Stephen Jones (Whitlam, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

I rise to speak on the Treasury Laws Amendment (Reuniting More Superannuation) Bill 2020. Labor has a proud track record on superannuation and will continue to fight for a stronger and fairer superannuation system. Our superannuation system sits alongside the Pharmaceutical Benefits Scheme, Medicare and the National Disability Insurance Scheme as a significant national achievement. But unfortunately too many Australians still retire without adequate retirement savings, which is why our super system needs to be strengthened and protected, not undermined.

This bill contains a single schedule, which amends the Superannuation Industry (Supervision) Act, the Retirement Savings Accounts Act and the Superannuation (Unclaimed Money and Lost Members) Act to facilitate the closure of eligible rollover funds, otherwise known as ERFs, by 30 June 2021. This measure addresses recommendation 5 of the 2019 Productivity Commission inquiry into superannuation, which recommended that the Australian Taxation Office be responsible for holding lost superannuation accounts and that the Australian Prudential Regulation Authority oversee the wind-up of eligible rollover funds. These changes build on the Protecting Your Super 2019 legislation, which saw low-balance and inactive accounts transferred by trustees to the Australian Taxation Office, but not eligible rollover funds. Since the implementation of Protecting Your Super legislation, fund trustees are required to transfer inactive or low-balance accounts to the Australian Taxation Office.

Eligible rollover funds were designed to look after unclaimed superannuation, but essentially they are now redundant. This legislation provides a timetable to wrap up the remaining ERFs by 30 June 2021, with funds transferred to the Australian Taxation Office. This will allow the Australian tax commissioner to reunite superannuation accounts they receive from eligible rollover funds with the members' active accounts.

We support this bill because Labor wants to see every Australian in a high-performance fund. We want to ensure that we have an end to multiple accounts, which is what this legislation is aimed at addressing. To date, it is worth pointing out, the Australian Taxation Office has successfully reunited more than 2.1 million or lost or forgotten superannuation accounts with their rightful owners. This is something we can all be very pleased about. This is a greater success than AUSfund have been able to achieve over a 10-year period. It is a success rate that we hope to see matched with the wrap-up of ERFs.

I will also formally move my second reading amendment to this bill. I think it is important that members of this place have the opportunity to debate a lot of the issues that currently surround superannuation. There has been a busy agenda of proposals coming from both the government and the backbench since the election of the Morrison Liberal government. Most of them, I have to say, weren't ventilated during the election campaign. Most of them, particularly those propositions emanating from the government backbench—with permission from the Prime Minister, we fully suspect—would have a very, very harmful effect not only on superannuation fund members but also on the strength of the system.

We have a superannuation system which, while not perfect, is the envy of many countries around the world: $3 trillion worth of national savings owned by fund members, savings which are not only providing funds for a dignified retirement for their fund owners, but also providing a pool of investment which enables us to invest in new infrastructure projects and job creation projects, and also enables us to invest in projects and companies in businesses overseas, earning foreign remittances for the fund members. We are now in a situation where, for the first time in our nation's history, we are not a net importer of capital. We have a savings pool which is helping us to provide ballast in difficult times and to ensure that we have the money available to invest in nation-building infrastructure and other projects. Why, when we are just realising some of the benefits of the system, many of the members opposite would want to pull it apart is beyond all right-thinking Australians, but that is exactly what they are trying to do. So we're calling on the parliament not only to support the substantive bill but to support the second reading amendment. We think it's important to send a very strong message, from this parliament to the people of Australia, that we believe that every Australian deserves a dignified retirement.

