Kelvin Thomson (Wills, Australian Labor Party) Share this | Link to this | Hansard source

I understand it is the wish of the House to take the bill as a whole.

Bill Shorten (Maribyrnong, Australian Labor Party, Minister for Financial Services and Superannuation) Share this | Link to this | Hansard source

by leave—I move government amendments (1) to (17), as circulated, together:

(1) Clause 2, page 2 (table item 1), omit the table item, substitute:

(2) Page 5 (after line 2), after clause 3, insert:

4 Acquisition of property

(1) This Act does not apply to the extent (if any) that its operation would result in an acquisition of property (within the meaning of paragraph 51(xxxi) of the Constitution) from a person otherwise than on just terms (within the meaning of that paragraph).

(2) The following subsections do not limit subsection (1).

(3) If, apart from this section, this Act would result in such an acquisition of property because, as a result of a repeal or an amendment made in a Schedule to this Act, a person would be required or permitted to use, disclose or publish information, then despite any other provision of this Act, the person is not required or permitted to use, disclose or publish the information in the circumstances that would result in such an acquisition.

(4) To avoid doubt, any provision that does not result in an acquisition of property continues to apply in relation to the use, disclosure and publication of information.

(3) Schedule 1, item 40, page 17 (line 26), after "facility", insert "within the fund".

(4) Schedule 2, item 6, page 22 (lines 12 to 15), omit subsection 68AA(6), substitute:

(6) The trustees of a regulated superannuation fund may require that MySuper members who wish to make an election in accordance with subsection (5):

(a) must make the election in relation to both permanent incapacity benefit and death benefit; or

(b) must make the election in relation to death benefit if they make the election in relation to permanent incapacity benefit.

(5) Schedule 3, item 44, page 51 (lines 26 to 30), omit subsection 348A(3).

(6) Schedule 6, item 4, page 65 (lines 16 to 32), omit subsection 20B(1), substitute:

(1) Subject to this section, the total amount attributed by the trustee, or the trustees, of a regulated superannuation fund to a member of the fund is an accrued default amount for the member if subsection (1A) or (1B) is satisfied.

(1A) This subsection is satisfied if the member has given the trustee, or the trustees, of the fund no direction on the investment option under which the asset (or assets) of the fund attributed to the member in relation to the amount (the member's underlying asset(s)) is to be invested.

(1B) This subsection is satisfied if the investment option under which the asset (or assets) of the fund attributed to the member in relation to the amount (the member's underlying asset(s)) is invested is one which, under the current governing rules of the fund, would be the investment option for a new member if no direction were given.

(7) Schedule 6, item 4, page 66 (line 7), omit "if", substitute "to the extent that".

(8) Schedule 6, item 4, page 66 (line 19), omit " or".

(9) Schedule 6, item 4, page 66 (after line 19), at the end of paragraph 20B(3) (c), add:

  (iv) an investment option under which the investment is held as cash; or

(10) Schedule 6, item 4, page 66 (after line 23), after subsection 20B(3), insert:

(3A) For the purposes of subsection (1A), if:

  (a) benefits of a person in a regulated superannuation fund (the earlier fund) are transferred to another regulated superannuation fund (the later fund); and

  (b) the person gave or (because of a previous application of this subsection) is taken to have given the trustee, or the trustees, of the earlier fund a direction on the investment option under which an asset (or assets) of the earlier fund is to be invested; and

  (c) an amount attributable to the person is invested under an equivalent investment option offered by the later fund (the equivalent investment option);

the person is taken to have given the trustee, or the trustees, of the later fund a direction to invest in the equivalent investment option any asset (or assets) of the later fund that is attributed to the person in relation to an amount attributed to the person.

(11) Schedule 6, page 69 (after line 12), after item 8, insert:

8A Paragraph 29TC(1) (b)

  After "facilities", insert "except to the extent that a benefit is provided by taking out risk insurance".

(12) Schedule 6, item 9, page 70 (lines 15 to 19), omit section 29XB, substitute:

29XB No liability for certain transfers

  A trustee of a regulated superannuation fund is not subject to any liability to a member of the fund:

     (a) for an action taken to give effect to an election made in accordance with section 29SAA or 29SAB; or

     (b) for an action of the kind mentioned in subsection 55C(1).

