Chris Bowen (McMahon, Australian Labor Party, Shadow Treasurer) Share this | Hansard source

This bill represents the latest instalment of the Liberal and National parties' long-running war with superannuation and long-running war with industry superannuation, in particular. This is not a bill that will receive the support of the opposition.

The Liberal Party and the National Party have never believed in Australia's compulsory universal superannuation system. They opposed it at its inception, they opposed it continually, they have opposed every addition to it and they have, particularly, been opposed to industry superannuation. What we see here is a continuation of that prejudice from the Liberal and National governments. This is a process that began under Prime Minister Abbott and, like in so many other areas, has continued untouched, uninterrupted, under the Turnbull administration.

What we have here is a solution in search of a problem and a very bad solution—a botched solution—at that. What is the malfeasance that we are trying to fix here? What is the problem we see in industry superannuation? Is it that there is some sort of systemic problem the government has identified that they have rushed urgently to fix? Is it that the government has identified that industry super is underperforming compared to the rest of the superannuation sector? Have they found conflicts of interest rampant, throughout, in the industry superannuation system?

If they have done that, they are invited to present some evidence to the House. They are invited to present some case for their actions. They will not be able to, because none exists. Industry superannuation has been performing well for its investors. Industry superannuation has been providing good returns for its members. What we are seeing, on the contrary, is the Liberal and National parties old-style divide-and-conquer prejudice against industry super.

This is some sort of problem for the Liberal and National parties that they never seem to have been able to overcome. Industry super employers and unions—working together for the best interests of the members of the industry super funds—is something that just does not compute with those opposite. They cannot quite process that this is something that would work in a cooperative fashion. As a result of the way industry funds have operated over the last several decades, many working Australians have better retirement incomes than they would if superannuation did not exist and if they were not members of industry superannuation funds. Of the top 50 performing superannuation funds over 10 years, 19 are industry funds. Of the bottom 50, only seven are industry funds. Of the top 10 funds over 10 years, none are retail funds. Retail funds and the retail sector play a very important role in our superannuation system, but industry funds are not the issue that should be this government's urgent priority when it comes to structural and institutional reform.

I note that this is a recommendation of the Murray inquiry. I note that and I freely knowledge that, but I also point this out: the government is yet to respond to the Murray inquiry. The response to the Murray inquiry, we are told, is being delivered tomorrow and this legislation is in the House tonight. Of all the recommendations in the Murray inquiry and of all the things that the Murray inquiry has decided to recommend, there is one that this government has decided to implement—one that they have picked out and said, 'This is most urgent for us, not all the other recommendations of the Murray inquiry.'

I have been at pains not to make a political football of the Murray inquiry and to provide bipartisan support wherever possible to the Murray inquiry, but we have got government addicted to playing cheap and dirty politics and we have got a government addicted to saying, 'We're not going to accept that bipartisan support. What we're going to do is cherry pick the Murray inquiry and we're going to play good, old-fashioned wedge politics.' That is what this government is addicted to. We were used to that under previous arrangements and we are told that everything is changed and everything is better now that we have a new Prime Minister. Well, nothing has changed. This Prime Minister has changed not one jot when it comes to this government's actions. He is proceeding with this old style, divide and conquer, prejudiced approach to policy.

We have seen this in the government's approach to financial services regulation across the board. What was the government's first priority when they came to office, when it came to financial services regulation? What did they rush to do first? It was to unwind the previous government's Future of Financial Advice reforms. Those reforms were a solution for real problem. They were a solution for a problem that had been identified, which was people being ripped off by poor and conflicted advice. The Labor government stepped in and provided appropriate and well-calibrated regulation to minimise the chances of that happening again. This was regulation in response to scandals—not just one scandal and not just two scandals but continual scandals and rip-offs of good, hardworking Australians. It was legislated painstakingly by the previous Labor government because there was a problem to fix.

Where there was a problem, the Liberal and National parties came to office and rushed to undo the solution. They took reforms to both houses of parliament to unwind the Future of Financial Advice reforms. They urgently prioritised it and, for a time, they succeeded. Thank goodness, the Senate—after the strong representations from the Labor Party—eventually reversed their approval of the government's watering down of the Future of Financial Advice reforms and insisted that they be reinserted. But here, again, we have the government playing the same old games. Here we have them now rushing to pick one Murray inquiry recommendation for a problem which does not exist. Where is the problem in industry fund regulation that the government has identified that this proposed legislation is designed to fixed? It is not poor returns and it is not conflicts of interest.

The other point is this: not only is this a solution in search of a problem but it is also a botched solution in search of a problem. This is very poorly drafted legislation. This is legislation which goes much further than what the government claims is its intent. They claimed that their intent is a third—so a third are independent for directors of industry super funds. In fact, it is a third that are independent and the rest is open slather. The longstanding requirement that 50 per cent of the representatives of industry funds be employers and 50 per cent be employee representatives is no longer extant in this legislation. Instead, there is a requirement that a third be independent and the rest are open slather. Employer representatives could be removed and union representatives could be removed in their entirety. Either the government is trying to do more than they are saying they are trying to achieve or, in fact, they have been incompetent as they set out to do this.

Instead of trying to divide superannuation between industry funds and the rest, and instead of trying to divide the superannuation sector and concentrate on the things which some elements of the superannuation sector disagree with each other on, the government could instead be concentrating on strengthening superannuation. They could be concentrating on taking the superannuation guarantee from nine per cent to 12 per cent. In fact, they have done the opposite; they have frozen it at 9.5 per cent. They could be actually tried to strengthen superannuation for low-income earners by actually giving low-income earners a tax concession to their superannuation, which was in place under the previous government and which this government—to the eternal discredit—has abolished. That is, the low-income superannuation contribution.

That is because this government does not believe that low-income earners deserve any tax concessions to their superannuation. They certainly believe in very generous tax concessions for high-income earners and they very clearly believe that high-income earners deserve very, very generous concessions. But what they cannot stand is the fact that low-income earners get any tax concessions. They could not stand for it and they abolished it. Here we have that same sort of old, cheap prejudice, which is driving this change—I will not call it a reform, because it is not—to see the longstanding fifty-fifty model of representation for industry super being abolished under this legislation.

If there was a one-size-fits-all regulation for corporate governance—and if it was appropriate—the Labor Party would be prepared to consider it. But, of course, no such thing exists. What we see is that industry super funds are being overly regulated by a government which tells us that they believe in getting rid of red tape, not having too much regulation and being an anti-red-tape government. But here we have them prescribing that a third of directors should be independent when funds already have that capacity. They can already appoint independent directors if they think it is in the best interests of the fund.

What is important is not whether a director is necessarily independent. It is the skills that director brings, the expertise they bring and the experience they bring. The fact of the matter is that there is already significant regulatory oversight of superannuation funds. The government might have us believe otherwise, but that is not the case. APRA has the power to set and supervise compliance and enforce credential standards so that funds meet the financial promises they make to beneficiaries. APRA funds are required to continuously report on the composition of their boards and whether boards and individual directors have the required mix of expertise and skills. Boards are also required to conduct ongoing performance reviews, manage conflicts of interest and make sure directors are fit and proper.

Many of these requirements were only introduced in July 2013 but this government just could not help itself. Instead of just seeing how those reforms play out, seeing whether they meet the objectives set out for them by the previous government, no, they go down the old-fashioned route that they have engaged in since the early 1990s of opposing superannuation and opposing industry superannuation in particular. There has never been an industry super fund that a Liberal National Party MP did not see and want to damage and to punish. And we see that long-standing process continued in this legislation.

I again invite the government to provide one piece of evidence that there is a problem with industry funds which needs to be fixed and fixed by this legislation. Show us the evidence that industry funds are underperforming. Show us the evidence that there are systemic conflicts of interest in industry funds. They will not be able to do so because no such evidence exists. This government, which claims to have an evidence based approach to policy, simply cannot have such an evidence base because this evidence does not exist.

The fact of the matter is that there will be costs imposed on funds as a result of this imposed overregulation, this heavy-handed regulation, this red tape that is imposed on industry funds by this interventionist government, who seek to impose their will on the trustees of industry super funds, who think they know better from Canberra than the employer representatives who are experienced and well qualified, and the employee representatives with their member's best interests at heart who are also well experienced a well qualified. This government thinks they know better than all of those. They know better than all the industry super fund trustees that have done such a good job for their members over the years that industry super has existed.

I do not mind saying industry super has done very well for many millions of members including many members of this House over the years and that has continued so I have full confidence in the particular directors of many of the industry funds both employer representatives and employee representatives. I see very little case for this overly heavy-handed form of regulation, which is hard to reconcile with this government's alleged zeal to reduce red tape—because they only do that when it suits them. They only do that when it suits their prejudices. I hesitate to call it an ideology because an ideology implies some sort of coherent set of logical parameters to their thought process and I do not see any evidence of that. I just see prejudice when it comes to this government's approach to superannuation, prejudice against lower-income earners and against industry funds. Such is this government's hatred of trade unions that they are prepared to say that they will overly regulate industry funds because they happen to have union representation on them as well as employer representation on them. And that just shows was what is wrong with this government's approach.

We have seen the danger of a one-size-fits-all approach. It has been highlighted by many commentators in this debate and in other debates. The danger of a one-size-fits-all approach when it comes to governance systems and structures which are overly prescriptive was highlighted as long ago as in the HIH royal commission by Justice Owen. In that commission he pointed out that it can be very dangerous to impose governance systems or structures that are overly prescriptive and are one-size-fits-all. The fact of the matter is that is exactly what this government is doing. As David Whitely, chief executive of Industry Super Australia, has said in relation to this, 'It is a solution in search of a problem … It is not because of any systemic performance within the sector.' The fact of the matter is that Mr Whitely in this regard is right. Ian Ramsay, Professor at Melbourne University, is right when he says skills, expertise and experience were more relevant criteria than independence per se. Peter Swan, Professor at University of New South Wales, was right when he said what is important is independence from management, not the owners—the owners being the members of the fund.

There are matters of independence of directors which governments can and should from time to time consider, not singling out industry funds but looking at the independence from management. The separation of management and directors right across the superannuation sector is something which is worthy of debate in this House, but of course we do not see that from this government. They always go the cheap and easy route, which, in this case, involves an attack on industry super because that is a very obvious play for this government to embark on. If this Prime Minister was fair dinkum, he would change the approach. If this Prime Minister was fair dinkum, he would actually go back and say, 'Well, let's have an evidence based approach. Let's take the Murray inquiry as a whole. Let's respond to it in one go.'

The opposition are being fair dinkum. The opposition are not playing politics on the Murray inquiry. We will not abuse that but of course this government has not done that because they cannot find it within their wit to do any better than what they have delivered to the Australian people for the last two years, and what a very poor government that has been indeed.

See this speech in context