Graham Perrett (Moreton, Australian Labor Party) Share this | Hansard source

I rise to speak on the Superannuation Legislation Amendment (Trustee Governance) Bill 2015—surely a perfect example of the Abbott-Turnbull focus on the past. We can see by the number of speakers opposite lining up to talk about this legislation that it is a dog. The advisers in the adviser's box outnumber government speakers by five to one. This is not a good piece of legislation.

Any time a piece of legislation comes before the chamber we need to ask, 'Why is it here?' Why would you want to change the governance arrangements for industry super funds? I should just explain what industry super funds are for those listening. Industry super funds are where the employer and employee representative groups, mainly unions, of an industry such as the childcare sector, building sector or education sector have come together and said, 'Let's look after our members' financial interests when it comes to retirement.' Industry super funds have a mix of 50 per cent union—that is, employee—representatives and 50 per cent employer representatives. The chair of that board can come from either of those groups.

You might well think that the government has brought on this bill to make governance changes to industry super funds because they have not been performing as well as retail funds. That would be the logical presumption as to why you would bring in this horrible, short-sighted, ideologically motivated and not practical piece of legislation. You might perhaps assume that there have been some issues around the governance of these funds because you have employer groups and employee groups. They are two groups that often have industrial action; you might think they do not get together when it comes to the retirement funds for their members. You would be wrong on both counts.

Do not just listen to me. You can even go and listen to that well-known rabid unionist John Brogden! He represents the peak body for these union funds. Who is John Brogden? He is a former leader of the Liberal Party in New South Wales. So he is not some former union member. He is actually a representative of the right. Industry super funds, as John Brogden will tell you, have consistently outperformed retail funds. Nineteen of the top 50 performing super funds over 10 years are industry super funds. Only two of the top 50 are retail funds. There is no evidence of any governance problems or even performance problems with industry super funds.

I will declare that I am in an industry super fund. I am in QIEC because of my time spent in private school education. At the moment QIEC is chaired by Terry Burke. I should declare that Terry Burke gave me a job many years ago. He is the chair of QIEC who has been outperforming the previous chair of QIEC. Terry Burke works for the Independent Education Union, the union I used to work for. It is a union that looks after private schools around Queensland. They are not usually a hotbed of unionism. Before Terry Burke, who is an employee representative, QIEC was cheered for 20 years by Allan Fazldeen. How does the board make decisions? The chair of the board, Terry Burke or Allan Fazldeen, would look at the majority of views. They always, like any sensible organisation, were able to make decisions in the best interests of their members.

Industry is aware of this, so this bill is a misguided attempt to fix something that is not broken. It could do damage. Industry super funds have had longstanding governance arrangements where 50 per cent of representation is employers and 50 per cent is employees. That is perfectly balanced. And now the government is trying to bring something into the mix that sounds good—'independent'. We all like independence, even on the floor of this chamber. We respect the concept of independence. However, the problem with an independent person on such boards is that they will not be committed to the members. We want our umpires to be independent. We want them to be disinterested and not have an interest either way. They can then make a fair decision. But when you are talking about decisions for your members, be they an employee or an employer, you want someone who is committed to those members and their long-term interests. That is what industry super funds are. This bill is attempting to change that longstanding arrangement and replace it with a bizarre requirement that one-third of the representation on these boards be independent. But, bizarrely, there are no requirements for the remaining two-thirds of these boards. There will be no guarantee that employers or employees will have any representation. This is in a situation where, as I said, 19 out of the top 50 performing super funds have been industry super funds.

There is obviously at play here an agenda of this government. This is another example of the Abbott-Turnbull government where the Prime Minister is not really leading his team; he is following the government's short-sighted agenda. I find it quite incredulous that this government would impose a requirement on industry super funds that would tear down a system of governance that has been the most successful governance model.

Industry superannuation funds enjoy a reputation as having a 'members first' culture. Good employers are passionate about the best returns for their employees. That culture flows from having equal representation. That equal representation model of governance makes industry superannuation funds different to retail funds. There is no doubt about that. But there is also no doubt that industry superannuation funds have been more successful than retail funds. That is the motivation for this legislation, I would suggest.

There is no evidence that any one type of governance is better than others. Justice Owens in his HIH royal commission report—we all remember HIH and how good they were; I think they had balanced governance arrangements—released in 2003 said about governance structures that:

I am not so much concerned with the content of a corporate governance model as with the culture of the organisation to which it attaches … the key to good corporate governance lies in substance, not form.

The financial system inquiry report, when discussing the governance of superannuation funds, said:

… there is little empirical evidence about the relationship between quality of governance in Australian superannuation funds and their performance …

The government is trying to fix something that clearly is not broken.

This bill was introduced to the House on 16 September this year. In the explanatory memorandum it says that the measures in this bill are consistent with the financial system inquiry report's recommendations. That report was released on 7 December 2014. Until this morning there had been no response from the government to that inquiry report. There are 44 recommendations in the report. It is curious that, without having responded to the report, the government thought it was urgent to bring a bill before the parliament to address this one recommendation.

The government make plenty of noise about getting rid of red tape. Because they are starved of a legislative agenda, they have these red tape repeal days where they celebrate hunting down commas and jumping on semicolons and stamping out a couple of brackets or parentheses. This bill is a sneaky attack on unions. That is what this piece of legislation is all about, and it costs money. This bill is actually nothing but red tape. It is setting up the over-regulation of an industry that is already performing well and is well regulated, an industry that has no allegations of scandal or impropriety. There is no rational reason for imposing this mandatory change to governance on industry superannuation funds when they are performing well ahead of retail funds.

The members of industry super funds—like me—are in a much better position to fund their retirements because of the performance of their industry super funds. There is real reform that the government could implement in the superannuation sphere, but the government have no reform agenda and no ticker for reform. They have no ideas about real reform. Yet our retirement income system is badly in need of sensible reform. It is unsustainable under the current arrangements.

Australians deserve to have a comfortable standard of living in retirement. By design, tax concessions are an integral part of the superannuation system. But this great Labor initiative—because, remember, superannuation was an initiative of Labor, working with the unions—was not designed to be a tax haven for wealthy Australians. The financial system inquiry found that 10 percent of Australians receive 38 per cent of Australia's superannuation tax concessions. There are 475 people in Australia with superannuation balances of more than $10 million each. Those people earn tax-free income of $1.5 million each year. That is not a sensible set of arrangements. How can this government continue to hit those who can least afford it—the pensioners, our youth, our schools, our families—when we have our most wealthy earning $1.5 million each year tax free. It is unsustainable and unfair.

Unlike the Abbott-Turnbull government, Labor has a superannuation reform plan. Labor would target superannuation tax concessions to those that need them the most. This is how the superannuation system was designed to be used. It is about providing retirement income for all Australians. Labor's reforms would affect approximately 60,000 superannuation account holders with superannuation balances in excess of $1.5 million. Earnings above $75,000 from those accounts would not be tax free but, instead, would attract the same concessional rate of 15 per cent that applies to earnings in the accumulation phase. Those people would still be very comfortable in their retirement, and good luck to them. However, such a change would make a huge difference to the retirement income system as a whole.

It is estimated that the revenue from Labor's proposed reform would collect $9.2 billion in the first 10 years. I know the Treasurer has been prevaricating in question time, but the reality is that the government does have some revenue challenges. This is sensible reform. It is not unnecessary red tape. It is not motivated by a union-busting agenda. This is the type of reform a good government would deliver. Labor is passionate about the superannuation system. It was a creation of the labour movement. Labor wants it to be sustainable and to deliver the outcome it was designed to deliver: to allow all Australians to fund their comfortable retirement.

This bill does not assist people with their retirement income. In fact, it could do the opposite, as I said in my opening remarks. This bill does not make the superannuation system more sustainable. What this bill does is single out industry superannuation funds—the ones that are working well; the ones that are outperforming retail funds—and tie them in knots with red tape. It is compelling them to change the governance structures that they have had in place for decades and that have been operating with no problems. As I said, with 50-50 employer-employee representation there is balance. These are funds that have members that benefit from the performance.

There is no need for this unnecessary red tape and regulatory burden. There is no need for it and, obviously, like any red tape, it comes with added financial burden. The explanatory memorandum to the bill confirms that this amending legislation will result in $8.5 million in start-up costs and a further $12.3 million annually in ongoing costs. That is $20 million that will be thrown away. That is the sort of excess that would make Kathy Jackson blush. This is a financial cost that will be imposed on industry superannuation funds and will impact on the returns that their members receive. The regulatory burden on the funds will include an obligation to report annually on whether they have a majority of independent directors and, if not, to explain their lack of compliance.

This bill gives unprecedented powers to the Australian Prudential Regulation Authority at a time when industry funds are outperforming their retail equivalents. APRA will have power to determine if a person does not qualify as independent for the purposes of the governance of a fund, even if that person meets the statutory definition. Isn't that a great use of members' money—to pay for someone to investigate whether or not this person is committed to the industry! This power goes further than APRA's powers with respect to banks and insurers.

These measures are unwarranted. They will create unnecessary regulatory burdens on industry super funds. They will create added regulatory costs for industry super funds. They will impact on the returns received by members of the industry superannuation funds. For those reasons and for every sensible reason, I would ask the government representatives opposite to look at this agenda. This is an outdated political agenda linked to the Prime Minister who was knocked off a few weeks back. This is not a sensible, forward thinking government. I think what we have opposite is a Prime Minister who has shackled and welded himself to the Abbott agenda but likes to talk about the future. Here is an opportunity for the new Prime Minister to actually do something positive. Why would any sensible business person look at the empirical data and say, 'We need to bring in extra red tape. We need to slam a $20 million cost on the retail funds'? As I said, 19 of the 50 highest performing super funds over the last 10 years are industry super funds. They have the balance right now. It is 50-50. But every single board member in an industry super fund is committed to that industry. That is the difference. By bringing in this independence they will sabotage that strategic focus. That is why Labor will not be supporting this legislation.

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