go down. Yet, what is the government's argument about superannuation and wages? The Liberals seem to have no problem suppressing our economy with their own inaction during the last eight years. We have had stagnant wages, and at the same time those opposite have held off and broken commitments they took to the 2013, the 2016 and the 2019 elections—that is, they would not freeze super. We are now on the eve of the next federal election, but we know that they're opposed to the increase of superannuation up to 12 per cent—a measure that would place less of a burden on future taxpayers to fund Australians in retirement. Let's be realistic. The Morrison government, this Liberal government, are not interested in improving outcomes for Australian superannuation members. They're interested only in their own political advancement at the cost of the national economy. We know the Prime Minister is only interested in one job, and that's his own job. He reinforces that day in, day out with his broken promises and his loose-with-the-truth comments that he makes and commitments that he gives to the Australian people.
Superannuation was delivered by the Keating government, by a Labor government, to give ordinary Australians the benefit of professional management of their money. It's important to ensure quality of life in retirement, to support the national economy into the future, and it is a legacy that I am very proud of. I am very proud of superannuation and a great defender of it, because we already know that women in this country will not retire on the same money as our male colleagues. They're not going to have the same retirement. We will always speak up and we will always work for a better, a decent retirement for all Australians. We will fight tooth and nail because it's in the best interests of all Australians to have a dignified retirement, where they will no longer have to rely on future budgets and future taxpayers to fund pensions going forward. This government, instead of making changes that are going to be beneficial and encouraging people to put more money in their super, are out to attack superannuation and ordinary everyday Australian workers. It's in their DNA. (Time expired)
I rise to make a contribution this evening in the cognate debate, but I would like to make my remarks specifically on the Treasury Laws Amendment (Your Future, Your Super) Bill 2021. As everyone in this parliament and in communities throughout Australia would know, Labor built the superannuation system in this country. It is a proud legacy of Labor. It is a system which seeks to ensure that hardworking Australians can have a decent retirement, but it also provides a huge national saving pool that can be reinvested in our economy to provide jobs and incomes to workers today. It's a system which does need constant improvement to maximise returns for workers, the fund contributors. One obvious improvement would be to increase the superannuation guarantee over time and as originally intended. However, sadly, as we are all acutely aware in this place, it is successive Liberal governments that have sought to stymie this long overdue increase: first the Howard government, then the Abbott government, then the Turnbull government and now the Morrison government.
Every time the Liberals try to tinker with the superannuation system in this country, they seek to do so not to improve outcomes for workers—not in the best interests of working people, their jobs and their life after paid work—but rather with vested interests at heart. Ultimately, their proposed solutions lead to worse retirement outcomes for workers, because, when reasonable suggestions are put forward to fix clearly inherent flaws in their legislation, they reject them. This is what we are seeing here yet again this evening. It is the Liberal Party returning to type. True to form, they are going after the hip pockets of working people and undermining the strength of the superannuation system, set up to provide for workers' retirement.
It is clear that these bills in the cognate debate we're having here today—but specifically this bill, the Treasury Laws Amendment (Your Future, Your Super) Bill 2021—have many flaws. Many of these problems were identified through the inquiry into the bill by the Senate Standing Committee on Economics. In a dissenting report on the bill, Labor senators outlined in detail the reservations that we on this side of the chamber have with this bill. There are a great many flaws in this legislation, and many of them with the potential to cause significant harm—harm, in a broader sense, to the Australian economy and, more specifically, harm to superannuation fund member right across Australia. Put simply, that means harm to working people and their families.
That is why Labor cannot support the bill in its current form. We have put forward in good faith to the government that they need to review and reconsider the issues that have been raised directly with them and canvassed through the Senate Standing Committee on Economics in the inquiry on the bill so that the bill can be improved and actually deliver on the stated intent. Only after the legislation has been revised, amended, should the bill be returned to parliament. In its current form it simply is not good enough.
Let's consider some of the serious flaws that were identified through the inquiry process. Firstly, there's the political override power. This bill includes an extraordinary power that would allow the Treasurer to personally override any investment decision or payment decision made by a superannuation trustee. Why? How could this possibly be necessary? It's an absolute overreach. It clearly goes too far, and it must be reconsidered or knocked out in this place.
Now let's come to the provisions on stapling to underperforming funds. The implementation of the stapling mechanism would cause up to three million Australians to be stapled to underperforming funds. How can that be good for workers or fund contributors? In terms of stapling, we have heard that Your Future, Your Super, according to APRA, also contains many occupational exclusions. This is a really important point, because some of the most hazardous jobs are excluded from insurance coverage from particular superannuation funds. I will go through some of the occupations that we're talking about—some of the most hazardous occupations that need coverage that are excluded by some funds. This goes to the point that people need to be very careful about the fund that they join—which again goes to this stapling to underperforming funds and the fact that, according to APRA, three million Australians will be stapled to underperforming funds. Some of those commonly excluded occupations include boilermakers, bricklayers, carpenters, concreters, dogmen, fitter and turners, labourers, painters, plasterers, plumbers, electricians, riggers, scaffolders and welders.
