Michelle Rowland (Greenway, Australian Labor Party) Share this | Link to this | Hansard source

I move:

That the House:

(1) commends the historic achievement of the previous Labor Government in establishing universal superannuation through the Superannuation Guarantee;

(2) notes:

(a) that Australia’s total superannuation savings are projected to be $500 billion higher by June 2037 as a result of the Government’s superannuation policies;

(b) that Australia now has the fourth largest pool of retirement fund assets among OECD states;

(c) the key findings in the report prepared by the Allen Consulting Group for the Association of Superannuation Funds of Australia, Enhancing Financial Stability and Economic Growth: The Contribution of Superannuation, that the:

  (i) superannuation sector assisted Australia in avoiding some of the worst consequences of the Global Financial Crisis;

  (ii) increase in the Superannuation Guarantee from nine to twelve per cent will benefit 8.4 million Australians; and

  (iii) superannuation sector plays an increasingly important role helping to fund Australia’s investment needs;

(d) data from the Australian Bureau of Statistics that whilst the mean superannuation balance for women almost doubled in the period between 2000 and 2007, there remains considerable disparity in the mean superannuation balances in the accumulation phase for females compared to males; and

(e) that the Government’s Low Income Superannuation Contribution will boost the superannuation savings of 23,400 people in Greenway and 25,200 in Canberra; and

(3) supports the need to preserve the Low Income Superannuation Contribution which benefits 3.6 million Australians, of whom 2.1 million are working women.

I am pleased to move this motion on superannuation and to remind the House that it is this Labor government that is delivering a superannuation system that is the envy of the world. As my motion states, it was indeed an historical achievement by a Labor government to implement one of the most innovative public policy initiatives of the 20th century in Australia, the benefits of which accrue every day for millions of Australians who would otherwise not have the means to support themselves in a decent retirement. In bringing forward this motion I would like to focus on three key issues, including recent independent reports on Australia's superannuation system; how our superannuation system benefits working people and, in particular, working women; and the obstacles to realising the full benefits of superannuation for all Australians now and into the future.

I began by stating that this Labor government is delivering a superannuation that is the envy of the world. By every objective measure it remains an outstanding success, from its contribution to assisting Australia avoid some of the worst consequences of the global financial crisis to its strategic role in funding many aspects of investment. In the 2012 Melbourne Mercer Global Pension Index results, Australia ranks third after Denmark and the Netherlands in terms of adequacy, sustainability and integrity in its retirement income system. In the report produced by Mercer, Australia is described as having a superannuation system that has a sound structure with many good features. Our neighbours in the Asia-Pacific region who participate in the Mercer index—namely, China, India, Japan and South Korea—actually feature at the bottom of the Mercer table, with a D-grading. Each is described as having a retirement income system that has some desirable features but also major weaknesses and/or omissions that need to be addressed. Without these improvements, the report states, the efficacy and sustainability of these superannuation systems are in doubt.

It is therefore no surprise that the peak industry body, the Association of Superannuation Funds of Australia, has organised an annual forum for the past two years called the Asia-Pacific Pensions Forum, designed to showcase to our neighbours in the region how the retirement income system which has been devised in Australia, together with the product innovation and skills developed by service providers in the industry, can all be successfully packaged and delivered to other parts of the region. It is a theme which also features prominently as part of this government's Australia in the Asian century white paper.

While those opposite would contend that our superannuation system is plagued by uncertainty, the evidence is clear: industry leaders are putting the system on a regional pedestal. If there were any truth in the opposition's claims, independent assessments such as those by Mercer would not produce the results they have, highlighting our retirement income system as a model of best practice relative to others in the region and globally.

On this side of the chamber we have never been complacent when it comes to continuously improving Australia's retirement savings system. It was a Labor government that introduced superannuation in this country, and as a Labor government we have continued to build on and improve the scheme implemented by our predecessors. Our recent Stronger Super reform initiatives are part of a broader reform agenda for superannuation which has been initiated by the government. The Stronger Super response, following the extensive Cooper review, is one of three limbs to the overall superannuation reform agenda in recent years. The other two limbs have been the Future of Financial Advice reforms, and the government's Stronger and Fairer Superannuation reforms, including an increase in the superannuation guarantee charge from nine per cent to 12 per cent by 1 July 2019—all of which have been passed by this parliament. On this side of the chamber we have set the benchmark on superannuation, while those opposite have been carping from the sidelines with plans to undermine the retirement savings of working Australians, particularly working women.