There's a point I want to make to those members opposite—sometimes referred to as 'the dirty dozen'—who are trying to unwind our system of compulsory superannuation and unwind the legislated increases from 9½ to 12 per cent. The point I want to make to those opposite, a point which they're going to have to explain to the Australian public, is this: why is it fair that they take home, on a monthly basis, a 15 per cent contribution from the people of Australia to their superannuation accounts but not fair that the people who clean their offices, the people who look after us in this place, should receive the same—indeed less, a 12 per cent contribution—to their superannuation accounts in future years? Those opposite have a big question to answer: why is 15 per cent fair for them but 12 per cent not fair for the people who clean their offices? And, of course, it's not just the contributions; it's also the tax concessions that go along with those contributions.

With this debate swirling, I think it's incredibly important that we provide some certainty to the people of Australia and get a very clear message out that the parliament supports our world-class superannuation system and that across the parliament—each and every member, each and every senator—we are dedicated to ensuring that we strengthen, not weaken, this superannuation system. I move:

That all words after "That" be omitted with a view to substituting the following words:

"whilst not declining to give the bill a second reading, the House:

(1) notes that Labor created Australia's superannuation system so that every Australian can have dignity in retirement;

(2) criticises Government members who would see Australia's world class superannuation system become voluntary for working class Australians; and

(3) further notes that too many Australians retire without adequate retirement savings, which is why our superannuation system needs to be strengthened and protected, not undermined".

Rob Mitchell (McEwen, Australian Labor Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Ed Husic (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

Yes, the amendment is seconded, and I reserve my right to speak.

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

It's always a pleasure to follow the member for Whitlam and his comments in this space. Whilst I'm sure there's stuff in the financial services sector—as he well knows—that we would agree on, there's also much we would disagree on. There's nothing more important to me than to see the efforts of this government and the work we're doing in tidying up the superannuation system to remove unnecessary and costly fees that eat away at the retirement savings of hardworking Australians. That's why I'm pleased to be speaking on this bill, the Treasury Laws Amendment (Reuniting More Superannuation) Bill 2020. Again, this bill builds on a number of previous pieces of legislation and seeks to further protect the retirement savings of hardworking Australians by closing down eligible rollover funds.

The role of ERFs, historically, was to be a temporary holding fund for lost, small or inactive superannuation accounts, but that has significantly declined or diminished over recent times. The unclaimed superannuation policies put in place by this government through the Protecting Your Superannuation Package changes mean that small, inactive accounts that may otherwise have been paid to ERFs are now paid directly to the ATO. We know our reforms are working, and this bill seeks to ensure that more and more Australians are reunited with their super so they can continue to grow their nest egg for retirement. Since our Protecting Your Superannuation Package reforms became a reality at the end of 2018, the ATO has reunited more than 2.13 million lost or forgotten superannuation accounts, worth around $2.8 billion, with their rightful owners, and this bill seeks to increase those numbers even further.

Another reason to support this bill is to ensure that, by having a single superannuation account rather than multiple accounts, people are not getting charged additional or questionable fees and seeing their savings eroded.

The ATO's data-matching program has achieved far better results than those of the ERFs over past years. The House of Representatives Standing Committee on Economics recently heard that some superannuation funds may be transferring accounts to ERFs to circumvent the government's Protecting Your Superannuation changes. The committee heard evidence that some ERFs recently received an influx of accounts from some superannuation fund administrators ahead of the 31 October 2019 deadline for funds to transfer inactive low-balance accounts to the ATO. This is a blatant attempt from the superannuation industry to repudiate the government's reforms and efforts to reunite Australians with their lost super, in a last-ditch effort to charge more fees. Interestingly, I heard nothing from the member for Whitlam on this activity.

These activities by these super funds hurt Australians most likely to benefit from our reforms, including young people who often have multiple jobs and, as a result, multiple superannuation accounts. We all know the impact of high fees in the long run on people's superannuation balances. We all know too well how much worse off Australians are in the long run due to the higher fees charged in underperforming ERFs. Fund managers and administrators love these funds because they know can make more and more money from members through these funds, and they rush to ensure they can squeeze every last cent possible from hardworking Australians. They increased their funds under management in the ERFs by an estimated $700 million in the June quarter of 2019 alone, to a total of around $4 billion in ERFs, where previously these had been trending downwards. This is a disgusting and despicable move by super funds, despite there being a more efficient facility in place through the ATO to unite people with their lost super. The government is making these changes to ensure that the funds that people have accumulated through their hard work are all accumulated in one place, in one super fund.

