Chris Hayes (Werriwa, Australian Labor Party) Share this | Hansard source

I advise the minister at the table that I too will be going short of my allotted time in this speech. I do not rise to oppose the Bankruptcy Legislation Amendment (Superannuation Contributions) Bill 2006 but I do wish to point out some shortcomings, at least from my perspective. The most significant amendment made by this bill will be to allow bankruptcy trustees to recover superannuation contributions made prior to bankruptcies which are intended to defeat creditors. The amendment addresses the problem highlighted in the High Court decision in Cook v Benson in 2003, which opened up the possibility that people could hide money from their creditors by putting it into superannuation before declaring themselves bankrupt. This is a welcome amendment. I am sure that creditors who in the past have had money slip through their fingers will be keen to see that the loophole highlighted by the Cook v Benson matter will be closed.

As indicated by previous speakers, the overall purpose of the amendments in this bill is as follows. The bill will allow a bankruptcy trustee to recover the value of contributions to an eligible superannuation plan made by the bankrupt to defeat creditors. It will allow the trustee to recover contributions made by a person other than the bankrupt for the benefit of the bankrupt where the main purpose, again, was to defeat creditors. It will ensure that consideration given by the superannuation trustee for the contribution will be ignored in determining whether the contribution is recoverable by the bankruptcy trustee. It will allow the court to consider the bankrupt’s historical contribution pattern and whether any contributions were out of character in determining whether they were made to defeat creditors. The bill will provide that a superannuation fund will not have to repay any fees and charges associated with the contributions or any taxes it has paid in relation to the contributions. Finally, it will give the official receiver the power to issue a notice to the superannuation fund or funds that are holding the contributions that will put a freeze on the funds in order to prevent a bankrupt from rolling them over into another fund, therefore seeking to cover moneys that would otherwise be recoverable in bankruptcy.

These are all very sound measures that will act in concert to close the loophole that allows money to be channelled into the superannuation fund of the bankrupt or someone acting in the interests of the bankrupt in order to defeat creditors. However, as I noted at the outset, I do not believe that these measures go far enough. While welcome for creditors, these amendments do absolutely nothing for working Australians who lose their superannuation entitlements when companies go bankrupt.

There are not too many worse things that can happen to any working Australian than for them to find themselves out of work as the organisation they worked for has gone into either liquidation or bankruptcy. It is devastating to anyone who has been in that situation. In many cases it is very much unexpected when they find themselves out of work as a result of poor company performance. However, finding yourself out of work can quickly become worse when a worker finds that an organisation that they have been working for has not put aside the employees’ entitlements to cover their liabilities. I have dealt with many working Australians in the past who have experienced this. There are many thousands of people who fall into this category. Even as a local parliamentarian I have worked with people who have lost thousands of dollars simply because someone in their company did not put aside money to cover leave, long service and other entitlements.

I note that members opposite would indicate that those entitlements could be accommodated by the General Employee Entitlements Redundancy Scheme, or GEERS. GEERS does not work well enough and it certainly does not work in the recovery of superannuation entitlements. I know GEERS does not work as well as working Australians want it to because I have been involved in an ongoing debate between an insolvency company and the Department of Employment and Workplace Relations about some technical specifications of a deed of arrangement which has cost one of my constituents a considerable amount of money. Despite the deed, which by all appearances will operate in a manner consistent with the requirements of the department, my constituent’s request for assistance through GEERS has been rejected because the deed does not fulfil the exact requirements of the GEERS operating arrangements. For this constituent, a person of advancing years who has worked for the organisation for a considerable period of time, the system has not worked to satisfy his expectations. It certainly has not worked to satisfy mine.

While members opposite can dismiss concerns about the operation of GEERS, they cannot come in here and deny that there is an insufficient amount of protection in place for the superannuation contributions of Australian workers. The superannuation savings of Australians now amount to more than $1 trillion. By any measure, that is an impressive amount of money that has accumulated following the decision of a previous Labor government to introduce a system of compulsory superannuation contributions. Some in this place will recall, no doubt, that the coalition did not support the introduction of the superannuation guarantee. They opposed it at every step. As the value of superannuation savings continues to grow, the government’s efforts to rewrite history to claim credit for the whole system seem to be growing with it. The government would have Australians believe that they were the architects of superannuation, despite the fact that they never really believed in it—at least, not right at the beginning.

The rapid growth of superannuation savings means that we have responsibility for a significant proportion of people’s retirement income. That is something that should be protected. Those savings mean an adequate retirement income for many Australians who would otherwise not have that income to rely on. It is a credit to a good policy, but it is certainly something that has to be protected.

To understand the value of this system you need look no further than the accumulation of these savings. As I mentioned, currently there is somewhere in excess of $1 trillion in superannuation savings. Over the course of the next decade, to 2017, it has been predicted that superannuation savings of working Australians will be in the vicinity of $3 trillion, due to a threefold growth. Such a huge sum of money is worthy of some real protection but, more importantly, given the age of the Australian population, it is now more important than ever that we take measures to protect superannuation moneys that hardworking Australians have accumulated and are entitled to enjoy in their retirement years.

The government has acted to cover the unfunded liabilities of Commonwealth public servants through the Future Fund—in fact, according to the Minister for Finance, Senator Minchin, so much money is flowing into the Future Fund that unfunded liabilities are likely to be met much earlier than expected. The government has taken what would be considered a responsible step in that respect, but there remains a gap in the protection of the superannuation contributions of other working Australians. It is for this reason that I describe this bill as a good start—as a matter of fact, a great start if you are a creditor—but one which does not go far enough if you are a working Australian looking for the preservation of your superannuation entitlements. Therefore it is disappointing that the government has once again failed to adopt the plan put forward by Labor to include superannuation under GEERS and protect superannuation entitlements.

Labor has put forward a proposal which would guarantee workers’ rights in respect of superannuation entitlements. Working Australians are very conscious of the growth of their personal superannuation as they move towards planning their retirement. Following Labor’s bold decision to introduce a system of retirement savings for all working Australians, there is widespread recognition of the importance of these savings, of making sure that employers pay them and that this pool of money is protected. The compounding effect of missing out on even a small sum of superannuation can have a huge impact on the lifestyle that people can afford in retirement.

Superannuation is a statutory entitlement of employees. While members opposite tried their hardest to oppose superannuation at the outset, it is now a reality. It is a statutory entitlement and it should be protected in the same way as annual and long service leave. Accordingly, it should be afforded the same level of protection by including superannuation entitlements under the GEERS scheme.

Through this bill, the government is seeking to close the loophole that allows money to be channelled into superannuation to defeat creditors, yet it continues to resist providing protection to working Australians who lose their superannuation entitlements due to companies going into bankruptcy. This amendment has been introduced—and I support it—with a view to making sure that payments to superannuation plans to defeat creditors will be recoverable in the same way that payments or transfers to other funds, again to defeat creditors, are similarly recoverable. This should apply to protect the statutory entitlement of superannuation contributions of Australian workers. They should not have to pay the price in retirement for the fact that their former employer was able to get away with not making the superannuation payments on their behalf. Going into bankruptcy is a way of escaping entitlements to employees.

I believe the amendments before us have not gone far enough insofar as I would be looking for something in the bill that could be utilised by employees to protect their nest egg in much the same way as this bill seeks to protect the finances of creditors—and rightfully so—from the application of bankruptcy laws. While I support the provisions of this bill I think if the government took a clear look at how important superannuation is to every member of—

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