Labor's reforms will boost the retirement savings of working people and improve equity in the superannuation system. According to the ASFA, nearly 90 per cent of Australian women do not have enough superannuation, and that is why this government, through its reform package, has moved to increase super from nine to 12 per cent and introduced the low-income superannuation contribution, or LISC. As outlined by the Australian Institute of Superannuation Trustees and the Women in Super advocacy group, the low-income super contribution will deliver a much-needed annual super boost of up to $500 to around 3.5 million Australian workers who earn less than $37,000 per year, many of whom are working women. There are 23,400 of these workers living in my electorate, and this will be a welcome boost to their retirement savings.

Of course, those opposite want to scrap this important reform, ripping away the extra retirement savings from the low-income workers in my electorate—and why? Because they do not support superannuation and they never have. The earliest speeches by members in this place say a lot about what they really believe. The Leader of Opposition in one of his earliest speeches to the parliament, on 25 September 1995, gave us his considered view when he said:

Compulsory superannuation is one of the biggest con jobs ever foisted by government on the Australian people. If the Prime Minister (Mr Keating) was a private businessman, chances are that he would be before the courts for false and misleading advertising. The basic objective of compulsory superannuation is that the government is taking our money now so that it does not have to pay us a pension when we retire. The government is making us worse off now so that it will be better off in the future.

To this day, throughout the parliamentary debate on these critical reforms, there has been no shortage of grossly exaggerated and just plain wrong claims by those opposite about the likely impact of the reforms on our retirement income system in Australia. I am reminded of the shadow Treasurer's response to the government's Mid-Year Economic and Fiscal Outlook last year, in which he made a number of ridiculous statements suggesting that Australians with superannuation accounts that were dormant for 12 months would have their superannuation transferred to the ATO as lost accounts. He said on 2GB on 23 October 2012:

If your kids go overseas for 12 months or you're unemployed for 12 months and you don't access your superannuation account, then it's going to the tax office.

He made the same misrepresentations again and again. The statements by the shadow Treasurer were a total fabrication and a complete misrepresentation of the government's MYEFO measure in this area. It was ridiculous for the shadow Treasurer to repeatedly misrepresent the truth of this very important government measure. The member for North Sydney forgets that lost superannuation accounts can be claimed at any time through the ATO's SuperSeeker website. Furthermore, the relatively small number of Australians who will be impacted by this change will be better off in many instances. That is because they will not have their retirement savings chewed away by the fees and costs charged by superannuation funds.

How hypocritical it is for those opposite to claim that this government is creating uncertainty because of its commitment to improving the superannuation system in Australia and to providing a system which ensures Australians have the opportunity to enjoy a dignified retirement. When the Howard government turned the taxation of superannuation on its head and embarked on what it called the Simpler Super tax reforms, not a single figure from the coalition uttered a word about the potential economic costs of tax policy uncertainty. Despite creating major headaches for the industry and the Australian public at the time, the Howard government hammered away at the tax treatment of superannuation until the industry simply gave up. The real uncertainty felt by Australians and the superannuation industry at the time was obviously lost on the coalition.

Mind you, someone must have finally woken up to the mess the coalition had created and realised the label of 'simplified superannuation' used in the Simply Super initiative was a misnomer. Writing for Thomson Legal and Regulatory publications at the time, Stuart Jones, a senior tax writer, commented:

While the reforms trumpeting tax-free superannuation benefits from age 60 have delivered welcome simplification to certain facets of superannuation, a closer analysis of the new laws reveals that considerable complexity remains in several areas.

The coalition's so-called Plan for Real Action on Superannuation produced as part of the 2010 election campaign contained a grand total of four bullet points—a grand total of four bullet points for an industry which APRA data tells us was worth approximately $1.4 trillion as at 30 June 2012. Today, in their 'real solutions' prop, they have not improved, managing to muster only seven sentences of slogans and no policy.

But we do know at least one superannuation policy which the opposition leader has contributed himself. He wants to abolish the low-income super contribution and disenfranchise 3.6 million low-income Australians, 2.1 million of whom are women, and some 23,400 residents in my electorate who currently benefit from this government's low-income superannuation contribution. Let it be clear to each and every one of those residents: this would constitute a superannuation tax increase of up to $500 for every Australian worker earning below $37,000.

Sharon Grierson (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

Is the motion seconded?

Joel Fitzgibbon (Hunter, Australian Labor Party) Share this | Link to this | Hansard source

I second the motion.

Alex Hawke (Mitchell, Liberal Party) Share this | Link to this | Hansard source

You know when you hear the word 'historic' in relation to one of these motions that you are in trouble. The 'historic' keyword is code for bad policy today that one day the member for Greenway hopes will be regarded with a rosy haze in a similar way to the Whitlam government in relation to superannuation. I listened very carefully to her presentation on why the government should be lauded for its superannuation reforms, and I challenge the member for Greenway to walk down any street of her electorate and talk to a self-funded retiree about whether they think this government has been good for superannuation. Certainly the member for Greenway does need to read the government's own legislation, because it is a fact that since this government has been in office it has imposed more than $8 billion in increased taxes, targeting people saving for their retirement.

The challenge of a superannuation and retirement system is that you have to have a platform for people to make their own contributions to fund their own retirement. It is not a scare campaign or a fear campaign to say that compulsory superannuation will not sustain a person in retirement. It is a fact, and I challenge the member for Greenway to live off her compulsory superannuation if she thinks she could do so. Clearly, of course, in Australia we have to have a system that welcomes and encourages voluntary contributions to people's own superannuation. That is where this government with its policy uncertainty and chaos has produced a retrograde step for superannuation in Australia today. Over the past five years we have seen the cuts to super co-contribution benefits for low-income earners. That was more than $3.3 billion in total, but what it did was reduce the government's super co-contribution for lower-income earners from $1,500 under the Howard government to just $500—something that the member for Greenway did not mention and certainly not something that is lauded in this motion before us.

What is the best way to take advantage of human nature? It depends on your approach to government. Do you believe in the carrot or the stick approach to government? I have said this in this place before and I will say it again: carrot incentives are the best way to take advantage of human nature. A co-contribution scheme allows for people to make their own contributions and for the government to say, 'We're going to offer you an incentive to sacrifice that money that you can spend now on your current standard of living or on your current family needs and put it aside for the future by matching it.' In fact, in this case it was $1,500 cut to $500 by the government—a three-times reduction. This government is big on penalties and big on using the stick instead of the carrot.

Amid a series of options to increase taxes on super savings, the government even contemplated breaking another election promise—and the fact that it did not is remarkable. It was promised in 2010 that the government would never—never!—remove tax-free superannuation payments for the over-60s, but the desperate times of budget deficits and the chaos in economic policy have meant this government is desperate for money. It is looking at superannuation as some sort of automatic teller machine for the government—'We need money; we've got to go get it.' We saw that with the lost super and unclaimed money bill that came through this House recently, where the government was looking at lost super supposedly in active bank accounts as a source of revenue, because it was so desperate for cash. It is crazy for the member for Greenway to say that was some fear campaign whipped up by the opposition; the government put in a bill to sweep up people's private accounts if they were lying dormant, even if they were lying dormant for legitimate reasons. It introduced a bill to say all the lost super would be swept up by the government. Why? Was it a good public policy measure? Was it a historic reform? No, this was a government desperate to sweep up any cash out of the economy that it could to fund its flagrant expenditure.

The member for Greenway spoke about raising the compulsory contribution from nine to 12 per cent and how great this would be for low-income earners. Of course, the coalition supported that and will not rescind it in government, but I would make the point that the Henry review actually recommended against raising compulsory superannuation from nine to 12 per cent. The reason the Henry review recommended against raising the compulsory barrier was because it was not needed by those on higher incomes and would disadvantage low-income earners. The review also suggested that contributions be taxed as income at the recipient's current tax rate to create both better equity and net additional government tax income by reducing use of this form of tax avoidance and providing extra income for equity needs. That was the government's own Henry review that said that. So, again, I ask: is that a historic reform advantaging low-income earners? The member for Greenway's argument is not supported by the Henry tax review.

The member for Greenway also bemoaned a series of things. In particular, many of the things that she was saying were purely partisan and not in the interest of good superannuation policy, especially when she comes from a government that has increased taxes on voluntary savings by reducing concessional contribution caps from $50,000 and $100,000 down to $25,000. They are significant reductions; I think any member of this place would agree. Anyone who wants to save more than $25,000 a year, which includes their compulsory superannuation contribution, now has to pay more tax as only super contributions of up to $25,000 per annum attract the lower 15 per cent rate of tax. It goes back to the point I made earlier about $8 billion in increased taxes targeting people saving for their retirement.

Here we have a motion lauding the government's performance on superannuation when they are increasing the tax take out of this absolutely vital area of government policy where we do want to see more people contributing to their own retirement. We do want more self-funded retirees and less drag on the state. How is that going to happen when we have $8 billion of increased taxes targeting people saving for their retirement? It is hard to see.

We, the coalition, think that the concessional contribution caps are too low and most certainly should not be lowered any further, given at present anyone saving more than $25,000 a year has to pay the top marginal rate of tax of 46.5 per cent already. These are people putting aside money for their retirement to take the burden of the government in the future. Probably of the biggest drains on the Commonwealth in terms of welfare expenditure the single largest is pensions. So these people are doing the right thing by our society and the right thing by themselves in their retirement and we are taxing them at 46.5 per cent for just $25,000. I ask the member for Greenway to come back in here and say that she agrees with taxing at 46.5 per cent the contribution of $25,000 a year and that that is an historic reform that has been introduced into this place by her government.

Of course, this is on top of all of those lost and raided accounts that I have spoken about. Over the six months from 31 December 2012 to 30 June 2013, the government expects that the tax measure of 46.5 per cent will raise $760 million in additional revenue. This is something that is hard to understand.

This is a very partisan motion, lauding Labor for establishing the superannuation guarantee in the first place. However, the premises of most of the arguments of the member for Greenway really do not stack up when you look at them—the increase in compulsory superannuation is not supported by her own government's Henry taxation review, the things that this government has done in raising $8 billion in extra taxes off people saving for our own retirement and the removal of the system of incentives. The only system of government policy that has any chance of working is incentivising people to make their own voluntary contributions for their retirement. Every other measure—taxing them, penalising them and pushing them down for putting money aside for their own retirement—has no chance of delivering a viable amount of money for people to retire on. That is really why this motion has a very poor element to it.

The coalition have made it clear that in government we would not make any detrimental, unexpected changes to superannuation. That is exactly what the superannuation industry is calling for—no detrimental changes that are unexpected. The member for Greenway says that the policy chaos and all this uncertainty is just a furphy. The uncertainty that is created by constant change to the taxation of superannuation means that people vote with their feet. They will not make those contributions while they are being taxed so heavily and while the current policy environment is constantly changing. The uncertainty that this government produces in every sector has been replicated in superannuation and retirement savings, to the detriment of Australia's future.

Gai Brodtmann (Canberra, Australian Labor Party) Share this | Link to this | Hansard source

Superannuation is a Labor Party policy through and through. The Labor Party is the party that introduced universal superannuation and it is the party that will protect superannuation. It was a Labor government that introduced the compulsory superannuation guarantee and it is a Labor government that is now reforming super to ensure the retirement savings of Australian workers are better protected. Labor's commitment has always been to make sure that all Australians have a fair, regulated superannuation industry. Labor has always been a champion of compulsory superannuation because it provides a significant source of savings that is untouched and will continue to grow until needed.

Australians want a superannuation industry that they can have faith in as they work hard to save for retirement. It is in our national interest to encourage more Australians to save more for their retirement and to understand how their superannuation works. That is particularly important: Australians need to understand how superannuation works.

This motion highlights the importance of Labor's increase to the superannuation guarantee from nine per cent to 12 per cent, an increase that will benefit 8.4 million Australians. Overall, Labor's historic super reforms will lift retirement savings by $85 billion over 10 years—$500 billion by 2035. These are major reforms. These are Labor reforms that reflect Labor values.

This motion also brings to light data from the ABS that shows the imbalance between men and women when it comes to super, which is something I am particularly concerned about. As the member for Greenway pointed out, although the mean superannuation balance for women almost doubled in the period 2002 to 2007, there remains considerable gender disparity. When it comes to super, one of my biggest concerns is what is happening when women come face-to-face with their superannuation needs, because there is a gender gap when it comes to their superannuation. Data from 2009-10 shows that Australian women do not always have enough super to allow them to be comfortable in their retirement. Statistically, women earn 17 per cent less than men and the average super account balance for women is just over $40,000, while for men it is about $71,000. The average payout for women aged 60 to 64 is around $112,000, while for men it is closer to $200,000. Another critical difference is that men hold an estimated 63 per cent of super accounts, while women hold only 37 per cent.

I have seen figures showing that a single woman aged 65 who is wanting to retire will need over $500,000 to create an annual income of just over $40,000. As women live longer than men, they actually need more super, but the statistical evidence is clear: there is a discrepancy between what men can access compared to what women can access.

I have seen this all too often in my own electorate. I have seen the reality of what this means for women and super. I gave a speech last week on International Women's Day, in which I focused on housing for older women. When I told the stories about what I had experienced in my electorate a number of women came up saying: 'They are the same things I'm experiencing: I'm staring down the barrel of retirement in five or 10 years time, I don't have enough super, I'm in the private rental market and I'm working just to make ends meet.' It is very tough for these women. I know that they are very concerned about their super. I know this from my own experience, from my mum, who retired with about $5,000 in super and is now on the pension. Fortunately, she has her own home. It is tough for women, particularly when they just do not have enough super for a comfortable retirement. That is why I am so adamant that women, particularly young women, get across their superannuation needs, not just what they need for their retirement but also how they are going to plan to make sure that they can reach those goals for their retirement, so they can plan for the gaps in their career when they take time out to have babies and so they can plan for when, possibly, they want to do part-time work in their 50s while ensuring that they can cover their superannuation needs to ensure a comfortable retirement.

I commend the member for Greenway for putting forward this motion. It is good to bring to everyone's attention the superannuation achievements of the Labor government but also the superannuation needs of women for the future to ensure that they have a comfortable retirement, to ensure their quality of life when they retire and to ensure they are not fearful as they age.

Jane Prentice (Ryan, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the member for Greenway's motion on superannuation policy. The Australian people do not deserve this government. They do not deserve a government that has increased taxes on superannuation by $8 billion. They do not deserve a government that has attacked the voluntary savings of low-income earners by drastically cutting the super co-contribution scheme. Nor do they deserve a government that continually ignores self-funded retirees, who are facing the prospect of their hard-earned money being stripped away from them because this government cannot manage the economy.

What this motion does not mention is what this incompetent Labor government has done since it got into power. True to Labor form, it has increased taxes on superannuation time and time again, reducing the ability for Australians to save for their retirement. Quite simply, this government cannot be trusted on superannuation. After years of reckless spending and racking up $172 billion in debt, the Treasurer has come to the point where he has increased taxes so much on current income that he has run out of ideas on how to extend the ATM of Australian workers that he treats as his own personal cash cow. Not content with slugging the Australian economy with more than 25 new taxes, hurting industry in Australia and damaging the hip-pocket of Australian households, and so incompetent is this Treasurer that he is looking to further tax the savings of Australians. The Treasurer has not ruled out that the Labor government will increase income tax rates, nor has he ruled out that the Labor government will increase tax rates on legitimate withdrawals from superannuation funds. The Treasurer is now turning towards the money which people have already earned, on which they have already paid tax and, quite legitimately, thought would be there to serve them in their retirement.

Furthermore, this government has increased taxes on voluntary savings by slashing concessional contribution caps from $50,000 and $100,000 down to $25,000. We in the coalition believe that Australians who are saving for their retirement and putting up to $25,000 into their superannuation per year at a 15 per cent tax rate are not rich. They represent the families playing catch-up with their retirement savings after their children have grown up and they have paid off most or all of their mortgage. Added to this, anyone contributing more than $25,000 per year in pre-tax income to superannuation is already taxed at the top marginal tax rate of 46.5 per cent. Given that people are required to lock up their super savings until retirement, if the tax rate on contributions or earnings is not more attractive than that on take-home pay we will see people start to minimise their superannuation savings.