As I've said before, the role of ERFs was already diminishing as a result of our changes, and now they will be closed in a timely and efficient manner. To facilitate this exit, the bill allows trustees of ERFs to voluntarily transfer any amount to the ATO, broadening the current arrangement where ERFs can only send accounts to the ATO if they meet specific conditions. The bill also includes a requirement to transfer all accounts below $6,000 to the ATO by 30 June 2020 and all remaining accounts to the ATO by 30 June 2021. This effectively facilitates the exit of ERFs from the market by the middle of 2021.

We want to make it as easy as possible for Australians to be reunited with their super, and this bill goes a long way towards delivering the necessary reforms to benefit Australians now and in their retirement. Once transferred to the ATO, the ATO will be able to use its superior suite of data-matching tools to reunite these accounts with members' active superannuation accounts. By reuniting these lost accounts with their rightful owners, members will benefit from higher account balances and no longer having to pay multiple sets of fees and, in some cases, having to pay for insurance policies. This legislation will benefit many people in my electorate of Forde—not just young people but many people who work part-time or intermittent work across the age brackets—who have multiple low-balance superannuation accounts. Our reforms seek to benefit them in the long run to ensure they have a strong and secure nest egg in their retirement.

This bill gives effect to the recommendations of the Productivity Commission, which specifically recommended that APRA oversee the exit of ERFs from the market within three years. Unlike those opposite, we on this side of the House won't continue to run a protection racket for the superannuation industry. Instead, we are continuing to focus on how we can improve the superannuation industry for the benefit of everyday Australians who are seeking to grow their wealth through superannuation for their retirement.

We will continue to reform the sector and build on our record of protecting members in the system, giving the sector greater clarity and moving towards what's really working for members now and into the future. We will continue to stand with hardworking everyday Australians when it comes to their superannuation because we want to ensure members have more money, more security and more freedom in their retirement and old age, not less. This bill goes the next step to further protecting the superannuation balances of members across this country. I support this bill in its unamended form, given the pious amendment put forward by the member for Whitlam.

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Assistant Minister for Financial Services) Share this | Link to this | Hansard source

I'm speaking in support of this bill, the Treasury Laws Amendment (Reuniting More Superannuation) Bill 2020, but also in support of the very sensible second reading amendment that's been moved by the shadow minister for financial services, the member for Whitlam, which correctly points out what this government has tried to do to destroy the superannuation system that was established by Labor when we were in government in the 1980s and 1990s.

That second reading amendment points out that this government has a group of rebel MPs—and let's face it, rebel MPs have been getting away with quite a bit in the coalition over the course of the last couple of days. It's these rebel MPs that are members of the government backbench that are trying to undermine the compulsory superannuation system in this country by proposing ideas such as making superannuation voluntary for low-income employees in Australia—a system that would completely undermine the universality of the system and ultimately result in people retiring with inadequate balances in their superannuation accounts, particularly those that take breaks from the workforce like women, and people having to rely more on the age pension in their retirement. We are also critical of the government for the role that they have been playing in criticising the superannuation industry and some of the measures that they've tried to look at, such as freezing superannuation account balances into the future.