People may not be aware, those that are assigned to these super funds, that AMP, for example, have specific exclusions. At AMP, bricklayers, concreters, dogmen, labourers, plasterers, plumbers, those who work on roofs, electricians, electric linesmen, riggers and scaffolders cannot get total and permanent disability cover. They're totally excluded. At MLC the total and permanent disability cover completely excludes farm labourers and railway workers—they're excluded. So if you don't know that you're excluded then by stapling a worker who is new to a hazardous occupation to one of these funds—and I have to say that there are others—we'll see a member paying premiums for no cover: a fee for no service, if you like.
We all know in this place that the most serious and hazardous occupations are around the building industry. There are around 2.7 million people who work in the riskiest quintile of Australian occupations, which includes many of those I've already spoken about—there are miners as well—and there are over 34,000 new entries into the construction workforce annually. Many start out as apprentices, often well below the age of 25. Insurance is especially important for young blue-collar building and construction workers as they are more than twice as likely to require insurance than the general population of the same age. Today, only seven funds nationwide continue to offer default opt-out cover to under 25s. The government forced the rest to switch it off in 2020. That's what this government did—switched it off in 2020. It means that a hazardous occupation apprentice or young worker will not get default cover at particular funds. So this is a very important part of this legislation, and it goes too far. Clearly, it needs to be reconsidered.
As I was saying, the implementation of the stapling mechanism would cause up to three million Australians to be stapled to underperforming funds. Quite frankly, we all know that that cannot be good for workers or their funds—it can't. Put simply, up to three million Australians will be left worse off in retirement because of this provision. The whole point of making changes to super should be to improve the retirement incomes of workers, not worsen them.
And what about the impact on insurance? As I've already mentioned, Australian workers in certain industries will be left without adequate insurance as a result of this bill. This will leave working people with less-than-adequate insurance coverage. It hardly sounds like an item on the tick list for a government that's genuine about improving the way that superannuation works for workers. And what about the bill's failure to cover all APRA regulated funds? This bill explicitly excludes up to one-third of all superannuation funds regulated by APRA from the performance measure. We know that the performance measure is critical to ensuring that funds always seek to get the best possible returns in their members' interests. Why should certain funds be excluded from this critical feature?
That brings me to the flawed performance measure. Stakeholders have identified numerous flaws in the performance benchmarks originally proposed by the government, including the exclusion of administrative fees and the potential to discourage investment in Australian assets. There's no reason to exclude these basic fees. And I would have thought that the very last thing the government should seek to do is to discourage reinvestment in our Australian assets. Notably, investment by funds here at home have added the benefit of growing our local economy and providing more jobs in our local communities.
And what about the administrative burden on funds included within this bill? The drafting of the proposed best financial interest duty provisions could place undue administrative costs on superannuation funds, which will be passed on to members in the form of higher costs. That's a big cross: higher costs to members equal lower returns on investment. It's the wrong way: go back and redraft it. But, no, not this government. And, of course, the administrative burden on employers, which is proposed by the start date of this bill, 1 July, could have significant impacts on employers, who will be required to implement changes to payroll processes in an extremely short period of time. This is another flaw which could be easily fixed.
The issues identified by Labor senators in the dissenting report are not only issues identified by stakeholders in relation to the bill; many of these issues have been identified in chapter 2 of the chair's report on the bill. It is for these reasons and more that Labor believe this bill is in need of a serious rewrite. Improving superannuation for fund members is the objective of the bill. I will just say that again: improving superannuation outcomes for fund members is the objective of the bill. Labor support that objective. We always have and always will. But we cannot support a bill which fundamentally and manifestly fails to deliver on that objective without needed improvements to address these serious concerns. I just want to say again that Labor support any move to improve superannuation outcomes for fund members, as is the stated objective of this bill. That is, as I've said, what we always have done. But of course this bill does not do that. It won't deliver on that objective—not without serious improvements to address these serious issues that have been raised by Labor.
I just want to make a point, first of all, on some comments that were made by Senator Bragg. Isn't it amazing that he had the hide to stand here in this parliament and have a go at the banks? He said the banks are part of the problem, except the Treasury Laws Amendment (Your Future, Your Super) Bill doesn't deal with the retail banks. He says the banks need to be held to account. But this bill doesn't make them accountable. In actual fact, it clearly makes them unaccountable. I describe Senator Bragg as a modern Liberal defender and protector of all things commercial, unless it involves content disagreements with people like the ABC. He disagrees with them. He disagrees with making sure retail super funds are held to account. He is all things commercial whilst he is running a defence line for the retail funds, but look at Senator Bragg's track record. He happily delivered the keynote speech at the 2020 FinTech Awards when the top gong was given 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?
Senator Bragg touched on the important area of the reverse onus of proof. You don't have to go into all the legal details of reverse onus of proof except to simply say that in the Your Future, Your Super Senate inquiry what was highlight by the department was that the only significant areas where there's reverse onus on proof other than superannuation funds that are not run for profit are Australians accused of being paedophiles overseas. They have a reverse onus overseas. Terrorists have a reverse onus of proof. So now we have industry funds that have some of the most prominent businesses and employer organisations in the country and—heaven forbid!—worker representatives with equal numbers on the board that all now have a reverse onus of proof just like paedophiles and terrorists. Doesn't that say it all about Senator Bragg highlighting that point?
