Geoff Lyons (Bass, Australian Labor Party) Share this | Hansard source

I rise to speak on the Superannuation Legislation Amendment (Trustee Obligations and Prudential Standards) Bill 2012. In December 2010, the Assistant Treasurer and Minister for Financial Services and Superannuation, the Hon. Bill Shorten, announced the Stronger Super reforms. Stronger Super represents the government's response to the review into the governance, efficiency, structure and operation of Australia's superannuation system and the Super System Review. To provide input on the design and implementation of Stronger Super reforms, the government undertook a very extensive consultation program with industry, employers and consumer groups. On 21 September 2011, the government announced its decision on the key design aspects of Stronger Super reforms. This bill is the second part of the legislation implementing the government's MySuper and governance reforms, as part of Stronger Super. The first tranche of legislation was introduced to parliament on 3 November 2011 as the Superannuation Legislation Amendment (MySuper Core Provisions) Bill 2011, known as the MySuper core provisions bill. There have been criticisms of the way we govern superannuation in Australia. As Ross Jones from APRA said:

We have better supervisory controls over a building society in remote NSW or a credit union in the sticks than we do over a multi-billion-dollar super fund.

Also, the Cooper review stated:

… governance in super has not kept up with developments in the industry. There have been difficulties for trustees in understanding what is expected of them and, as the industry consolidates, conflicts of interest and conflicts of duty arise regularly.

In the light of these criticisms the government is now taking logical, important and necessary steps to reform governance of this industry.

This bill addresses these issues by introducing the power for the Australian Prudential Regulation Authority, APRA, to make prudential standards, which is in line with banking and insurance, and amends the Superannuation Industry (Supervision) Act 1993—the SI(S) Act—to expand and enhance the duties of the 4,000 or so trustees of superannuation funds. It is important to note that there are no changes of substance for trustees of self-managed super funds.

In brief, this bill introduces the power for the Australian Prudential Regulation Authority to make prudential standards; amends section 52 of the Superannuation Industry (Supervision) Act 1993 to expand the duties of registrable superannuation entity licensees; applies new trustee duties to RSE licensees of an RSE that offers a MySuper product; and applies duties to the directors of corporate trustees. Trustees that elect to offer a MySuper product will have to meet new obligations, in particular to promote the financial interest of members.

The government has decided to introduce enhanced trustee obligations for trustees of funds that offer MySuper products, recognising that trustees should have increased responsibilities for default members who generally delegate all aspects of their superannuation to them.

APRA must be satisfied that a trustee will comply with the enhanced trustee obligations and that individual directors of corporate trustees will comply with the enhanced director obligations to authorise an RSE licensee to offer MySuper as a product.

Power will be given to APRA to make prudential standards in superannuation. Currently, detailed prudential requirements expanding on the SI(S) Act requirements are contained in regulations. These are less flexible and are unable to be quickly amended to respond to industry developments. Prudential standards will provide APRA with greater flexibility to effectively adapt to industry developments and the ability to provide regulated entities with clearer and more tailored legal requirements. This is a sensible change.

As we raise the bar in areas such as financial planning, it is also fair that we ensure there are improvements in other areas of our super system, including in the operation of the funds themselves and the conduct of trustees. Twenty years ago the Keating Labor government introduced one of the great economic reforms: nine per cent superannuation for every worker. This year sees the Gillard Labor government progress the next steps: stronger super, by progressively taking the universal compulsory savings rate up from nine to 12 per cent; stronger super, by getting rid of unfair fees and charges, leaving a lot more money in people's balances; and stronger super, by finding lost super, consolidating multiple accounts and improving the duties of trustees.

Thanks to our superannuation system, Australia now has the fourth largest number of privately managed funds in the world—a huge achievement. It is the envy of the Americans and a fiscal protection that our European mates would give their eye teeth for right now.

I would like to take this opportunity to thank Treasurer Swan and Senator Sherry for their work in the area of superannuation, ensuring Australia's future and steering our economy in the right direction. Labor's response to the GFC, led by Treasurer Swan, saved jobs and avoided a recession. We have delivered a strong economy with low taxes, low unemployment and low interest rates.

