Brendan O'Connor (Gorton, Australian Labor Party, Shadow Minister for Employment and Workplace Relations) Share this | Hansard source

I too rise to oppose the Superannuation Legislation Amendment (Trustee Governance) Bill 2015. This bill has, I think, a dishonest motive. The ostensible purpose of the bill as it is drafted is to somehow provide better regulation for superannuation funds—in particular, not-for-profit funds—and supposedly to ensure better regulation and more independent advice, which would lead to better outcomes for members of superannuation funds. Unfortunately for the government, the evidence belies the presumptions that motivate this bill, because, if you look at all the evidence in relation to this matter, you will find that, generally speaking, over the last 20 or more years, the facts are that the not-for-profit industry funds have had better outcomes for members, they have been cheaper and there have been fewer, if any, scandals in relation to those funds when compared with some of the for-profit funds. So it is quite a remarkable proposed piece of legislation, when we are looking to change the governance arrangements for better funds rather than look at and examine more closely some of the deficiencies of other parts of the super industry.

That is of great concern to the opposition. But it comes as no surprise to us, because we know that the government has an ideological predisposition in relation to industry super. It has never supported industry super. The Liberal Party in this place has never, ever voted for, for example, employer contributions to super. It has always, when elected to government, reneged on its earlier commitments to increase the contribution. We had that most recently with the recently disposed of Prime Minister, Tony Abbott, who made a commitment to increase superannuation prior to the election, and, upon election, reneged upon it. Prime Minister Howard had made, before the 1996 election, a commitment to increase the employer contribution, and he reneged upon that when coming into government. So there is a long, long history of enmity towards compulsory super but also, in particular, a keenness by Liberal governments to attack the arrangements for not-for-profit superannuation funds. As I say, this is hard to countenance, given the history. The history is that, over the last many years, the dividends have been better; the scandals, if any, have been fewer—certainly less scandalous than in the for-profit area; and the fees have been lower.

This bill does not achieve its stated goal. The changes will not improve super-fund governance. Rather than focus on the behaviour or skills required of directors, the bill will introduce a quota of so-called independent directors, based upon relationships a director may have with the fund or its sponsoring employers and unions. Drafting has proven problematic and has resulted in a large number of unintended outcomes.

The bill is unnecessary. Two years ago new governance obligations were enacted. These require all funds to regularly evaluate—by using an independent third party—the effectiveness of their board and directors, to manage and disclose conflicts of interest, to ensure all directors are fit, proper and capable of making decisions expected of them, and to regularly review their board-renewal policies. APRA has robust enforcement powers and has admitted that these new requirements are still being bedded down within funds.

The bill is inappropriately heavy-handed. Unlike the regulation of company boards, the bill adopts a heavy-handed one-size-fits-all approach, regardless of the super fund's business model or the circumstances of its membership. The bill does not address the governance challenges of super funds. If enacted, it will change the governance of the most successful super funds, the representative model that applies across the not-for-profit sector, while failing to address the governance issues associated with consumer losses in the scandal-ridden bank and wealth management industry. That is why you have to be sceptical of the government's intentions, in relation to this matter. It seeks to punish the most successful funds and leave alone the funds that have left many of their members worse off. It is unjustifiable for the government to contemplate that.

When you are advocating change to public policy, particularly in a sensitive area like superannuation, there needs to be confidence that the government is doing it in the interest of the beneficiaries—in this case, superannuation funds. There is no evidence to suggest that these policies will, in any way, improve the lot for members of industry funds. If you look internationally, the representative model has been more successful than having a board full of independent directors. If you look at domestic arrangements, the same is true. If you look at the level and degree of regulation of current super funds, there is no reason for the government to be going down this path.

Is this about diminishing the role of employer bodies and unions in industry funds? The answer to that is: unequivocally, yes. This is about diminishing the representative model and, in particular—happy to sacrifice employer bodies, along the way—diminishing the role of unions in superannuation. That in itself is a remarkable thing. In this country, even in the pre-accord years, many of the ideas for the existing super industry emanated from the union movement. In fact, the ideas for striking the accord and intention to deliver on employer contributions to super commenced in about 1986. It did not take effect, by way of parliament, until six years later, but it was driven by the Labor movement to make sure that people who were seeking some security in their retirement would have decent savings.

If you go back to the mid-eighties, the only people who could say they had any adequate superannuation savings were public servants—I would not suggest their conditions were as good as they are now, but they had some security when it came to retirement savings—and managerial staff in the private sector. I know that many blue-collar workers in the private sector had no superannuation, whatsoever, 25 years ago.

The efforts of Labor to make sure we provided access to savings beyond the pension for people retiring has been a 30-year journey. It emanated in the mid-eighties. The federal Labor government joined the ACTU to make submissions, before the Industrial Relations Commission, to have employer contributions inserted into awards. This culminated in 1992 with the first parliamentary enactment providing minimum contributions by employers. Often, these were in lieu of wages. This was to not only build national savings but also to ensure that people who were not making a great deal of money were able to have a reasonable nest egg upon retirement. That has been a 30-year journey.

Throughout that entire journey, there is not one point where the Liberal Party, whether in government or opposition, has supported the advancement of those contributions to millions upon millions of Australian workers. Not one. They did not vote for the 1992 enactment. They did not vote for the increases to employer contributions. Indeed, they attacked the intentions of the then government and, upon election, reneged upon any commitment they had made about increasing that contribution, even though they were quite happy to use it as a commitment—it ended up being a broken promise—in, at least, two elections.

So there is a history of neglect and disregard for universal super retirement savings for Australian workers. And, of course what we see now is that their most interested focus is allowing it to be one which provides enormous concessions for the very well-paid and very high-income superannuants in this country. That seems to be where they focus their intentions. They have abandoned the co-contribution for 3½ million low-paid workers. They have resisted the opposition's efforts to find some bipartisanship on reducing some of these remarkably high concessions to the most fortunate and very high-paid superannuants. It is unfortunate that there has been that divide between the two major parties.

But despite that divide, because it is so popular and because the Australian people warmed so readily to this policy, the government today and the Liberal Party generally have not been able to dismantle it—as they would like to have done. They would like to take a wrecking ball to superannuation generally. They do not like the idea of it; they have never liked the idea of it. That is manifest in every decision they have made with respect to it. But it is so popular that they just have to find another way to affect the benefits that flow on to many millions of workers.

One of the ways they have considered affecting it was to bring in this legislation that will diminish the role of employer bodies and unions sitting on those funds and representing the beneficiaries of those funds. Of course, that is one of the reasons why we cannot support it. And the other, as I have outlined already, is that if we compare the not-for-profit super funds with the for-profit super funds, when it comes to outcomes the evidence shows that the not-for-profit funds have been superior. In some cases, that is by at least a full year's salary more than the for-profit funds.

When it comes down to the fees, we have seen them to be generally lower than those of the for-profit funds. And, of course, when you look at some of the scandals that have happened in our financial sector, they have not involved industry super funds. Unfortunately, they have involved other types of funds. And yet the government has tended to focus its energies and its red tape on industry super funds.

This piece of legislation as proposed is targeting unions and employer bodies ideologically. It wants to smash up what has been the most successful arrangement in so far as representation on boards goes. And, of course, the Assistant Treasurer is very much motivated to take on unions. Like her old boss, Peter Costello, she is from the Dollar Sweets clan. They are really into this sort of stuff!

But the reality is that everyone knows what they are doing. They are trying to attack hardworking people. And they are willing to attack unions to do it because they do not believe in unions or, indeed in this case, in employer bodies governing super funds. This is despite the fact that they have been more beneficial than any other fund that we have seen in this country.

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