Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Hansard source

'Not for profit,' he says. Here we have got the industry funds movement, quite frankly, which is completely outdated in terms of its corporate governance structure and is not prepared to engage in genuine competition. Having said that, let me just say—and I have made this point on a number of occasions to senior executives in some major industry funds—that this government is not doing them any favours by seeking to protect them from genuine and open competition. If they are as good as they assert they are then, quite frankly, why is the government trying to protect them from genuine competition? If they are as good as they say they are, they will thrive and prosper under competitive arrangements and people in default super will thrive and prosper, because only if you have got genuine and appropriate competitive tensions in the system will the benefits for people in default super be maximised.

I can see that the minister at the table is very touchy about all of this, because the Labor Party is always very touchy when it comes to their links and the vested interests of the union movement across Australia. This is big business. Superannuation is very big business for a large part of the union movement now. The conflicts that we have witnessed in recent years in the way that Fair Work Australia has made decisions about identifying industry funds as default funds under modern awards is breathtaking. We have had union delegates making representations to Fair Work Australia in their capacity as a delegate for a particular union in the context of Fair Work Australia without declaring that they were at the same time trustees for a particular fund that happened to be recommended for a particular award. Senator Sherry, who had a very distinguished career in this whole area of financial services and superannuation, was embarrassed. Senator Sherry wrote a letter to Fair Work Australia, saying, 'Fix it,' and Fair Work Australia said to him, 'Go away. You have not got the authority to tell us what to do.' Senator Sherry said that they should go through a more open and transparent process.

The current process by which default funds are selected by Fair Work Australia under modern awards is a national disgrace. It is a secretive, closed-shop, anticompetitive arrangement which is widely discredited and which is there for one reason and one reason only: it is the government trying to protect the commercial interests of its friends in the union movement.

In the lead-up to the last election the government said they would fix it. After the election who is the new minister for financial services and superannuation who has got the responsibility to fix it? It is none other than Mr Shorten. We gave Mr Shorten ample opportunity. We had motion after motion pass through the Senate. In fact, the Senate passed a motion back in early 2011 when we actually referred to the Productivity Commission the request for them to develop a process to select default funds through a more open, transparent and competitive process. Minister Shorten stopped them going ahead with it. Minister Shorten said, 'Don't do that.'

So month after month came. Minister Shorten wanted to protect the commercial vested interests of his friends as long as possible. It took him until early this year before he commissioned the Productivity Commission review. The Productivity Commission did what they usually do—they did a very good job and came out with a very sensible interim report that recommended a strong move to genuine competition in the default fund market, but the government did not go along with it. Not only that, Minister Shorten effectively provided a response to the Productivity Commission review before it had issued its final report.

Those who know Minister Shorten and his modus operandi reasonably well will know that that is completely out of character. Normally when Minister Shorten is presented with a policy problem he will commission a review through the Productivity Commission or somebody else. That gains him eight, nine or 10 months. After he gets the report he will commission a roundtable, a consultation paper or a further review into the review to gain him another six, seven, eight or nine months. In fact, I think I might have called him in the past the 'minister for reviews, consultations, indecision and essentially not getting on with it at all'.

But on this occasion he was as quick as a flash. He was in like Flynn responding to the Productivity Commission review on how to introduce genuine competition in the default fund market before they had actually reported. Of course, the result was what was expected. The final report was a serious weakening of the draft recommendation. It was a serious move away from their initial recommendation to move towards a genuinely open, transparent and competitive process. But even the weakened recommendation was still too strong for Minister Shorten, so the legislation we have in front of us does not even go along with the weakened recommendation of the Productivity Commission.

I would like to know from the minister: why shouldn't every single MySuper product, which is a product that this government has designed, be able to compete freely in the default fund market? What is the government's problem with genuine competition? If the government have put forward all of the parameters that they think are important in a MySuper product and all the consumer protection requirements that they think are necessary for default fund products, then once a superannuation fund registers a product as a MySuper product that complies with all of those conditions, why should that product not be able to compete freely in the market? Why is there a need for an additional process, for further government intervention, through Fair Work Australia on top of the process that is already taking place through the MySuper registration process?

We know that this is a government that loves red tape. Senator Sinodinos has been given the very important job by our leader, Tony Abbott, of chairing a coalition deregulation task force, which is absolutely committed and focused on cutting red tape to achieve about $1 billion in savings per annum for business, which of course will flow through the economy and through the community in the form of lower costs of living and lower costs of doing business.

But this government is adding red tape on top of red tape on top of red tape. There have been more than 21,000 new regulations since the Labor Party was elected to government. No wonder the cost of doing business keeps going up in Australia. No wonder the cost of doing business has been going up under this government. No wonder we are less competitive internationally now than what we used to be. As Senator Sinodinos reminds us on many occasions, this is the government that went to the 2007 election promising that for every new regulation coming in they would take one regulation out: the one-in one-out policy, as was promoted by the then Prime Minister Kevin Rudd. But the only one that went in and out was the Prime Minister himself. Maybe he was too keen on cutting red tape and the Labor Party was not all that excited about cutting red tape.

Here is my question to the government. Why would you not pursue what you promised you would pursue in the lead-up to the last election—that is, a genuinely open, transparent and competitive process? Why would you persist with this widely discredited and inherently conflicted process through Fair Work Australia where clearly parties that have got interests under the equal representation model on an industry super funds board are also interested parties on other matters in an industrial relations context in Fair Work Australia? That is completely inappropriate. There is no need for it. It is inappropriate. It is costly. It is inefficient. It should be scrapped.

Given that this government has done what it thought it needed to do to put in legislation the features of a default fund product, as soon as that product has qualified as a MySuper default fund product there should be no other process. That is enough process. That is enough red tape. As soon as somebody has jumped that hurdle they should be able to compete freely. Minister, can you explain to us why this government does not want to do it? I am very interested in your response.

Progress reported.