The Morrison government has landed on a strategy for how it can attempt to pass woeful legislation through this parliament. The government serves up an abysmal bill. It's opposed by all corners of the Australian parliament—even by members of the Prime Minister's own coalition. The government is then forced to axe some of the most offensive parts of its bill. And then the Prime Minister sees if he can squeeze through the unpalatable leftovers!
The Morrison government tried to exclude administration fees from performance testing. And the Prime Minister was forced to backflip. The Morrison government served up benchmarking, which would have disincentivised investment in regional Australia. And the Prime Minister was forced to backflip. Then the Morrison government attempted to give the Treasurer the power to cancel any investment by any super fund for any reason. And the Prime Minister was forced to backflip.
I wish I could say that that means the bill before us now is a sensible piece of legislation which addresses the actual issues in the superannuation sector, but it's not. First and foremost, this bill still contains a back door for the Treasurer of the day to create regulation to control what super funds can and can't invest in. They might be able to dupe the National Party, but they certainly can't dupe us. The power was supposed to have been removed from this bill in the House, but, if you read the fine print of the bill on page 30, schedule 3, part 1, section 10, it's all too clear. You'll see that super fund trustees will be forced to comply with any requirements prescribed by the regulation. This is a limitless power for the current Treasurer, and any future Treasurer, to take direct control over super fund investments. I'll come back to the sneaky attempt to back-door these powers a little bit later.
I want to go to the Productivity Commission's 2018 inquiry into superannuation. It found two issues: unintended multiple accounts and entrenched underperformance were costing Australians $3.8 billion each year. Labor wants to address these problems. Industry super funds want to address these problems. Employers want to address these problems. Judging by this bill, the Morrison government doesn't.
This is a bill with a very small constituency, but it's a constituency that is very important to this Prime Minister, and that's the constituency, of course, of the big banks. This is the Prime Minister who voted against a royal commission into banks on 26 separate occasions—the Prime Minister who, as Treasurer, referred to Labor's calls for a royal commission into the banks as 'a populist whinge'. That same Prime Minister has put forward a bill, supported only by the big banks, which leaves Australians worse off in retirement and worse off if they get injured at work.
Now let's examine this bill a little bit more closely. Schedule 1 will staple fund members to a single fund for life. The government is claiming this will address the issue of unintended multiple accounts. But, by not addressing underperformance first, it will mean that three million Australians will be stapled into underperforming funds at exorbitant fees.
And who are the funds with eye-watering fees? Well, fortunately, APRA publishes data on the funds which slug members with the highest fees. And surprise, surprise! Nine of the 10 funds with the highest fees are for-profit retail superfunds—funds like AMP, Suncorp, Aon, Mercer, Colonial First State and Commonwealth Bank, the Prime Minister's old mates, who he worked so hard to protect from the royal commission. These are the sorts of funds that three million Australians will be stapled to if this bill proceeds.
Stapling will also be catastrophic for workers in high-risk industries who depend upon the insurance they receive through their industry super fund—workers like 25-year-old Andrew, who was crushed at work by two glass plates weighing more than 1.6 tonnes and suffered severe spinal injuries. Thanks to his Cbus insurance, he is recovering with the support of a financial safety net. Under this bill, if Andrew had opened his first super fund with his bank, or his hospitality fund, it would be very likely his policy would have explicitly excluded the occupation from coverage. He would've been left with nothing. How is stripping insurance from construction workers, truck drivers and frontline health workers a good policy? How is locking three million Australians into underperforming funds are good policy?
Schedule 2 is supposed to be addressing underperforming funds. Let's see how we go here. Again, this is something that Labor does support, but the actual provisions in this bill are woefully and deliberately inadequate. In 2012 the Gillard Labor government introduced the MySuper reforms. MySuper funds are simple, low-cost superannuation products that are suitable for the vast majority of Australians who do not want to actively manage their super investments. Non-MySuper products are commonly referred to as 'choice' products. If you read the whole way down to page 27 of the Treasury Laws Amendment (Your Future, Your Super) Bill, you'll see that the entire performance test schedule only applies to MySuper funds and some choice funds prescribed by regulation, which we now know from the draft regulations will only be trustee directed choice products. That leaves an entire third of super assets, $5.15 billion in exempt choice funds, excluded from performance testing. That's a $5.15 billion loophole. It's not an accidental loophole. It's intentionally written into the bill and into the regulations. So, why has the government excluded a third of the sector from performance testing? I think I know. Here is a quote from the Productivity Commission's report from its inquiry into superannuation:
… we found that about 36 per cent of choice products—
that's the big retailers—
in our sample, with about 15 per cent of assets, underperformed benchmarks tailored to their own asset allocation (in the 13 years to 2017). Almost all were offered by retail funds. This is likely to be a conservative estimate of underperformance in the whole choice segment …
The Productivity Commission identified that, even by conservative estimates, these exempt choice products consistently underperformed and were almost exclusively retail funds offered by financial services companies like the big banks. So, of course—surprise, surprise, surprise—the Prime Minister who voted against the royal commission 26 times excluded them from performance testing. Here's another quote from the Productivity Commission report, and, again, this is the report the bill is supposed to be implementing:
In the choice segment, poor comparability of products … the charging of fees for no service, the entrenched tail of high-fee products and persistent underperformance by some funds all point to an absence of healthy competition.