Our nation faces a choice, as our region of the world becomes the centre of economic growth in this century, as the resources boom and the high Australian dollar transform our economy, as our technology changes, as our society ages and as we tackle climate change. Our nation can choose to either give working people a fair share of the resources boom and today's economic strength or let only a few feel the benefits. We can choose to get ready for the future or stand still. We can choose to face up to the hard decisions now or take the easy way out and leave the hard decisions to our children and our children's children.

As a government, we have made our choices. We stand for supporting working families with a package of policies that helps them through, giving working people a fair share of the resources boom and making the hard decisions that will build a new Australian economy and get us ready for the future. By putting money into superannuation, Australians steadily build up capacity to have lifetime income security and that goal, lifetime income security, is a Labor vision, a Labor goal for the whole nation—not the Liberal way of super just for private or public fat cats. The more of our own money we have in retirement, the less we will have to rely on the age pension. So it is fiscally responsible. It also improves the circumstances decades ahead for our children. The more private savings older people have in their retirement, the less younger workers need to pay in tax to help support those retirees.

Our super reforms mean that, on Treasury estimates, we will be saving $10 billion a year to the budget by easing the pressure on the age pension. It is in the national interest to encourage Australians to save more for their retirement. But it is also fair that the superannuation industry contributes to higher retirement savings through greater efficiency and lower fees.

Fundamentally, what we are doing here is making super more efficient. The Gillard Labor government believes that every worker should take an active interest in their superannuation accounts. But, let us face it, most of us do not until we are much closer to retirement. The problem is that most superannuation funds charge you fees as though you take a regular, active interest in how your money is invested.

The most important question for federal parliamentarians is the same one as that for most modest, ordinary Australians: what can we do to bring about a better future for our kids? I am so very proud to be part of a government that is making key reforms that will make life easier for our children and their children. We know that the world is changing and that Australia faces challenges and big opportunities in the years ahead. Superannuation is part of the Australian economy. It is the largest source of long-term savings in Australia and after the family home is the second most significant source of wealth for many Australians. By ensuring that the superannuation system is more efficient, these reforms will also improve the productivity of the Australian economy.

The Gillard Labor government understands that cost-of-living pressures extend beyond working life. That is why we are delivering a world-class retirement income system and increasing support for pensioners to meet day-to-day living costs. The Leader of the Opposition is mindlessly negative and opposes everything but has no real plan for building retirement incomes for Australian workers. He acts out of political interest—the interests of the privileged, not the national interest. We all know that the member for Warringah has extreme views on compulsory superannuation. In 1995 he said:

Compulsory superannuation is one of the biggest con jobs ever foisted by government on the Australian people.

He obviously still believes this. In his book, Battlelines, he outlines a plan to dismantle it and increase the pension age to 70.

On all of the big calls, the Liberals get it wrong. The only policies the member for Warringah has are the ones he is trying to hide: reintroducing Work Choices, cutting family assistance and pensions, abandoning the action on climate change and abandoning support for industry. When he talks about the economy, he is speaking not for everyday Australians but for the vested interests of big tobacco, mining magnates, climate change deniers and all Liberal Party donors. When the Liberals think about the economy they do not put families and workers first. That is why they opposed Labor's stimulus package, which saved 200,000 jobs.

We understand the cost-of-living pressures on working families. We are easing those pressures through tax cuts, by making family payments fairer and more sustainable, through assistance for child care, through our education tax refund and through Australia's first Paid Parental Leave scheme. We have a proud history when it comes to families and seniors. We are making the hard decisions now, giving working people a fair share of the resources boom and getting our nation ready for the future by building a new Australian economy. We are managing the economy for working people—fighting for jobs, as we did during the GFC and are doing now in the manufacturing and auto industries. Building a new Australian economy means rolling out the NBN, which can be used to make business more productive and deliver better government services; bringing in a mining tax to increase retirement savings, cut small business taxes and increase the tax-free threshold; and increasing our skills base through trade training centres, workplace skills programs and extending all of the education system from primary to tertiary, equipping Australians for current and future jobs.

The Gillard Labor government is getting things done. Those opposite are holding this country back. Superannuation is a proud Labor government achievement that represents a triumph of the nation over vested interests. We now have a chance to use our past achievements to build a new economy based on clean energy jobs, on technology and on skills. Our super reforms are just another piece of the puzzle. I commend this bill to the House.

Debate adjourned.

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