Jacinta Collins (Victoria, Australian Labor Party, Parliamentary Secretary for School Education and Workplace Relations) Share this | Hansard source

For Senator Cormann's benefit, as he may not have been listening at the stage when Senator Abetz and I discussed how to deal with the issues that he raised last night, I advise that we agreed—I think as a courtesy to Senator Cormann—to delay responding to Senator Cormann's questions until Senator Cormann was in the chamber. So I am happy to cover those issues now.

As I highlighted with respect to their amendments generally, the government does not support the opposition's proposed amendments. Our reforms to the default fund selection process will ensure that default superannuation contributions in modern awards will be directed to funds that meet the best interests of employees covered by modern awards. We are enabling superannuation funds to apply for default fund status on an equal footing. This will increase competition in the default fund market, which will drive product and service improvements for the benefit of both members and employers.

Our reforms largely reflect the approach recommended by the Productivity Commission. I think this is a critical point, picking up some of the issues that Senator Cormann raised last night. I should highlight that we are proud of our superannuation reforms and further refinements are simply that—refinements responding to the recommendation of the Productivity Commission.

The opposition's approach, on the other hand, is for employers to be able to select from any available MySuper product. This approach was comprehensively rejected by the Productivity Commission. On the opposition's approach, the Productivity Commission noted it:

… does not have an explicit focus on the best interests of employees. It assumes that their best interests will be reflected in the decisions made by employers …

This is one of the critical reasons around why industry superannuation was established in the first instance. We know from the history of superannuation that you cannot have a system based on relying on the best interests of employees being reflected in the decisions made by employers.

The commission went on to note that most employers, particularly small- and medium-sized employers:

… do not necessarily have the incentive, interest or expertise to make a decision that is aligned with the best interests of employees …

The government's approach will ensure that the best interests of employees covered by a specific award are protected by ensuring those employees are placed in the most appropriate MySuper products. The opposition's approach was strongly opposed by unions, industry superannuation funds and employers, including the Ai Group. The government is looking after the best interests of employees whose super is directed to the default fund. The opposition are only looking after their own cheap political interests.

In respect of how these changes will improve the existing approach, our reforms ensure that default superannuation contributions in modern awards will be directed to funds that meet the best interests covered by the relevant award. For the super funds, our reforms enable them to apply for default fund status on an equal footing. All funds with a generic MySuper product will be able to apply to the Fair Work commission for selection as a default fund on an equal basis, which will bring greater contestability to the system. We are increasing competition in the default fund market, which will drive product and service improvements to the benefit of both fund members and employers while ensuring that the default superannuation system operates in the best interests of employees and at the same time responding to the clear recommendations of the Productivity Commission.