So we have retail products that persistently underperform, charge high fees, charge fees for no service, and these are the products that the government has chosen to create a loophole for. I have an article that was published in the Guardian today titled 'Commonwealth Bank reaped superannuation profits even when fund members' balances fell'. Now, I'm sure this headline brings immense pleasure to the 'Senator for Financial Services', Senator Bragg, because the article reads:
Australia's biggest bank, the Commonwealth, reaped more than $1.4bn in profits from superannuation arm Colonial First State over four years that include periods when members of the funds it ran saw their balances shrink or stagnate.
The only part of the statement that would disappoint Senator Bragg and the Prime Minister is that it was only $1.4 billion! Under this bill, when these sorts of funds are exempt from performance testing, it will be easier than ever before for the big banks to milk Australian superannuation accounts dry.
Finally, I'll go to schedule 3. As I said earlier, the government ditched this part of the bill, which explicitly gave the Treasurer the power to kill super fund investments. But, as always with this government, the devil is in the detail. You'll see that the bill changes the wording of one of the covenants in section 52(2)(c) of the Superannuation Industry (Supervision) Act. It omits 'best interests' and substitutes 'best financial interests', so that trustees must perform the trustees' duties and exercise the trustees' powers in the best 'financial' interests of the beneficiaries, and adds 'including complying with any requirements prescribed by the regulations for the purpose of this paragraph.' That gives the Treasurer of the day the power to set seemingly limitless requirements on funds through regulation. That could include what super funds can and can't invest in. I know that the member for New England and the member for Hughes were both particularly vocal in opposition to that power. I'm sure this back door to that same power would be of great concern to senators on all sides of this chamber.
This bill will staple three million Australians into underperforming funds. This bill will strip vital tailored insurance away from workers in high-risk industries. This bill will create a $515 billion loophole for some of the worst-performing, highest-fee retail choice funds to operate outside of performance testing. This bill will create a back door for the very investment powers that were supposed to have been axed in the House. It's a bill that contradicts both the Productivity Commission and the banking royal commission and delivers a big payday for the Prime Minister's mates at the big banks, and it must be opposed.
(Quorum formed )
Here we go again: another sitting of this parliament where the Liberal Party, the National Party and One Nation are here attacking the retirement incomes of ordinary Australians—attacking probably the single biggest reform to our finance sector and to the potential for ordinary working Australians to have a decent retirement—because in this government, in what passes for a government, there is only one set of ideas that bind this misanthropic group of characters, and that is to tear down the achievements of previous Labor governments.
The Liberal Party can't be trusted on superannuation, they can't be trusted on workers' retirement incomes, they can't be trusted on wages and, as we're discovering, they certainly can't be trusted on the age pension. The Liberal Party message to working Australians, to families in the suburbs and regions, is earn less, retire with less: earn less—'We're going to keep wages down'; retire with less—'We're going to trash the superannuation system.'
Senator Van interjecting—
The lowest wage growth on record is the achievement of this eight-year-old tired sclerotic government. Senator Van—silly as a two-bob watch, down there—can hector and carry on as much as he likes, but everyone in the country knows—
Senator Van interjecting—
I just did, or I thought I did. I'm very happy to—
Senator Van interjecting—
What he should be offended by is the record of this government: the lowest wage growth on record and no answer for wages and no answer for superannuation. What has their answer been on low wages? Have they reflected on the institutional factors that have driven wages down—weaker collective bargaining, an anti-growth Fair Work Commission and no effort from this government to deal with wage theft? Oh, no. Have they dealt with the issues in the labour market that are dragging wages backwards—a growing guest worker economy and temporary workers being paid $9 an hour, which is particularly rampant in agriculture, as we've discovered over the last few weeks? Oh no; they haven't got a plan to deal with that. Do they have a strategy to deal with the dead hand on wages growth, reflected in their own public sector wages cap and the wages caps of governments at the state level, Labor and Liberal, around the country? Absolutely not. On the gender wages gap, there's crickets. You don't hear a thing from these jokers about dealing with the structural inequalities that mean that women's occupations in this country are paid less and valued less than men's. We have got no answers from this government on aged care, no answers on disability care and no answers to deal with labour hire and casualisation. Oh no; that's too difficult.
The idea that this group, this sclerotic eight-year-old government that has lost its way and is tired and out of ideas could come up with an actual strategy to lift wages—an actual wages policy—is a complete anathema to them. Indeed, the previous finance minister said that low wages were a deliberate design feature of their system. So what was the only suggestion that these pea-hearted characters on the other side could come up? What could these superannuated, overpaid—$250,000 a year; well paid, like everybody across their parliament—characters come up with? That the wage increases of low-wage workers should be funded with cuts to legislated superannuation increases. That was the best that they could come up with—maybe $20 a week. If you followed the bouncing ball of their failed logic in their plan, the minister's plan—the plan of many on the backbench who go on with this stuff—it's maybe $20 a week; $80,000 less for people for their retirement incomes. So ordinary families—for the flawed ideology and failed approach of this government on wages and super—would have paid the penalty in a massive hit to their retirement incomes. And there is no plan for wages. So why would we—why would anyone in the country—believe that anything this government says on superannuation could be believed?
