Bert Van Manen (Forde, Liberal Party) Share this | Hansard source

I have to admit that I do like the member for Fowler. There's much in his contribution that I could speak on, but, in the interest of staying focused on the bill before us, I won't do so. But I will just outline a couple of things for the member for Fowler and his colleagues over there to consider. One of the reasons we're discussing the Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018 is that in 2013, as part of the MySuper changes that those opposite legislated when the Leader of the Opposition was the Minister for Financial Services and Superannuation, they removed the member protections for small-balance superannuation accounts. I haven't heard those opposite mention that in their contributions this afternoon. Those standards protected accounts with balances of less than $1,000 from erosion via fees by ensuring those fees could not exceed the earnings of the superannuation fund. Whilst those opposite talk about protecting people with low balances, in reality when they were in government they did exactly the opposite. As is said many times in this place by my colleagues, it's not about what those opposite say; it's actually about what they do.

This bill is a great step in protecting the hard-earned superannuation contributions of working Australians. They're hard earned because, as the member for Fowler outlined, initially super was a trade-off for a wage increase. Now, with 9½ per cent of people's earnings going into superannuation, for the majority it is their second largest investment, behind their home. It is critically important that we have a system and framework that protects those funds from erosion via unnecessary fees and charges or, in some cases, inappropriate insurance.

The other interesting comment the member for Fowler made was around the importance of super in EBAs. Mandating a superannuation fund in an enterprise bargaining agreement means those employees have no choice whatsoever about where their superannuation goes. Nearly a million employees in Australia have no choice of where their superannuation goes. If they already have a personal or other fund and join an employer that has an EBA, they cannot have that employer put their superannuation into their existing fund. So what do they finish up with? They have multiple funds. We know that some 40 per cent of Australians have more than two funds.

In my experience prior to coming to this place in 2010 I had a client who had eight different superannuation funds, including the one into which contributions were being paid. It took nine months of working with that client and the various superannuation funds to consolidate all of that super into the one fund into which his contributions were going, but in the meantime all of those other funds were collecting fees and insurance premiums. In a number of cases, in those funds where he had income protection cover, he wasn't able to claim on any of that income protection cover and therefore was paying a premium for something he wouldn't ever have received. He wasn't getting any service, advice or anything like that from those funds. They were all funds with small balances. At the end of the day once we tallied them all up it was maybe $9,000 or $10,000.

These are the people this bill is seeking to protect. The measures in this bill, particularly around improving the capacity of the ATO to receive those low-balance superannuation accounts—those below $6,000 that have been inactive and are without insurance—are critically important. The bill will empower the ATO to proactively obtain those funds, then work through its systems to transfer those funds to an existing fund for that member.

Equally, it is important that where we see funds with a low balance—and we've set that limit at $6,000 in this bill—we provide the opportunity, where people are under 25, for default insurance arrangements not to exist on an automatic acceptance basis. Those superannuation members can always opt in to obtain insurance cover. It's about those first few years of accumulating your superannuation fund. When you start out in the workforce, there are two important things: the risk of multiple accounts and the risk of insurance cover that you don't necessarily need or that is way above what you need, and consequently paying unnecessary premiums. There is also a risk, as I've seen in many product disclosure statements, that even if you do have that insurance cover in your fund, particularly with income protection—less so with death and total and permanent disablement—you can't even claim on the income protection policy or, in a lot of cases too, death and total and permanent disablement cover, because you do not meet the relevant thresholds for making a claim within the fund. So why is there a situation where people are apparently covered for something and paying for something that they have no ability to access in the event they actually need it?

I don't think that that is a system that benefits hardworking Australians who are trying to save and accumulate super for further retirement. As has been rightly pointed out by a number of speakers in this place, we want to see people's superannuation grow and accumulate so that they have more in their superannuation funds when they retire, thereby ensuring that the requirement of government for age pensions is reduced. That was the original purpose of superannuation. It was to allow people to accumulate wealth in a tax-advantaged environment where they couldn't touch it until they were age 65—or age 55, in some cases—so that the requirement for the government to help fund people's retirement through the age pension would be reduced. We recognise as our population is getting older that the number of people actually working to support our social security and our age pension system is reducing. So the tax revenues are not necessarily there. That is the whole purpose of superannuation. The more we can do at the outset to create a superannuation system that protects those balances when they are small and ensures that the number of accounts that people have is kept to a minimum, the better it will be for those people in accumulating that superannuation and that wealth for their retirement. I commend this bill to the House. I think it's a tremendous example, again, of what this government is seeking to do to protect people's savings, allowing them to grow wealth and prosperity for the future not only for themselves but for their families and the country.

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