Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Hansard source

I rise to speak on the Superannuation Legislation Amendment (Early Release of Superannuation) Bill 2011. As speakers before me have said, this is really only a shifting of the deckchairs on something of a Titanic. In reality, the move of the administration of superannuation early release from APRA to Medicare may claim to have some streamlining benefits, but it does not address part of the key issue for people who are applying for early release and delays in having that approved. In the Bills Digestfor the bill, it says that in 2009-10 there were 16,331 applications and 10,539 approvals, the total amount being just over $111 million, or about $10,544 per account.

That is not the issue. On the criteria for early release of superannuation, which are not addressed by this bill, the Bills Digest says that superannuation benefits generally cannot be accessed before 55 years of age, and I think that that is good in general terms. It goes on to say:

In some specific circumstances, persons are able to apply to their superannuation fund/retirement saving account provider for the early release of superannuation benefits, including financial hardship, permanent incapacity (permanent and total disability), terminal illness, where the preserved benefit balance is $200 or less, and in cases of permanent departure from Australia.

It also goes on to say:

Superannuation benefits may also be released early on 'compassionate' grounds by application to APRA for superannuation and retirement savings accounts or by application to the Commissioner of Taxation for Self Managed Superannuation Funds. The changes proposed by the Bill relate only to the administrative arrangements for applications about early release of superannuation on compassionate grounds.

It does not address the key issue. It further says:

The circumstances under which an application for the early release on compassionate grounds can be granted are specified in the Superannuation Industry (Supervision) Regulations 1994 and Retirement Savings Accounts Regulations 1997 and include:

and I want to emphasise that because I will come to it in a minute—

and it is important that I also highlight that—

or

I wanted to speak on this bill due to a number of representations that I have made on behalf of constituents on concerns raised by them. I will not go into individuals' names. The minister is aware of these, because I have had responses back from Minister Shorten. One was a person in Woodbury who struck severe personal and financial hardship. Her house burned down and her granddaughter was killed. She was unable to access money to repair the house as, I understand, it was not insured. She wanted to be able to access her superannuation so that she could at least keep the property and undertake some repairs to it. As I understand it, an application was put in last year. In February representations were made to the minister because she was not having any joy. I received the response from the minister on 5 July. By the way, that person has now lost her house.

These conditions by which people can supposedly access their superannuation in times of financial hardship are an absolute farce. The lady is not my constituent, by the way—she is the member for Newcastle's constituent but found no joy there. Here is a case where a lady has lost her granddaughter and her house in a fire. Subsequently, because of her economic situation and not being insured, she has lost the property on which that house stood because she could not meet the payments. Had she been able to access the amount that she had in superannuation, it may have been different. This bill does not address part of the core issues.

I received a massive number of representations arising out of the global financial crisis when the Labor government sought to protect the deposits in the four major banks. The flow-on effect of that was that businesses such as Colonial First State Investment and AMP Capital Enhanced Yield Fund froze the finances they had. People who had their money invested in those and other funds found their funds were frozen because of the rush on those funds arising out of the government's ill considered bill and an absolute refusal to think through the process and the ramifications of their actions. People had no income coming to them by which to live, they were denied social security because they had the money held in these funds and they were not sure whether these funds would collapse. We are not talking about huge amounts of money. For most of these people it was a small amount. This has led to situations where people who are applying for relief are starting to lose their homes because banks are foreclosing.

The response from the minister on the various submissions that we made to him on behalf of these people who were applying under financial hardship was basically, 'This is a problem of the global financial crisis.' In his letter he referred to all the reasons for which a person can access their superannuation and then turned around and said that it was a problem created by the global financial crisis and that it was just tough luck. I say this to the minister: the problem was not created by the global financial crisis; it was created by your decision to provide an unlimited guarantee on bank deposits. The coalition put forward a bill limiting that guarantee to $100,000. The unlimited guarantee saw a rush from investors in these funds withdrawing their money to put it into the banks. What you did was cause a collapse in that financial market. Whether it is APRA or Medicare, because of your integrity as a minister and your lack of action and understanding of these situations, you placed these individuals into financial hardship. You placed them into situations whereby their houses were in jeopardy. In fact, in one of those cases—and I will read from this person from Forster's letter without mentioning their name—they had $19,304 in one account with Colonial First State and $34,179 in another and they needed to access it. I will read from their letter:

After I retired aged 60 in Dec. 2009 Colonial advised us that these accounts were frozen due to the G.F.C. However as my husband was diagnosed in February this year with advanced renal cell cancer & bone cancer and is no longer able to work we will again attempted to close these accounts as they return only approximately 2%.

But they could not get access to their capital. Did they meet the over-55 criterion? Yes. What about financial hardship because of medical condition or life-threatening illness? I would say that if you have advanced renal cell cancer and bone cancer the long-term prospect for you is not as good as it could be. This government and APRA failed those people in this situation and that is disgraceful.

So it is not a matter of who will administer this, whether it is the head of Medicare or in part the Taxation Office or in part APRA; it is about having people that act and respond to avert the crisis that is occurring by these people not being able to access their money. At the end of the day it is those individuals' money. I know we need in superannuation to protect their investment as much as we can and we need to make sure that it provides for their retirement, but the actions of this government cost people the ability to access that money, even though they complied on a number of counts. I have another letter, this time from a person in Raymond Terrace. This and the other letter I read out are just a couple that I grabbed, instead of grabbing a huge ream of them, on the way out of the office to make this speech. This letter is about superannuation funds held by the AMP capital enhanced yield fund . This person needed to get access to the $25,000 of his superannuation that he had invested in the fund. The letter reads:

I have been diagnosed with prostate cancer and during the past five years have been having treatment for this terrible disease. These funds would assist and be vital for the medical expenses etc. which will be ongoing.

As I said at the very start of my speech when I talked about the criteria in the legislation, if money is to be used for life-threatening medical expenses, its withdrawal should be approved. But the responses from this minister have been absolutely appalling—letters written in May and responses received in August. In a letter to me of 9 August about the representation by the person whose letter I just read out, the minister said:

Frozen accounts stem from the ongoing turmoil in international financial markets. While Australia has weathered the financial storm better than any other developed nation in the world, the global financial crisis is still having a significant impact. As a result, some investment funds are still having difficulty attracting fresh investment inflows.

Because of this, many funds have not had sufficient liquid assets or cash to be able to pay out redemption requests and those funds have chosen to put a freeze on redemptions as allowed under law, until the liquidity position of the fund improves. The decision to freeze redemptions is one taken by each individual fund and is not a decision taken by Government.

Minister, the decision to freeze the fund came about directly because of your unlimited guarantees of deposits with the four majors. This caused the flow of cash from these investment houses to the major banks as people naturally went to protect their financial returns. Minister, you have not only failed this nation economically but also failed these individuals, who, in their hour of absolute need, needed access to their money either to save their life through payment for proper and expedient medical assistance or to save their property threatened by circumstances beyond their control. Withdrawal of funds to do either of these things is completely within the guidelines listed in the legislation. Minister, you have failed those people, and for that you should be condemned. It is a good idea to control the money in question by moving it to a single house such as Medicare, but we need to see fast and responsive action to genuine claims so that people can access their money as per all the criteria stated in the legislation and avert long-term situations which always end up negative.

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