And then we come to today's performance, an utter shambles, utter chaos: a rabble of misanthropic, misinformed, out-of-touch, wild ideology driven from the backbench of a government that is completely out of touch and completely out of time. It's a lazy, tired and out-of-touch government led by a characterless marketing man who believes only in himself. And what is the product of it? It's another lazy, tired, dishonest, hateful and shallow assault on the retirement incomes of ordinary Australians.
What does it mean for ordinary families out there? What does it actually mean for them, their circumstances and their retirement incomes? Well, we know that the government has not got an answer on wages. Wage inequality will continue to grow. Real wages will continue to fall. We know they will continue to fall, because the best way of assessing future performance is past performance, and these jokers haven't got a plan. And what is the future for people's retirement incomes? Well, you can see it in this shambolic effort at legislating that we've seen over the last couple of months. Bits have fallen off this bill on its way into this place as if it were one of those broken-down old cars you used to see on Bush Mechanics. At every bump in the road, bits and pieces fall off it. Why? Because there's nothing coherent about this plan except the hating on the industry super schemes.
So what does it mean for ordinary families? It means more risk. It means that you're more likely to be stapled to a low-performing fund. It means more risk and uncertainty, including investment uncertainty, for the superannuation funds and their investment vehicles that have done so well, particularly those of the industry funds, to mean that more Australians retire with dignity and with the prospect of a decent retirement for them and their families. What does it mean? It means more poverty. It means poverty from lower wages, from lower-performing funds getting a leg-up and from lower retirement incomes. And for many people, particularly workers in high-risk industries, it means the risk that they are underinsured or incorrectly insured or not insured at all. In industries like the building industry, where workers have benefited from the decision of the building unions and the building employers to offer insurance across those industries at low cost, many people will lose the benefit of an insurance scheme. That means that, when misfortune befalls them or their families, they will end up living in poverty.
The last time we saw this approach from the government was in the industrial relations omnibus bill, which became less and less omnibus as we got closer and closer to the vote. There have been some concessions. The approach that the government had coming into this—that somehow the Treasurer would have the capacity to override the investment decisions of superannuation funds—has, thankfully, fallen off the agenda. That is an idea that belonged in North Korea, not in Australia. That is an idea that should have been a relic of authoritarian governments in other countries, not this government. The idea that investment decisions that have been made in boardrooms and superannuation funds could be overruled by a politician is an absolute anathema to a functioning, decent market economy and an absolute threat to the security and the future of the superannuation industry. No other industry in Australia would tolerate that level of political interference. Whose idea was it? That idea is an orphan now, but it lived large amongst the coalition for so many months leading up to the last sitting week.
The stapling mechanism will cause up to three million ordinary Australians to be stapled to underperforming funds, funds that don't do well, funds that drag retirement incomes backwards, where the cost of being in the fund and the returns on the fund mitigate against a decent retirement income for Australians. The impact on insurance—the failure to cover all of the APRA related entities that exist in superannuation. A third of the superannuation industry is explicitly excluded from what passes in the bill. There are flawed performance benchmarks. The administrative burden on funds will result in administrative costs being passed on to members through higher fees.
On the government side of this higher fees are the way that the retail funds and the big banks return big profits to shareholders and exorbitant executive salaries. But on this side of the House we stand for the industry fund model that's about low fees, that's about better performance, that's about higher retirement incomes for ordinary Australians. In truth, what this bill will do is increase the administrative burden on employers. Now, who knows what has been dealt in and what has been dealt out in this sordid legislative performance. One Nation certainly doesn't know. But 96 per cent of the time One Nation has signed up to the government's agenda, an agenda that they couldn't possibly understand. They won't be able to explain to Australians tomorrow what it is that they voted for. What is the advantage to ordinary Australians? To the ordinary working people in the regions and the suburbs of Queensland, who they purport to represent, they will not be able to explain tomorrow what on earth it is that they have done. Except we know that it has been done for their direct benefit, for their narrow political interests to suck up to, to cosy up to, the Morrison government. It is a poorly conceived, poorly drafted bill.
The Liberals can never be trusted on superannuation and retirement incomes. They have opposed it since the day that it was introduced. They have bitterly resented it. They resented it because it meant that people who they never thought should get a decent shake in life got a decent go, a decent retirement income and could retire with a little bit of dignity. They have never understood it and they certainly don't believe in it.
There is, I think, a deep loathing in the Liberal Party for industry superannuation and for the collective effort of workers. I was walking past a Liberal senator's office. It had this old poster of Robert Menzies on the front of the office and it said, 'Do you stand for Liberalism or socialism?' Bob Menzies was an old barrister who used to work for the AMWU, my old union, before he came into the parliament—represented us in the High Court on some very significant matters—and probably would never have taken the approach that passes for liberalism on the other side of this chamber on these kinds of issues. I tell you what, what is wrong with working Australians, through their unions, working together with their employers to build a system that's decent? What's wrong with them making a decision in a pluralist society, in a society where people can get together in their institutions and make a difference, to make a superannuation system that is the envy of the modern world? Well, the Liberal Party hates it and they are going to do everything they can to dismantle it. It's ordinary people who will suffer from their efforts.
