Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Hansard source

I move opposition amendment (18) on sheet 5739 revised 2:

(18)  Clause 139, page 138 (line 14), after “superannuation”, insert “, but ensuring employers can nominate any complying superannuation fund as the default fund”.

What this amendment seeks to do is of course maintain the employee’s right to choose his or her superannuation fund, so they have that choice, but, if that choice is not exercised by the employee, to allow the employer to nominate a superannuation fund as the default fund at a workplace as an alternative to the one nominated by the modern award.

Superannuation is now an allowable award matter to be included in modern awards. The Australian Industrial Relations Commission has issued modern awards that limit the default fund to industry funds. We believe that our amendments are beneficial in that they allow an employer to nominate an alternative super fund—the choice of fund remains with the employee—but it also allows scope for the employer to negotiate or choose a better fund that is not an industry fund, such as one that provides reduced fees, better returns or better insurance cover. It also allows the employer to offer a default fund consistent with the employer’s business. For example, there are, as I understand it, various types of social and ethical super funds—that is how they describe themselves. I am sure all the others are ethical as well, but that is how they sell themselves. If a particular business is so minded then that should be a right that is available to the employer, because, if the employee disagrees with the employer’s choice of fund, the employee’s choice would prevail.

I turn to some information that I have. There has been some suggestion that industry funds are substantially better for those who invest in them. I am advised—and I can go through the detail if need be, depending on the reaction to that—that there are many funds now in the private sector that are in fact a better buy and cheaper than industry funds. I note that one of those that has been mentioned in recent times has just increased its charges by 50 per cent. I indicate that some of the industry funds are themselves asking for this.

I understand that CareSuper is concerned about the default fund policy denying the opportunity for employers to nominate a fund. I understand a letter has gone to the Australian Industrial Relations Commission from the CEO of CareSuper, who called for an employer to be able to nominate CareSuper as a default fund for relevant employees. The letter goes on to say:

If new employees of administrative people within various industries can no longer nominate CareSuper as a default fund this will have the combined effects of making it more difficult for employees to belong to the fund that is designed to meet their specific needs and adding to the proliferation of superannuation accounts and unnecessary costs associated with these multiple accounts. CareSuper also objects to REST being awarded a monopoly in the retail sector. CareSuper notes that it has over 2,500 participating employers, who contribute to over 14,000 members in the retail sector.

I am also in possession of a letter from the BT Financial Group. As I understand it, they provide superannuation for approximately 1,160 employers and over 44,000 employees. They advise:

In many cases, employers choose BT Lifetime Super as their default fund after an active tender process. These tender processes assess a range of features of various superannuation funds, including fees, insurance and member services, against the needs of a specific workplace.

Often within the public debate only fees are compared as opposed to all the other matters and the total package. I am advised:

The average employer using BT Lifetime Super has approximately 40 employees. BT Financial Group are concerned that this bill will prevent employers in a large number of industries from selecting BT Lifetime Super as the default fund for their award covered employees.

I happen to note, just as an aside, that BT exists in a particular state of Australia. I understand they have an office in Adelaide, in South Australia. They say:

The bill will therefore significantly reduce the ability of BT Lifetime Super to win business from employers.

What will that do?

… the resultant risk of job losses at our Adelaide office.

They also advise:

A monopoly has been awarded in relation to award covered employees in the following industries: textile, clothing and footwear; hair and beauty—

I think Minister Ludwig and I touched on hair and beauty the other day and thought it did not have much application for either of us—

general retail; fast food; and higher education. Many of these industries are major employers of award covered employees, and in other industries competition is restricted to a limited number of industry funds. Award modernisation will effectively lock all other superannuation funds from a very substantial segment of the market.

BT is not aware of any rationale as to why the commission would pick one super fund over another. I think the Industrial Relations Commission has already said that it is not going to be sitting in judgment on fees, member services and insurance policy here and there as to what is going to be the most beneficial for the people under the particular ward. So, of course, what is going to happen is that those large funds that in particular have big employer/big union involvement will undoubtedly be submitted as being the default fund, squeezing out the smaller superannuation funds. There is that African proverb that, when elephants mate, the grass gets trampled. When big business and big unions get together with their big industry super funds, the small super funds and also the workers, who would get an extra benefit, will be the grass—they will be the ones that get trampled. That is what is motivating the opposition in this matter.

The fund with the biggest monopoly, which is AustralianSuper, has just raised its base fee by 50 per cent. If that is—and I understand it has already been—nominated as a default, in those circumstances, once it is nominated as the default fund, it sits there and it then can, as AustralianSuper has just done, increase its fees by 50 per cent and everybody will be required to contribute to it unless they nominate otherwise. We say, especially in the context of small business—and other employers, of course—that they should be entitled to nominate another fund, should they choose to. And I think that is especially relevant for businesses in smaller regional areas that might, for example, want to invest in a specific state based superannuation plan or in a specifically environmentally minded or ethical superannuation fund. I see no reason why the employer should not also be given the opportunity of nominating a fund and, if that fund is to the dissatisfaction of the employee, the employee can nominate his or her own super fund or say to the employer, ‘I don’t like yours,’ and avail themselves of the default fund that is in the award in any event. I commend this amendment to the Senate.