Annette Hurley (SA, Australian Labor Party) Share this | Hansard source

On the Tax Laws Amendment (2010 Measures No. 1) Bill 2010, which I think is generally supported except for some issues about the Medicare clearing house, I will deal with just the issues that the Senate Economics Legislation Committee was asked to look at, and they were whether the legislation will have unintended consequences for the superannuation market, whether it is anticompetitive in relation to privately operated clearing houses and whether Medicare is an appropriate agency to operate the clearing house.

Superannuation is very important to Labor governments and to our constituency. It is the basis of the savings pool of Australia and is particularly important for the retirement incomes of ordinary Australians, because they do not have the ability to increase their money through private savings that other people do. Therefore, superannuation and the administrative requirements around it are clearly of great priority for Labor governments. That is why this bill in relation to superannuation has been particularly well considered and is a good solution to the problem. The problem, as was outlined, is that many small businesses, with the choice of funds which was introduced in July 2005, have some administrative difficulties in sending off the superannuation guarantee payments to a variety of funds under a variety of different data arrangements. So the government promise before the election was to create a clearing house for small businesses such that they could simply send the superannuation guarantee fund to that clearing house. As soon as the clearing house received it, those small businesses would be in compliance with their obligations under the superannuation guarantee system.

So initially, as the opposition outlined, the government did indeed envisage that the clearing house would be put out to tender. But, despite Senator Joyce’s diatribe on risk and the evaluation of risk, he did not once in his speech mention the key piece of advice which persuaded the government to change that original proposal to have private companies do it. That key advice was that if a clearing house is put out to tender there is a risk that a private company, in the event of incompetence, fraud or outright failure, could potentially affect employee entitlements of all employers using the clearing house. In other words, if there were some problem within the private clearing house, employees who expected that their superannuation was going to their fund might suddenly find out that, as a result of fraud or some other failure in the private clearing house, their superannuation had not been going for years into the fund but had disappeared into a clearing house.

This is the situation we have occasionally seen in the United States with private funds. It would mean that employees, ordinary Australians, would suddenly find that they did not have the superannuation that they thought they had. This is clearly a huge risk for ordinary Australians and it would mean that the Australian government would therefore have a contingent liability—and I have certainly heard Senator Joyce wax long and lyrical about the dangers of contingent liabilities. So, rather than ignore it, the government dealt with the risk proposed by that, and the way they did it was to provide a government agency to deal with this. Rather than set up a bureaucracy to oversee, regulate and deal with the possibility of a failure of a private company—and then not even have that guaranteed to work—they decided that it would be more prudent and less risky on many levels to set up a government agency.

Fortunately, there is a government agency used to dealing with money coming in from small groups in small amounts, and dealing with it quickly and efficiently, and that agency is Medicare. Medicare are already doing this kind of work. In their evidence to our committee, Medicare were very confident of their ability to perform this additional responsibility well and efficiently, and they were very clear about this. Senator Joyce talked about KPIs and various other things and said that Medicare admitted that they did not have these procedures in place. But this was a gross misrepresentation of Medicare’s evidence. Medicare have set up a working group with involved parties to deliver a flexible, responsive and appropriate set of guidelines. They are confident that they will have those in place by the time this is up and running and they are confident that they can do it within the budget required.

Small businesses were happy with that response. Indeed, AustralianSuper very concisely illustrated that. As they said in the Senate Economics Legislation Committee report:

Australian Super also did not agree that allowing existing clearance houses to participate would be a more efficient way of processing superannuation for small business:

If the government were to offer subsidies to existing clearing house providers to focus a service on this segment of the market, they probably could have done it, but it would have to have been in conjunction with legislation introduced as we have seen Medicare looking at—mandatory electronic data, mandatory data standards, licensing, a guarantee on floats, and service standards on how long a clearing house can hold onto the money and send it to the funds. If your question is, ‘Could private clearing houses provide this service with the subsidy going to them?’ the answer is: yes, they could have, but it would not have been as effective as the model that we are looking at now, unless it were in conjunction with a whole list of additional criteria.

AustralianSuper raised in there another point—that Medicare now has the ability to organise the data standards and the arrangements so that they are uniform across the sector, making it even easier for small business to provide the correct data in a uniform manner that will enable further efficiencies in the sector.

As for the private sector being cut out of this sector, they are able now—and they will continue to be able—to provide a clearing house service if they wish. But the committee took evidence that, of the two million small businesses in Australia, only around two per cent are currently being provided with clearing house services by SuperChoice, the largest private provider. The private providers have not been especially active in seeking this business and, if they have, they have clearly not been very successful, because only two per cent of those small businesses are operating with them. We have to remember that this is only for small businesses employing 20 or fewer people. Private clearing houses are still able to get business from any small to medium enterprise that has 20 or more players. It is not as if the market is being taken away from them; they are still free to complete in that market.

Speaking of 20 or more employees, the one area of the bill that the committee did make some recommendation on was the limit of 20 being monitored to make sure that businesses that had spikes in employment were adequately catered for. We were assured that there would be some flexibility in there, but we would like to make sure that those businesses that might employ 10 or 15 and have a seasonal spike and put on another six, seven or 10 employees, will not be disadvantaged by the system and have to leave it temporarily.

It is quite clear from our evidence that the government were presented with an unacceptable risk in dealing with the issue of tendering out to private services for this clearing house. They dealt with the risk in a pragmatic and responsible way. I was very pleased to see that that then got industry support from a broad range of sources. Industry was very pleased that this happened—both small businesses and the superannuation industry. It is a rational and reasonable response and I would urge the chamber to support this bill.