There are a number of points that I think everyone in this chamber would agree that we want included in superannuation laws. We want laws that test superannuation funds on their performance. We want laws that ensure superannuation funds are spending members' money wisely. We want laws that ensure fewer duplicate funds are created and that ensure superannuation fund members have access to accurate and timely information about the performance of their funds and are able to move to better performing funds with minimum restrictions. These objectives should be quite achievable. Unfortunately, we have before us today a poorly drafted bill that has struggled with these issues, and in many respects it's failed in these issues. If we all agree that those are sensible objectives, then our job today is to ensure that they are met.
Labor is the party of superannuation. We introduced it. We have consistently defended it and consistently improved it. We've done so because it is a core Labor value, something that we treasure—and that is dignity in retirement. As a result, Australians have $3 trillion in nest eggs for retirement—$3 trillion of economic security to enjoy after decades and decades of hard work, $3 trillion of investment in the economy and $3 trillion of planning for the future. As the Morrison government has learnt, Labor will not stand by and let this extraordinary achievement be degraded. Labor supports the objectives of the Treasury Laws Amendment (More Flexible Superannuation) Bill, but, as I've said, superannuation is a Labor legacy, and we want to see our superannuation system performing well, so we support the implementation of measures that will prevent members from unintentionally opening multiple superannuation accounts. We support the implementation of an objective performance benchmark for superannuation funds. We believe profoundly in the fundamental principle that superannuation trustees must always act in the best interests of their members, not those of parent entities, those of shareholders or those in the banking industry. As a result, Labor cannot support the bill in the form that it is being brought forward by the government today.
The passage of this bill through this chamber as it is drafted would damage the interests of current and future Australian superannuation fund members, working Australians who deserve that dignity in their retirement, working Australians who deserve our respect. So we all have a job of work to do today and for as long as this debate continues. Labor cannot support the bill as drafted, so we will aim to fix it right here in the Senate. We believe that if we all hold on to those key concepts—dignity in retirement, respect for working Australians and proceeding in the best interests of superannuation—then we might, but we should, get there. But, if the government can't accept the simple fixes that we propose, then we will protect the interests of Australian workers by voting this poorly drafted bill down.
Labor will be moving a series of amendments to fix this bill. We're not here to sink the bill; we're here to fix it. We want an objective performance test and we want to close down issues with multiple accounts. And, to be very clear, we cannot support a bill that staples members to underperforming funds for years. Treasury has estimated that 21 out of 77 default MySuper funds covering three million Australians will fail the benchmark on day one. This means that, if this bill passes, up to three million people will be stapled to a dud fund for life. That is a patently ridiculous and undesirable outcome, and it attests to the repeated pattern we see with this tired government, making an announcement claiming they've done something momentous and claiming to have solved a problem. But in the detail that's where we find all the flaws, all sorts of consequences that they have failed to consider. You cannot claim that this bill makes an improvement in workers' superannuation, when it leaves behind millions of Australians—three million Australians in this case. It's all announcement, no delivery. Independent modelling has estimated that this measure alone could cost Australians tens of thousands of dollars in retirement savings. Treasury's own information spelled most of this out for the government, who have simply chosen to ignore it.
There are many other problems with this bill. It attacks the basis of insurance in superannuation—the industrial default system—meaning that workers in high-risk industries will miss out on insurance tailored to their profession. We heard the examples of those professions when Senator Brown spoke earlier in this place. Non-industrially determined funds often include exclusions in their default insurance packages for high-risk occupations. Labor knows that our truck drivers, construction workers, police officers, firefighters and health workers deserve better. It really begs the question: why is essential workers insurance under attack once again?
The government has already begrudgingly accepted the necessity of valuable, industrially relevant insurance for workers in high-risk industry, through its acceptance of the dangerous occupation exception to the putting members' interests first package in 2019. We must bear in mind that some workers actually choose to stay in two funds: one for access to affordable insurance and one that's self-managed. Yet the government is proposing these stapling measures, so workers who are changing into high-risk careers and do not choose their fund will likely remain in their previous fund, which may well have insurance which is inappropriate for their heightened risk. This bill threatens to undermine the provision of putting members' interests first reforms which relate to those dangerous occupations.
Finding insurance as a worker in a high-risk industry is difficult, and it will be made more difficult if this bill passes unamended. Workers who are stapled to a fund—it may be the super fund for their first job in hospitality, fast food or retail—and do not join their workplace default fund as their work changes face higher premiums, may be underwritten or may be excluded entirely from insurance cover. The very least we can do as legislators is to ensure that our first responders, who are out there every day risking their lives for our safety, have the insurance cover that they need and the cover that they deserve.
Another huge problem is the rush the government is in. It just doesn't seem to be able to get its act together when it comes to the timing and implementation of its decisions. This is just like the massive Medicare changes announced by Minister Hunt in late May, giving the health sector just weeks instead of months to change over its entire system to support almost 1,000 changes. Now the government wants these superannuation changes to take effect from 1 July 2021—this year. That will mean that Australian employers have to scramble to implement new systems in just a couple of weeks. So you've got to ask: what is the rush? There's no answer to that question, except that once again we see a level of fumbling and incompetence, with rushed changes which have major implications. You could be forgiven for thinking that the Morrison government lives in la-la land, not contemporary Australia. Just like those Medicare changes, here is another example of magical thinking; the government has completely forgotten that the changes don't just magically happen with a vote in our parliament or by Ministers Hume and Hunt simply waving their magic wands. There is the practical process of implementing such significant change to be considered.
The bill introduces new administrative burdens on superannuation funds, tying funds up in red tape, which will ultimately be paid for by superannuation members through increased administration fees. The government's bill also has huge gaps in coverage as it will only cover default MySuper products when the majority of underperforming funds are concentrated in the choice sector.
For these many reasons, Labor cannot support the bill as drafted, and, as I said earlier, we will aim to fix that here in the Senate. I'll just add a couple of salient points. As most of us who are genuinely engaged in matters of ensuring that working Australians have sufficient retirement savings know, member engagement is critical to ensuring that super fund members are in the scheme that best suits their personal needs and career and life stages. Super funds have a range of products, including various investment choices. To staple a person to a fund with limited choices may not be in that person's long-term best interests. As you go through life, circumstances change; we know that. What suits an 18-year-old in casual work will not necessarily suit that person when they are maybe a 40-year-old professional. Stapling a super fund member to their first fund is contrary to member engagement, as it will encourage a 'set and forget' mentality.
We want super fund members to take an interest and to take responsibility, and much of that is about education. Rather than encouraging 'set and forget', the federal government should be encouraging Australians to take control of their super, including selecting the death, disability and income protection insurance that is most suitable to their individual circumstances and planning for a comfortable retirement. An important aspect of taking control is having comparative super fund information readily available. This must be on a consistent basis for retail and profit-to-member funds, which is not the case at present. There are some actual costs that retail funds are not required to declare at the moment. It would be an undesirable outcome if, as a result of this bill passing the Senate, millions of Australians are stapled to underperforming funds and untested superannuation products.
In its current form, the bill encourages that 'set and forget' environment where working Australians don't take an interest in their super, don't bother checking their balances, never discover the miracle of compound interest and don't make choices that best suit their situation and the nature of their work. The situation is even more baffling because it espouses the opposite of the Liberal ideology of individual choice and self-determination. Is the Morrison government playing some form of game? Does it want people disinterested in and disengaged from their superannuation? Is this about another ideological fare by some kind of elitist view—a paternalistic group of Liberal people saying to working Australians, 'You're not competent to look after your own money, so we should do that for you'? I say to senators opposite: is getting your hands on the money what this is all about in the long term? We know that's been the plan for a very long time—to get your hands on members' money. I have my suspicions, and I sincerely hope that, in our deliberations on this bill, you prove those suspicions wrong, and let people take charge of their super without your involvement.
I rise to speak on the Treasury Laws Amendment (Your Future, Your Super) Bill 2021 and the related bills.
Firstly, let me say how absolutely shameful this government are. This government have once again shown how pathetically desperate they are in attacking super. They're so desperate that they've resorted tonight to secretive deals to rush through their latest round of attacks. Labor will always support improvements to super, but Labor cannot support this bill as it has been put forward by the government today. We cannot support a bill that staples members to underperforming funds. We cannot support a bill that leaves high-risk workers without proper insurance. And we cannot support a bill that gives the government unilateral power to decide what's in the best financial interests of superannuation members.
Labor has a proud record on superannuation. It's the vision and determination of successive Labor governments and unions that have delivered what is now a world-class universal superannuation system. Since then, attacks from the other side have continued in this place—day after day, year after year—because those people opposite, who sit on those benches, do not want Australians to retire with their own funds and to retire in dignity. Those opposite simply cannot be trusted when it comes to superannuation. Only Labor will fight for Australians' superannuation. We will always fight for a dignified retirement for all Australians and we will always fight the attacks on superannuation by those on the other side.
Schedule 1 of this bill introduces a new system for stapling members to a single superannuation account. The first problem with this rushed bill tonight is that the government has set a deadline of 1 July 2021 for this schedule to begin. That's only two weeks away. This is a rushed job, and it's a rushed job that will see workers stapled to underperforming funds. Critically, this deadline must be extended. This deadline must be extended to ensure that performance testing of superannuation funds has begun before any stapling begins. If the stapling mechanism commences before performance testing is underway then, as we all know, individuals will be stapled to failing funds. If this bill comes into effect before this performance test is underway then underperforming funds will be able to keep accepting new members—new members who will also be stapled to these funds, potentially for life.
Treasury has estimated that 21 out of 77 default MySuper funds would fail this test on day one. And those 21 funds cover over three million Australians. So if this bill is passed tonight, in this rushed job that the government has put forward tonight without proper amendments, then from 1 July those three million Australians could be stapled to an underperforming fund. That's three million Australians who could lose thousands of dollars in their retirement savings; three million Australians whose futures would be worse off because of this government's latest attempts to undermine superannuation.
