Matt Thistlethwaite (NSW, Australian Labor Party) Share this | Hansard source

I rise to make a short contribution on the report of the Joint Committee on Corporations on Financial Services regarding its inquiry into the Superannuation Legislation Amendment (Service Providers and Other Governance Measures) Bill. This bill is the fourth tranche of the government's MySuper reforms. It deals with governance elements in the stronger super reform package. Australia's superannuation system was a very complex beast, and the architecture reflected the wealth of changes that have been made since 1992, often reflecting the different ideological views of the major parties regarding retirement incomes policy in this country. As it changed it became more and more complex, and as it became more and more complex fund managers and product writers found new ways to make money, often at the expense of innocent and ignorant members—the so-called beneficiaries of the superannuation system, the members.

As the system became more and more complex they became more confused, more ignorant and, unfortunately, more disengaged regarding superannuation. We got to situations where it was not uncommon to see a young worker with four or five different superannuation accounts, with two or three of those accounts inactive, receiving no contributions but paying fund managers, commissions, paying for products and paying fees for money that was essentially an asset for them but was doing them no good over the longer term.

When this government came to office we pledged to make the superannuation system fairer. We recognised that the system had gotten out of control and needed to be simplified, and that is what we have done through the Stronger Super reforms, in particular the introduction of the MySuper products. We have made it such that the system is now operating in the interests of members. Rather than operating in the interest of fund managers and product writers, it is now very much balanced in the interests of members. And, as Senator Cormann outlined, this came about as a result of the government's Cooper review, the most comprehensive study into the health and wellbeing of our superannuation system since its inception in 1992. A major part of that is the MySuper reforms, which at their heart ensure that there is a simple, easy-to-understand, easily comparable product available for all superannuation fund members in this country. This is the final tranche in that set of reforms.

The government has approached this in the tradition of making superannuation fairer and simpler. Overwhelmingly the Joint Committee on Corporations and Financial Services is supportive of this bill and its passage, and that is reflected in the committee's report. The bill strengthens the governance and integrity of the superannuation system. For example, many superannuation fund rules to date allow trustees to appoint or use a particular service provider on behalf of members, most notably in respect of insurance products. Their rules will say that you must use a particular insurance product that is often related to or has some relationship with that particular fund, even though in many respects it was not in the best interests of the members. There were particular rules that ensured that occurred. Now this is outlawed. No longer will trustees be obliged and mandated to use particular service providers when it comes to deciding which products to offer its members—and on behalf of members. This is consistent with the government's approach to reform in this area, of ensuring that the superannuation system operates in the best interests of members.

The reforms also provide for APRA to issue infringement notices for certain breaches of the Superannuation Industry (Supervision) Act. They require persons to seek leave of the court before bringing actions against an individual director for a breach of their duties. The reforms extend legal defences available for trustees and directors to proceedings involving breaches of MySuper obligations. They also require trustees to provide reasons for decisions made in relation to a complaint and they increase the time limit for members to lodge complaints with the Superannuation Complaints Tribunal.

Throughout the process of these reforms the government has been conscious to consult widely with players in the industry. I was pleased to hear in the hearings that related to the inquiry into this particular bill that many of, or in fact most of, the players in the industry were satisfied with the government's level of consultation. I would like to draw the Senate's attention to a quote from a representative of the Australian Institute of Superannuation Trustees when he appeared before the committee. He said:

AIST acknowledge the preparedness of government and Treasury to consult with the industry about all of the Stronger Super changes and in particular the matters that are contained within this bill. That is reflected in the changes between the consultation draft and this bill, and it is also reflected in the overwhelmingly positive comments that we and others have made about the legislation in our submissions.

That is the view of industry—those who work in the superannuation game in this country—about the government's approach to these important reforms. They have been met with overwhelming positive responses and vindication of this government's approach to making superannuation simpler and fairer and in the interests of members.

Senator Cormann raises his bugbear once again—the thorn in the saddle for the opposition—that unions have positions on superannuation fund boards; that workers are represented in managing their funds in this country. They have never got over the fact that since 1992, when the compulsory superannuation system was established in this country, workers have a hand in managing such large pools of investment funds in this country. Not only do they have a hand in managing such large pools of investment funds but they do a great job. Consistently since 1992, union and employer managed super funds, commonly known as industry funds, have produced lower fees and better results for members when it comes to comparing the performance of those funds with more expensive company based funds and other corporate funds. The opposition have never got over that fact. Every time they speak about superannuation they bring up that old chestnut that they cannot get over: the fact that workers have a say in the management of superannuation funds in this country and that they have done a good job.

The approach to superannuation and the difference between the parties is highlighted by one of the policies that Senator Cormann raised in his concluding remarks, and that is the Low-Income Superannuation Contribution scheme. When we came to government we ensured that the concessions available in superannuation were targeted well and truly at the lower end of incomes in this country, that low- to middle-income workers would receive the appropriate incentives to ensure that they saved for their retirement, and that reflects the fact that we have an ageing population and we need to plan for adequate retirement savings in this country. We instituted the Low-Income Superannuation Contribution, ensuring that anyone who earns less than $37,000 in this country effectively pays no tax on their superannuation, as an incentive to ensure that they remain in the workforce rather than drop out onto welfare, and provides for adequate retirement savings as their working years move on. But what is the approach of the opposition to this important policy? They will get rid of it if they are elected. That was confirmed by Tony Abbott, the Leader of the Opposition, in his National Press Club speech last week in response to a question by a journalist. He said that they will get rid of the low-income superannuation contribution—a tax increase for 3.5 million workers in this country, the lowest paid workers in this country. They are predominantly women who are working part-time. That exemplifies the differences between a Labor government and a coalition government when it comes to retirement incomes.

Question agreed to.