This motion also mentions the importance of the low-income superannuation co-contribution—a very important policy implemented by the Howard government. Again, this motion does not mention that, since 2007, Labor has cut the government's super co-contribution benefits for lower income earners by more than $3.3 billion by reducing the government's super co-contribution for lower income earners from $1,500 under the Howard government to just $500.

Should the Coalition form government at the next election, we will revisit concessional superannuation caps and super co-contribution benefits when the budget is in a strong enough position. The Leader of the Opposition has already announced that there will be no more unexpected detrimental changes to superannuation. This is because we support all Australians who want to make responsible savings for their retirement. We do this not just because it makes sense for every Australian but because it makes perfect sense for the future affordability of serving older Australians in the years ahead. It is absolutely crucial that we get every aspect of our retirement income system functioning as efficiently and sustainably as possible. Encouraging voluntary savings is an integral part of that.

We must make ensure that the system of compulsory contributions to superannuation that employers pay—not government, employers—is as straightforward as possible. We must also ensure that there is sufficient incentive for workers to donate above and beyond the compulsory contributions. The coalition is committed to the most efficient, transparent and competitive superannuation system, and that is what we will keep working towards in government. We will restore hope, reward and opportunity to Australians who are saving for their retirement, because Australians deserve a government that will protect the future of all Australians.

Deborah O'Neill (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

I am very pleased to rise to speak on the private member's motion of my colleague the member for Greenway. For those who might be listening outside the chamber, I put on record that, when we hear the confected outrage of those opposite, complaining about efficiency, transparency and competitiveness, we have to remember what their effective model was when superannuation came in. It was to have no superannuation.

What was their model of transparency? There was no transparency, because there were not any superannuation funds, except for the very, very wealthy and those who were born into lives of privilege, with education from their own parents in-house about how to look after their retirement. Where I grew up, in the western suburbs of Sydney in the seat of Greenway, I can tell you that superannuation conversations around the table were not too common. It took a Labor government to come in and create a superannuation sector and to deliver it for the Australian people, because we believe every Australian has a right to a dignified retirement, not just some Australians, as those opposite would have allowed to continue to be the case.

Much of the activity that happens in this very important place, in this chamber of the parliament, can seem very removed from the Australian people, who are moving around the economy and in the community outside here. Much of what we do does not get the attention or the coverage that it warrants. But this policy, our superannuation policy, has made the lives of millions of Australians better. Indeed, it will go on to support generations of future Australians in living in retirement with dignity and comfort.

Compulsory superannuation is a keystone Labor policy. When it was brought in it was a historic achievement for all working Australians. Let us hark back to the language that those opposite used at the time. At the time they said no. They continue to say no to innovation that looks after most Australians. At the time they said, 'We can't afford it.' It concerns me greatly as I move around in my community at this time that that is a catchcry of those opposite: 'We can't afford it.' If they had had their day back then, all the people who are rightly very interested in their superannuation right now would not ever have had any superannuation to be able to discuss or to think about. It was only a Labor government that delivered that significant, historic outcome of which we are reaping the current benefits.

Since the days of Hawke and Keating, the Australian superannuation industry has expanded to such a level that it is now the fourth largest pool of retirement fund assets in the OECD. That is a great savings achievement by Australian people, led by government innovation that could see long term into the future rather than just the short term, where those opposite continue to be focused. These funds have also helped to safeguard our economy from some of the worst aspects of the GFC that have afflicted nations around the world and they play an increasingly important role in funding our investment needs. Of course, the growth of this market also means that there has been an explosion of products available for customers, and the pros and cons of each are not always clear, particularly to people who might not have the advantage of having learned that at their mother's or father's knee in home conversations.

I commend this government for the work they have done to streamline superannuation products and services for all Australians. It is very helpful when selecting a product to be able to go out and make comparisons. That has not been the case until the reform that we have introduced. The MySuper legislation has created a new default superannuation account with low fees and more transparency, which will mean more Australians will get their fair share of their retirement funds and not have them siphoned off in unclear and excessive fees and charges, which was the case—not for all companies but certainly enough to make a difference to average Aussies.