Nonetheless, this bill does contains a single schedule that amends the Superannuation Industry (Supervision) Act, the RSA Act and the SUMLM Act to facilitate the closure of eligible rollover funds, or ERFs as they're more commonly known, by 30 June 2021. ERFs were designed to look after unclaimed superannuation and balances, for ERFs are typically low and accounts inactive. This measure addresses one of the recommendations of the Productivity Commission report in 2019, which interestingly found that people aren't having enough money put into their superannuation and many Australians will retire with inadequate balances into the future. They made a series of recommendations. One of them was recommendation 5, which recommended that the ATO be responsible for holding lost superannuation accounts and that APRA oversee the wind-up of eligible rollover funds. This will allow the ATO commissioner to reunite superannuation accounts they receive from eligible rollover funds with a member's active account. It comes on the back of some changes that were made by the parliament last year. Those changes build on the Protecting Your Super 2019 legislation, which saw low-balance and inactive accounts transferred by trustees to the ATO, not ERFs. By all accounts, that change and that new system have been quite successful in reuniting Australians with unclaimed superannuation.

Fund trustees transferring inactive or low-balance accounts to the ATO have made ERFs redundant. This legislation provides a timetable to wrap up the remaining ERFs by 30 June 2021. ATO matching has been more successful than AUSfund and is in the members' best interests. That relates to the legislation that was passed last year in respect of involving the ATO in reuniting funds with their owners.

The ATO has successfully reunited more than 2.1 million lost and forgotten superannuation accounts, and this is a greater success than the one that AUSfund had over the course of a 10-year period. And of course the superannuation system helps Australians to retire with dignity. It was established by the Labor Party to ensure that it was a universal system and that occupational superannuation applied to all Australians, not just the wealthy, as it had in the past, up to the point when the Treasurer, Paul Keating, as part of that Hawke-Keating government, established the system. With superannuation included as part of the pay packet, every Australian had the opportunity from that point on to put aside and build up a retirement nest egg to retire comfortably.

Yet we all know, even in this day and age, some 30 years on from the establishment of the compulsory superannuation, that too many Australians are retiring with inadequate balances in their retirement savings, which is why our superannuation system needs to be strengthened and protected, not undermined. That's what we've seen from a number of MPs on that side—attempts to undermine the universality of the superannuation system by suggesting things like voluntary payments for people on low incomes that ultimately are going to lead to people retiring with less and less in their superannuation balances, being unable to fund their own retirements and having to rely on the age pension, and with an ageing population putting a greater impost on the budget and the social security system into the future.

That's the situation we ought to be trying, as a parliament, to avoid. But calls by those opposite are based purely on ideological attacks and reflect the fact that many on that side have never believed in the notion of compulsory superannuation and want to attack the system. That's the reason we know that those opposite aren't fair dinkum about compulsory superannuation, and that's why we've got ideological attacks—

Mr Tim Wilson interjecting—

such as those from the member who is screaming out across the parliament, who's been one of the cheerleaders for these changes that they're proposing for freezing superannuation.

The Liberal Party has form when it comes to undermining superannuation. A recent report showed the price Australian workers are paying for the Liberal-Nationals government's freezes to the superannuation guarantee. We all know that when the coalition get into government they seek to undermine compulsory superannuation, and they seek to do it by freezing staged increases that have been put in place by previous Labor governments. We saw the Howard government do it when they were elected to office in the 1990s, and now we're seeing it done again by the Abbott-Turnbull-Morrison government. Those freezes unfortunately have a detrimental effect on Australian workers, and that's been demonstrated by Per Capita's report The super freeze: what you've lost, which showed that this government's 2014 superannuation freeze has already cost the average worker more than $4,300 in retirement savings. You don't boost retirement savings incomes by freezing superannuation.

The last time the Liberal-Nationals government froze the superannuation guarantee, wages growth didn't pick up. We got record low wages growth instead. So, this notion that's being pushed by those opposite that there's a trade-off between staged increases in superannuation and wage increases is not borne out by the anecdotal evidence or by the statistical evidence, because since that freeze has been in place we've had record low wages growth here in Australia, and Australian workers have fallen further and further behind. Those opposite would have Australians fall further behind in their retirement by trying to freeze the superannuation guarantee increases—increases that were put in place with plenty of lead time and plenty of information for employers to ensure that they were able to pay them, and they were staged in very small increments.