(13) Schedule 6, item 10, page 70 (after line 33), after section 55B, insert:

55C Governing rules do not prevent transfer from pre MySuper default option to MySuper product

  (1) A provision of the governing rules of a regulated superannuation fund is void to the extent that it would prevent a trustee or trustees of the fund from attributing an amount to a MySuper product for a member, instead of attributing the amount to a pre MySuper default option.

  (2) A pre MySuper default option, in relation to an amount attributed to a member of a regulated superannuation fund, is an investment option under which an asset (or assets) of the fund attributed to the member in relation to the amount would be invested, under the governing rules of the fund, if the member gave no direction in relation to the amount.

(14) Schedule 6, page 71 (after line 9), after item 12, insert:

12A After section 349A

  Insert:

349B Acquisition of property

  (1) This Act does not apply to the extent (if any) that its operation would result in an acquisition of property (within the meaning of paragraph 51(xxxi) of the Constitution) from a person otherwise than on just terms (within the meaning of that paragraph).

  (2) The following subsections do not limit subsection (1).

  (3) If, apart from this section, this Act would result in such an acquisition of property because:

     (a) it would require a person to take action in relation to an accrued default amount; or

     (b) it would require a person to take action in relation to an asset of the kind mentioned in subparagraph 29SAB(a) (i);

then despite any other provision of this Act, the person is not required to take that action.

  (4) If, apart from this section, this Act would result in such an acquisition of property because it would prevent the charging of a fee of a kind mentioned in paragraph 29SAC(1) (a), then despite any other provision of this Act, the person is not prevented from charging that fee.

  (5) If, apart from this section, this Act would result in such an acquisition of property because it would require or permit a person to use, disclose or publish information, then despite any other provision of this Act, the person is not required or permitted to use, disclose or publish the information in the circumstances that would result in such an acquisition.

  (6) If, apart from this section, this Act would result in such an acquisition of property because it excuses a person from liability, then despite any other provision of this Act, the person is not excused from the liability.

  (7) To avoid doubt, any provision that does not result in an acquisition of property continues to apply in relation to:

     (a) action in relation to accrued default amounts; and

     (b) action in relation to an asset of the kind mentioned in subparagraph 29SAB(a) (i); and

     (c) the charging of a fee of a kind mentioned in paragraph 29SAC(1) (a); and

     (d) the use, disclosure and publication of information; and

     (e) a liability.

(15) Schedule 6, item 13, page 73 (lines 13 to 16), omit subsection 388(3).

(16) Schedule 7, page 87 (after line 8), after item 16, insert:

16A After paragraph 349B(3) (b)

  Insert:

  or (c) it would require a person to take action in relation to an amount held in an entity that is or was an eligible rollover fund;

16B Subsection 349B(4)

After "paragraph 29SAC(1) (a)", insert "or 242C(1) (a)".

16C After paragraph 349B(7) (b)

  Insert:

  (ba) action in relation to an amount held in an entity that is or was an eligible rollover fund; and

16D Paragraph 349B(7) (c)

  After "paragraph 29SAC(1) (a)", insert "or 242C(1) (a)".

(17) Schedule 7, item 17, page 88 (lines 30 to 33), omit subsection 394(4).

On 19 September 2012 I introduced the Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill 2012. This was the third tranche of legislation to implement MySuper. The amendments I am moving today respond to stakeholder concerns in relation to aspects of the bill—in particular, the definition of 'accrued default amounts' which a trustee must move to a MySuper product by 1 July 2017. This definition of accrued default amounts will be amended to limit them to member balances where either the member has not provided any investment direction to the fund at all, or the member's entire balance is invested in the fund's default investment option. This approach represents a consensus position of the four key superannuation industry bodies—the Association of Super Funds of Australia, the Australian Institute of Superannuation Trustees, the Financial Services Council and the Industry Super Network—and seeks to strike a better balance between protecting the interests of members and respecting individual investment decisions.

A further amendment will exclude from accrued default amounts those amounts held in investment options in which all assets invested under the option are held as cash. This addresses industry concerns that the definition of accrued default amounts would capture cash hubs and superannuation wrap products. The amendments also address the issue of when a member has given an investment direction to the trustee of the previous fund and the member's benefits are transferred to an equivalent investment option in a subsequent fund under a successor fund transfer.

The government is also moving an amendment to provide trustees with discretion to move amounts in an investment option in which the member's assets would be invested if no direction were given to a MySuper product, even if the amount is not an accrued default amount. This will permit funds to convert their existing default investment option to a MySuper product if they wish. A related amendment will ensure that the provision of risk insurance does not have to comply with the general requirement that a trustee provides equal access to options benefits and facilities in a MySuper product. In particular, this amendment will ensure that trustees are able to move the existing cover that they have provided to members when moving the accrued default amount of a member into a MySuper product. The definition of 'intrafund advice' will be amended to clarify that it is limited to cash management facilities within the fund. This amendment is to avoid any interpretation that intrafund advice could have been provided on cash management facilities outside of the fund. These are technical amendments that provide additional flexibility in the circumstances in which members can opt out of TPD insurance yet retain life insurance in a MySuper product and to clarify provisions in the bill relating to constitutional issues.

Finally, there has been further consultation with the industry about the product dashboard and its practical operation. Issues have been identified around its coverage and ensuring the dashboard fully captures all relevant fees and net returns experienced by members and around ensuring that risk and liquidity requirements are workable and relevant to members. Consultation with the industry is continuing, also having regard to APRA's consultation on its reporting standards, and it is likely that further tranches of legislation will need to clarify the product dashboard requirements with respect to these areas. The government will also consult on the need for anti-avoidance provisions. I commend the amendments to the House.

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

Well, well, here we are again. It is like groundhog day. Here we have Bill Murray and we are recreating the scene—he looks a bit like Bill Murray, does not he? He does, a little bit like Bill Murray—charming, but a little dishevelled and a little uncertain where this is all going. I feel like this is groundhog day all over again. Here we are back in the chamber, another bill under this minister, bill under Bill. Along comes the situation where it has been put to the parliament, the government reluctantly sends it to a committee, the committee under Labor's control unanimously endorse the bill then Bill comes back in to change the bill.

Of course, last night this played out in the Treasury and we were being told that this legislation has to go through the House of Representatives immediately. The government did not even have the amendments. Beavering away under torchlight last night were 100 Treasury officials, desperately trying to redraft legislation because the minister said, 'We're going to put it into the parliament tonight'. The amendments were responding to what we were suggesting were the problems, the fundamental flaws in the bill.

However, pride is an emotion familiar to this minister. He is not prepared to admit that so many of these amendments come about because we raise the issues. As I understand it, there was a spelling mistake in the government's legislation. We did not do that. We try to pick up not just the policy errors but also the spelling errors in government legislation. What is interesting from my perspective is that the minister comes into the House and pretends that this is business as usual for the House of Representatives. It is business as usual to bring legislation into the House, to declare, like a state of emergency, urgency to introduce 17 amendments which stakeholders had not seen until we raised them with them today. All through the night, in a fit of urgency, the Treasury was working away at them. This is the second time this week. Talk about a comedy caper over there.

If the government cannot run a simple process of putting in place legislation and consulting with the community, it is no wonder they cannot run a budget. It is no wonder they cannot run the economy, no wonder they cannot run general policy. The government have such abject disregard for this chamber not only do they rush in legislation; the Prime Minister heroically equally declares that a nine-page piece of legislation on education is going to revolutionise Australia, even though that piece of legislation introduced by the Prime Minister has no funding, no objectives and no agency to deliver anything—it is legislated press release. That is the contempt that the government feel for this parliament in order to try to pretend that the wheels are turning fast in the government.

I think the Minister for Financial Services and Superannuation—and I might get in trouble for this—is inherently a pretty decent guy—

Opposition Members:

Opposition members interjecting—

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

I know that, particularly in the presence of the member for Mackellar, I might have gone too far, and I am getting a death stare from my colleague, but I am going to give the minister for financial services the benefit of the doubt and say that, inherently, he is a pretty decent fellow. Deep, deep down, under the veneer, is a heart that beats with the interests of the Australian people. My concern is he does not have his heart in his portfolio. He really hasn't. He is not there. He would much rather be charging at the windmills. He would much rather be out there declaring war on the bosses. (Extension of time granted) He would much rather be launching a campaign against someone than sitting down and getting across the detail of a very complicated portfolio. I know it is complicated portfolio. I actually had both of his portfolios. I was the first Minister for Financial Services and Regulation at that time, and I was Minister for Employment and Workplace Relations. In fact, the first time I met the minister at the table was when I was debating him at Manning Bar at University of Sydney. I was arguing the policy case and he was cracking fat jokes against me. I remember that. I gave him the benefit of the doubt at the time because that is the last refuge of someone without a policy argument. I am getting a little bit distracted here.

I want to come back to the amendments. We have constantly pushed for common-sense amendments to this bill. We were the ones that first pushed for this to go to the Parliamentary Joint Committee on Corporations and Financial Services, which reported on 9 October. As I said, it was a government dominated committee that recommended the bill, as it stands. Before the 17 amendments proposed by the minister were considered, they recommended that it be preceded with. We had amendments ready to go soon after the committee reported seven weeks ago. We could have dealt with the urgency.

However, after first trying to rush the bill through, the government has, of course as usual, gone cap in hand to the crossbench. The crossbench put the same concerns that we put seven weeks ago, and lo and behold, what we have is amendments—and the amendments that are substantial. They refer to substantial issues such as a major constitutional initiative, which involve matters dealing with the acquisition of property on just terms. We have raised that issue previously. I think the minister at the table spent the weekend watching reruns of The Castle, which was one of the issues at law when he appeared before the High Court—

Mr Shorten interjecting—

That is right. I was trying to remember who it was, thank you, Minister. The bottom line is that after we threatened to vote against the bill that was presented by the government to the House, the government started to reconsider the bill and proposed amendments. Literally, the government is making it up as it goes along. That is not the way a government should be run.

It is not acceptable for a minister of the Commonwealth to be introducing legislation that has been ill-prepared, even after consultation on the exposure draft. It is not acceptable for the second time in two days for a minister of the Commonwealth to be consulting on amendments even after Labor members of a committee inquiry into the bill recommend that the bill be passed. It is not acceptable for a minister of the Commonwealth to be rushing the bill through an inquiry when it is clear that it needed scrutiny because the minister had not given it proper attention, and it is absolutely not acceptable for a minister of the Commonwealth to be finalising amendments on the second last sitting day of the year, rushing legislation through to avoid proper, detailed parliamentary scrutiny.

My colleague Senator Cormann has done an outstanding job on this. Effectively he is writing the legislation for the minister. The Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill requires that trustees transfer accrued default amounts to a MySuper product by 1 July 2017, and these are supposed to be amounts where the member has not exercised choice. This bill as originally drafted would have forced the transfer of potentially large amounts of money from funds where individuals had made a clear and active choice about their super to a MySuper default product, without the need for prior approval from the individual concerned—even where a member had actually exercised choice.

I was around when the Howard government introduced choice. It creates a moral hazard for the individual involved, and then the government comes along and wants to change that arrangement. It could have exposed Australians to significant transaction costs and fees, as assets would have been sold and repurchased in a new fund under the proposed arrangements from the government. (Extension of time granted)The government's original bill would have changed the retirement plans of many Australians by potentially putting their savings into a fund with lower returns or higher fees than the one they had chosen, which would have created, in my view, a very extensive moral hazard for the government. Of course, it may have led to a higher risk investment profile than the individuals had previously selected. In addition, they might have potentially lost life or total and permanent disability insurance.

So we have succeeded today in forcing the government to amend the bill so that a member who has previously exercised a choice of superannuation fund cannot be automatically transferred into a MySuper product by having previous contributions defined as an accrued default amount. The last-minute backdown by the government in a number of areas follows our dissenting report in the committee. Whilst we had to drag them kicking and screaming, dragging their fingernails along the ground, to the position of the coalition, it has been achieved. Despite the endeavours of the minister in the original bill, common sense has prevailed.

I want to commend the minister for at least listening to the concerns expressed by the coalition. I know it is very hard for him to understand this, but all wisdom and knowledge does not come through the air conditioning in the ministerial office. That is why we have a chamber. That is why we have committees. Even though he ignored the committee, he could not ultimately ignore the views of the chamber. I want to wish the officials and the minister all the very best for Christmas.

Mr Shorten interjecting—

I am being generous here. It is important to have a generous spirit. I am trying to do my best here and be magnanimous. Just take it because it is not always going to come. But I would just say to you in that Christmas spirit and, more importantly, because of the fact that you are accepting almost all our recommendations in relation to this, that we are not going to oppose these amendments. We will support these amendments, but I am about to move our own amendments, and I hope the government will reciprocate. If they truly are engaging in this spirit of improving legislation, they will support our amendments in the same way that we are going to support theirs, to improve what was originally a pretty ordinary bill.

Question agreed to.

by leave—I move opposition amendments (1) to (3), as circulated in my name, together:

(1)   Schedule 4, item 5, page 54 (line 22), omit "for defined benefit members".