While many Australians will start earning super when they get their first job at 15, we do not give serious consideration to our retirement until we are a little older. In the intervening time, people have the right to know that their money is working for them, not for somebody else's advantage. Bringing in legislation about conflicted remuneration, making sure it is in the best interests of owners of superannuation and that that is at the forefront of consideration are vital, and that is what this government has achieved. We have a cheaper and more accessible, transparent and understandable form of superannuation management as a result of our reforms.

We on this side of the House should also be proud of increasing the superannuation guarantee from nine to 12 per cent. Of course, the catchcry from those opposite, once again, is, 'But we can't afford it.' We have to remember, every time they say that, that that is a plan to take something away from ordinary Australians in seats like mine of Robertson. (Time expired)

Paul Fletcher (Bradfield, Liberal Party) Share this | Link to this | Hansard source

I am very pleased to rise to speak on this motion moved by the member for Greenway, which commends the historic achievement of the previous Labor government in establishing universal superannuation. Once again, we see the spectacle of members of this present Rudd-Gillard government harking back to the glory days of what was—it must be acknowledged—a much more substantial government in terms of its policy achievements. The present government, sadly, is nothing of the scale or capability of the Hawke-Keating government.

This motion, however, is conspicuous for what it does not say about features of the superannuation system that need significant improvement and what it does not say about areas of reform, including those recommended by the Cooper review, which have been ignored by this present government—largely because they are changes that are unappealing to the union officials who call the tune in the Rudd-Gillard government. The equal representation system is part of the superannuation arrangements established by the Hawke-Keating government. This had the effect of entrenching the friends of that government in the union movement at the centre of the governance system of industry and public sector superannuation funds. Those entrenchment arrangements are very much still in place some 20 years later.

Last year I looked at the arrangements across 64 public sector and industry funds, with a total of more than $300 billion under management. I counted over 150 directors appointed by the unions, with a significant number of funds where the unions appoint at least half the directors. It is easy to see how these arrangements serve the interest of the unions. It means a large number of well-paid directorships are allocated amongst union mates and in, some cases, the fees paid to the directors of industry super funds are pocketed by the individual. In other cases, the fees are paid to the union. Regardless, it is an arrangement which very much suits union officials.

The problem though, as the Cooper review acknowledged, is that the interest of a union is not the same as the interest of a member of a superannuation fund, and that creates a very significant conflict of interest. There is a very good example right now. The Victorian branch of the CFMEU is attempting to put pressure on building industry superannuation fund Cbus in relation to property developments pursued by Cbus following a major industrial dispute, last year, between the CFMEU and construction company Grocon.

According to media reports recently, CFMEU's Victorian secretary, John Setka, said his members were angry that Cbus had awarded Grocon a $430-million project in Sydney. He said, 'I reckon it's a slap in the face for the union, what Cbus has done. As a consequence, CFMEU has been seeking expressions of interest from other super funds to become the default fund for CFMEU members and presumably it intends to use the award system to have Cbus removed as a default fund and a new one put in.

Let us be clear. This is nothing less than an attempt by a union to use the economic resources of a large superannuation fund over which it has substantial influence—including appointing three directors—to secure industrial or political outcomes, in this case to advance the industrial dispute of the CFMEU with Grocon. The interests of the 655,000 members of Cbus, the superannuation fund, are being put second to the industrial agenda of the CFMEU. That reflects a structural problem in the superannuation system, a problem that reflects the design of that system, as set up by the Hawke-Keating government, to entrench the position of union officials.

We could look at plenty of other examples. There was a $30-million investment in building company Austcorp by the Meat Industry Employees' Superannuation Fund, almost all of which was lost following Austcorp's collapse in 2009. The Australian has reported that Mr Wally Curran, a long-time secretary of the Meatworkers Union and a long serving director on the board of the fund, was paid significant consultancy fees by Austcorp. There appears here to have been a clear conflict of interest in duty—yet another consequence of the systematic problem in the governance of industry and public sector superannuation funds. Let us understand the full picture. Yes, the superannuation system is something to celebrate, but the governance arrangements and the equal representation system are seriously flawed—this government has done nothing about that.

Maria Vamvakinou (Calwell, Australian Labor Party) Share this | Link to this | Hansard source

The time allotted for this debate has expired. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.