The report claims that the real take-home pay for the median worker has actually declined since the instigation of the superannuation guarantee freeze. Anyone who thinks that freezing superannuation again will make employers suddenly pay higher wages is kidding themselves. It was this notion of trickle-down economics at its best, once again, when we saw the government pushing cuts to corporate tax rates. Where's the boost to wages in the wake of the cuts to corporate tax rates? It hasn't been going into the pockets of workers; it's been going into the pockets of employers and big businesses throughout this country, cheered on by those opposite. The previous speaker, the member for Forde, wanted to criticise the industry superannuation funds. Well, what about those bank-run superannuation funds? Don't they perform well—the ones that have been propped up and supported by those opposite through their policies. We all know that they've done their best to protect the banks and the dodgy dealings that have been going on in the banks over the course of the last decade by the fact that they voted 26 times against holding a royal commission into the banking industry in this country.

Anyone who thinks that freezing superannuation again will make employers suddenly pay higher wage rises is kidding themselves. It's not about higher wage rises for low-income workers at all. This is about an ideological obsession that those opposite have with the notion of compulsory superannuation. They never supported it when Labor instigated it. They never supported it through the life of its processes, and they have never supported the staged increases that Labor legislated for whilst we were in government.

The Prime Minister and the Treasurer have an appalling record on wages and superannuation. Their retirement incomes review shouldn't be a stalking horse for more cuts to the pension or for further delays to the legislated increase in the superannuation guarantee to 12 per cent. That's what we're all worried about on this side of the chamber: that this retirement incomes review isn't about checking on the state of the superannuation system and its adequacy and whether or not it's producing the right outcomes for Australians in retirement. It's become a stalking horse for those opposite to come up with an excuse to, once again, freeze the increase in the superannuation guarantee, which is staged to increase to 12 per cent over the coming years.

Those of us on this side of the House are committed to the legislated superannuation guarantee rise. We call on this divided government and those who are seeking to agitate for a freeze in the legislation to do the same. Freezing the legislated increase won't lead to pay increases, and it won't change super tax benefits for high-income earners. The original timetable has been delayed twice, costing workers who are retiring today between $60,000 and $100,000 in their superannuation balances.

Our world-class superannuation system means that we have an investment pool of $3 trillion worth of savings. Our system, compared to our population, is the envy of the world. The reason it's the envy of the world is Labor took that decision to institute compulsory superannuation and to ensure that there were regular increases in the notion of compulsory superannuation and the minimum guarantee into the future, to ensure that people have a retirement nest egg, but, just as importantly, to ensure we have a pool of investment funds that will fuel growth in business and productivity in this country. This creates a nest egg for Australians and is being invested in infrastructure and businesses which are generating wealth, creating jobs and ensuring Australians own more of the economic activity of this country.

Anyone that wants to see a system reduce not only the compulsory savings of Australians but that pool of investment funds isn't fair dinkum when it comes to ensuring the veracity of retirement incomes policy. The Reserve Bank has identified low productivity growth, globalisation, underemployment and a decline in bargaining power, all as drags on wages growth and productivity. Wages are weak now, not because of the superannuation guarantee but because this government does not have a plan to boost growth, to boost investment in our economy and, importantly, to increase wages.

We agree that workers need a wage rise, but we don't think that that should be paid for by a freeze on compulsory superannuation increases. That's not the way to produce income increases in this country to boost investment and to boost growth in the economy. The last time the Liberals and Nationals froze the superannuation guarantee, wages growth didn't pick up. We got record low wages instead, and that is their record when it comes to supporting wages growth in our economy.

In conclusion, Labor created the world-class superannuation system that we have in Australia so everyday Australians can have dignity in retirement, and we will always fight to protect it, no matter what.

Brian Mitchell (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

I thank the member for Kingsford Smith. The debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour.