Lisa Chesters (Bendigo, Australian Labor Party) Share this | Hansard source

Let us be frank about what this Superannuation Legislation Amendment (Trustee Governance) Bill 2015 is aiming to do. It is about knocking off union representations on industry super boards. It is another attempt by this government to drive through its anti-union anti-worker legislation. This is a government that is a little jealous of how well our industry super funds have performed.

They have performed really well, as we have heard from previous speakers on this side of the House, compared to retail bank owned super funds. Why? People on industry boards are there for one purpose: to ensure that their members get the best possible returns. They are not driven by commissions. They are not driven by shareholders. They are driven by outcomes for their members. That is why industry super funds continue to outperform retail super funds and continue to do so every single year.

Industry super funds was first established in the eighties to protect Australian workers' superannuation from the high fees and commissioned products that were common in the retail superannuation market. There is a reason they were established. It was to ensure that hardworking people got decent super returns when they retired. Industry super funds have never paid commissions or incentives to their own staff or any financial planners. People who work for them do so—like union officials—to ensure that their members get the best outcomes. Industry super funds are run only for the profit of members. They are governed by a trustee board made up of both employers and employer organisations, including representatives from the trade union movement.

Industry super funds aim to provide above-average investment returns to its members while keeping fees as low as possible. They continue to have lower fees than retail funds. Industry super funds are committed to quality long-term infrastructure and building investments, in Australia, because they benefit their members throughout the broader economic growth as well as in healthy investment returns.

Industry super funds have a proven track record of delivering for their members. Why, then, is this government bringing on this reform? If the industry super funds, with their current board make-up, are performing so well, why on earth is this government driving this legislation and trying to force it through the House? Government ministers and backbenchers cannot hide the fact that it is purely for ideological reasons. Perhaps it is jealousy, because their mates in business and big banks cannot match the profits and the amount of returns that industry super funds are making for working people. Perhaps it is the fact that they have a couple of mates who would like one of these cushy board positions. But we know through what other speakers have said and through the facts and the figures that industry super funds continue to deliver for working people.

And we are talking about the people who are our cleaners—the cleaners who clean here at Parliament House and who have a Australian super fund account. We are talking about the people who work as security guards or as early childhood educators, who many years ago through their union fought to establish industry compulsory super. Let us just remember who created compulsory super in this country—it was a Labor government. Workers were asked to give up a pay rise to create the first compulsory super scheme. And they did so. They saw that it was important that they as Australian workers started to put aside for their retirement. That is why today in 2015 we have more and more people able to retire on a part-pension and industry super—the super that they have. That is why in the future we will have more and more people doing that until we get to the stage where super accounts are large enough for the majority of people to retire on that income.

That is, of course, if we keep the current model, where we trust the industry super funds to keep doing what they are doing. But this government wants to take a wrecking ball to that. This government, through these changes, is trying to impose that one-third of directors are independent of employer and employee groups and of union representation. This government, through these reforms, is going to create more red tape and burden on business. These amendments will result in an increase of $8.5 million in start-up costs and a further $12.3 million in ongoing costs. This is annually.

This government likes to talk about abolishing red tape, but when it comes to industry super funds, when it comes to unions and when it comes to Australian workplaces then time and time again in this place we see this government proposing more red tape—more red tape to increase the cost and the burden on Australian workers, Australian workplaces and their employees.

Just take for a moment what those in this government have done in previous years when it comes to super. They tried to introduce choice. They said that employees could have a choice between an industry super fund or another super fund. It did not result in a big uptake by workers switching to a non-industry super fund. That was one of the previous reforms they brought out. I can remember it coming up in workplaces—the choice form. Nine out of 10 still stuck with their industry super fund. Why? It gave a better return.

Time and time again industry super funds deliver a better return, because the people on those boards care. They are the representatives of the low-paid workers—Australian workers. They are the people who have been elected or appointed in their organisations to care about retirement income. That is what superannuation is: it is a worker's wages that have been deferred—compulsory savings for when they retire. But rather than trusting the people who have the best interests of those workers at heart, this government wants to take a wrecking ball to that and impose that one-third of the board be independent. Furthermore, the proposed changes are really vague and fraught with danger. As Justice Owen said, speaking in his capacity as the HIH royal commissioner:

… any attempt to impose governance systems or structures that are overly prescriptive or specific is fraught with danger.

The experts out there are saying that these proposals are fraught with danger and that this extra red tape will create more problems and cost in this sector.

Furthermore, the government's proposed changes to the criteria to meet the definition of 'independence' are very broad and are likely to exclude considerable numbers of qualified and expert people from being independent directors. So who do they have in mind to take up these positions? If the definition of 'independence' is so broad, then how on earth are they going to get the expertise and the qualified people to take up this compulsory one-third of independent directors?

These reforms are about one thing. They are not about independence and they are not about delivering better returns for the people who are members. They are purely and simply about smashing a model that works, a model that was created by previous Labor governments with regard to industry super. This was a model that was driven from the workplace—from employees who said, 'I want to take responsibility. I want to be involved in saving money for my retirement, and I want my union and my industry super fund, through my union rep, to make sure that I have a good retirement income.' That is why we consistently see industry super funds outperforming retail super funds.

Retail super funds—I will just spend a few moments on what is going on in our retail super funds. Unlike industry super funds, banks and insurance companies use their funds to generate corporate profits which return a dividend to shareholders, not to the superannuation policy holders. Big banks are behind the big four retail super funds. These include BT super, which is owned by Westpac; MLC, which is owned by NAB; Colonial First State, which is owned by the Commonwealth Bank; and OnePath which is owned by the ANZ bank.

Whilst the banks which are behind the retail super funds regularly make enormous profits for themselves, over the last 10 years the average retail fund has delivered around $16,000 less to their members than the average industry super fund—$16,000 a year less! That just means one thing: if those superannuants do not have that money—that $16,000 annually—it means that eventually the government might have to pick up the tab through pensions. So rather than empowering these workers to have the kind of financial security that we want them to have, they may rely on a government pension. Or it could mean that there is less money that they are able to spend as disposable income in our economy.

This reform before us today is about red tape—increasing red tape and taking a wrecking ball to what is so critical to retirement incomes. It is not about ensuring that we have independence and transparency. That is just a smokescreen. This is about the government's ideological agenda to smash up unions, to smash up industry super and to tear down a system that is working. Industry super is critical. It is about delivering returns, and the current model is working.

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