(2)   Schedule 4, item 5, page 54 (before line 23), before subsection 149A(1), insert:

  (1A)   A modern award must include a term that permits an employer covered by the award to make contributions, for the benefit of an employee covered by the award who is a default fund employee, to any superannuation fund that offers a MySuper product.

Note:   An employer may make contributions under this term even if the superannuation fund to which the contributions are made is not specified in the modern award.

(3)   Schedule 4, item 6, page 55 (line 20), omit "section 149A", substitute "subsection 149A(1)".

The coalition had foreshadowed that we would move a sequence of amendments to this bill. Amendments (1), (2) and (3) amend schedule 4 and address the closed-shop, secretive and anticompetitive arrangements for the selection of default funds under modern awards. The decision on the selection of default funds under modern awards remains with Fair Work Australia.

Let's talk a little bit about Fair Work Australia. It is interesting, isn't it, that the minister commissioned an inquiry—

Bill Shorten (Maribyrnong, Australian Labor Party, Minister for Financial Services and Superannuation) Share this | Link to this | Hansard source

It is now called the Fair Work Commission. It changed.

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

Did it? The change of name went through the Senate? There you go, if that is the case. The government was so embarrassed about the term 'Fair Work Australia' and it has been such a tarnished organisation that their report came back and recommended a change of name. I hear it is now called the Fair Work Commission, which is hardly the change of name that I think they were originally intending. But, notwithstanding that, the Fair Work Commission, if that is to be its name, is still the creation of the Labor Party and still has its faults. Certainly in relation to the selection of default funds under modern awards, our view is that this is not something that Fair Work Australia, or the Fair Work Commission—whatever it is—should be doing.

They are widely criticised because this is where, within the heartbeat of the minister, always, every day, we come to the defence of the unions and union interests. Unfortunately for union officials, the great bulk of the Australian workforce, about 82 per cent of the workforce, is outside of the union movement. So when industry funds, which are union partnership funds, are directly involved because of an industrial organisation in becoming default funds, in a sense it disenfranchises the 82 per cent of employees who are not members of the unions but who are still looking for proper representation.

So we are moving amendments to level the playing field, to put an end to what seems to be a rather clever—rather disingenuous in one sense, but rather clever—decision of the government to create industry funds overwhelmingly as the default funds, as a result of decisions by Fair Work Australia. We want choice and we want competition in the selection of default funds. As we have done before, we are again moving amendments that will provide that competition and, importantly, give employees as much of a say as the union officials and Fair Work Australia about where their money ends up. I commend to the House what are very sensible amendments. I hope the government accepts these amendments, because they are good amendments and improve the quality of our financial services system.

Bill Shorten (Maribyrnong, Australian Labor Party, Minister for Financial Services and Superannuation) Share this | Link to this | Hansard source

I thank the member for North Sydney for his contribution and his somewhat positive remarks about the government.

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

It was about you; it wasn't about the government. Don't get carried away!

Bill Shorten (Maribyrnong, Australian Labor Party, Minister for Financial Services and Superannuation) Share this | Link to this | Hansard source

Anyway, in the spirit of Christmas, thank you, Member for North Sydney, for your support. I am sure it will be invaluable for me!

The government will not be supporting these amendments, for the following reasons. These amendments mirror what was proposed by the opposition during the debate on the Fair Work Amendment Bill, which has passed both the House of Representatives and the Senate. We did not support them then—as employer groups did not, as a range of superannuation interests and stakeholders did not and as unions did not. The proposition being advanced by the member for North Sydney is simply unworkable. It would create red tape and complexity for employers and employees. The idea that you would have telephone-book-sized lists of superannuation funds and default awards is simply unworkable.

I do not accept the characterisation by the member for North Sydney that employees do not have a choice about funds. They always have a choice about funds. The independent tribunal, the Fair Work Commission, under the act which we have just passed will have an expert panel. Every superannuation fund that passes the MySuper test will be able to submit a written expression of interest to be considered for one of 128 modernised awards in Australia. After the expert panel looks at who is appropriate and looks at their bona fides, it will then be a matter for a full bench of the Fair Work Commission to decide. So we have put forward more transparency than has ever existed before. Employees still retain choice. Parties have the ability in an enterprise agreement to work out what they want to do, and it does not have to be a fund from the award. So there is more transparency, there is more choice and there is a process which will sort the wheat from the chaff. For those reasons we will not support these amendments.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The question is that the amendments be agreed to.