This bill also attacks the basis of insurance in superannuation—the industrial default system. This Senate made really important changes to the 'putting members interests first' bill to create the dangerous occupation exception. This allowed funds with tailor-made insurance cover for workers in hazardous occupations to continue providing default opt-out cover for their members, regardless of their age. That exception has preserved insurance cover for some of Australia's most at-risk workers. Around 2.7 million Australians work in the most high-risk occupations: building and construction workers, miners, agricultural workers, health workers, emergency services workers, truck drivers and delivery workers. These are essential workers—the same essential workers that this government has relied upon to help get us through a global pandemic.
And how does the government show its thanks to these essential workers? By making a dodgy deal to ram through this bill and make the Senate stay up all night to debate it. These workers deserve better. Whether these workers are up on scaffolding, down a mine or working on the front line of a pandemic, death and total and permanent disability insurance is their safety net. It protects workers and their families in the worst possible situations. Too many funds have exclusions in their default insurance packages for high-risk occupations. The stapling mechanism proposed by this government could see these workers stapled to funds that do not include default insurance that is appropriate to their high-risk professions. This government would leave those workers and their families without the safety net that they need.
Building and construction is the third-highest sector for fatalities in the workplace, and each year almost 35,000 workers join the construction workforce. Many start out as young apprentices. But, as of today, only seven funds nationwide offer default opt-out cover to under-25s. One of those funds is Cbus, Construction and Building Unions Superannuation. Cbus member Andrew was 23 years old when he was injured at work, crushed by two glass plates weighing in excess of 1.6 tonnes. Andrew sustained serious spinal and pelvic injuries. He was lucky to have even survived. Andrew was hospitalised for over a month, during which time he watched his wife give birth to their first child while he was in a wheelchair. Thankfully, Andrew and his family today are recovering well. His Cbus insurance made an enormous difference to his health and his quality of life. He says that he cannot imagine what could have happened if he and his family had been left without insurance cover. Had Andrew been stapled to any fund except one of the seven funds that use the dangerous occupation exception, he would not have had any cover. This government's bill would have meant that Andrew and his brand-new family would have been left without any support. This is shameful. What does this government have to say to people like Andrew? What does this government have to say to families like Andrew's, who could have faced incredible financial turmoil, hardship and stress right at the very time they needed support to get better and needed to celebrate the birth of their child?
When Cbus member Shannon was in his early 20s, retirement was the last thing on his mind, but the insurance that he received as part of his superannuation is having a profound effect on his life. Shannon is 30 years old and lives in Albury, on the Victoria-New South Wales border, with his wife, Bianca, and their six-year-old daughter. Shannon previously worked in a brickworks, in a job that he loved. Three years ago, he fell backwards as a result of an anxiety attack and injured his spine. He is now in a wheelchair. Shannon says that, without the insurance that he received from his total and permanent disability claim as part of the insurance on his Cbus policy, he and his family would have lost everything. Even though he wasn't injured at work, his Cbus policy covered him, but insurance policies provided by many other superannuation funds would not have. If Shannon had been stapled to another fund, as this bill seeks to do to so many workers, his family would have lost everything.
That is what this government will do to Australia's most high-risk workers. They are risking the futures of Australian workers and families who face losing everything if they get injured and are left without proper insurance. But this government, as we know, has no regard for Australian workers, especially those in high-risk occupations—our construction workers, truck drivers, emergency services workers and health workers. They all deserve so much better.
This government is not satisfied just with undermining the future savings and safety nets of Australian workers. They've decided that this bill needs to go further. They've decided to try to give themselves unilateral powers to decide what superannuation funds can spend their money on. They've given themselves the extraordinary power to determine what is or isn't in the best financial interests of members. The government are not interested in protecting the best financial interests of superannuation members, because when it comes to superannuation they have never acted in the best financial interests of Australian workers. The only financial interest the government know how to protect is that of themselves and their mates. We have seen similar powers used in the Northern Australia Infrastructure Facility to block investment in renewable energy jobs in North Queensland. Whose best financial interests was the government protecting then? Whose best financial interests were this government trying to protect when they used their powers to block investments in creating jobs? The only financial interests the government know how to protect are their own. Questions remain about the way this bill allows the Treasury to reach into the democratically elected boardrooms of superannuation funds to block investments that he might disagree with. Questions remain about the way in which the application of the best financial interests test in this bill as it currently stands could actually undermine members' interests.
Superannuation is a Labor legacy, and Labor will always protect superannuation. Labor will always support the future of Australians. That's why Labor will move amendments to this bill that provide simple fixes to the serious concerns that we have—fixes that should be supported in this chamber. Labor will always be here to protect and improve superannuation, but we won't support the bill if these issues are not fixed and our serious concerns are not addressed.
Under this government, wages have been stagnant for a long time. Under this government, super has been frozen for a long time. Under this government, Australians have faced attack after attack on their super. This time, what they face is a future where they are stapled to underperforming funds that provide them and their family with no insurance, no protection and no safety net against the worst-case scenario. So there are two things that Australians can always be sure of. The first is that the Liberal and National parties will always find new ways to undermine superannuation, and the second is that Labor will always be here to stop them.
The Senate transcript was published up to 22:02. The remainder of the transcript will be published progressively as it is completed.