Murray Watt (Queensland, Australian Labor Party) Share this | Hansard source

I rise to speak on the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2017 and the Superannuation Laws Amendment (Strengthening Trustee Arrangements) Bill 2017. They are both bills that Labor will oppose. In relation to one of these bills, we will also be moving some amendments. What these bills amount to are a continuation of the rather sad attack that we continue to see from this government on the independence of superannuation funds and the right of workers to have some control over their own retirement savings. I understand that there was a rather brief Senate inquiry conducted into these bills, and I noticed from the dissenting report from Labor senators that this was a very rushed exercise. The bills were introduced late in a sitting week, and then a very short amount of time was provided for the inquiry. So I thank all senators, whether they be Labor or other senators, for their work on this inquiry—no doubt under significant time pressure. Thank you to the committee secretariat as well for their work.

At the outset I want to put on record that we on the Labor side of parliament are very proud of our nation's superannuation system. It is obviously a great Labor achievement from the Hawke-Keating days, in partnership with the trade union movement and employers. All observers would recognise that our retirement scheme, particularly based on compulsory superannuation, is an incredible social justice measure, making sure that all working people, no matter what their background, no matter what their income, are able to enjoy a dignified and secure retirement as a result of the superannuation contributions that they make and that their employers make on their behalf.

Not only is compulsory superannuation a critical social justice measure in Australia; it's also become a really key component of our economic wellbeing as a nation. Superannuation funds are obviously large investors in Australian companies, in property and in infrastructure projects, which all go on to create more jobs for Australian working people as well. There is no doubt that some of the prosperity that Australia has seen over the last 25 years is based on the introduction of compulsory superannuation by the Hawke-Keating Labor government a couple of decades ago. We are extremely proud of our role in having established compulsory superannuation, and we will always fight to preserve it and to preserve workers' ability to have some control and influence over their own retirement savings.

There was a very clear decision made by the Labor government when we set up compulsory superannuation that it needed to be a bipartisan exercise between employers and trade unions on behalf of working people. A very deliberate decision was made to ensure that boards of superannuation funds reflected the interests that both employers and working people, through their unions, had in the preservation of good retirement savings and a decent retirement for all working people. That's why, when this system was established, it was created on the basis that there would be an equal place for employers and trade unions on the boards of superannuation funds to ensure that those interests were properly reflected. So it's very sad to see this government now wanting to change that, to change a system that has been extremely successful for working people, for social justice, as I have said already, and for the health of the Australian economy.

It's worth observing that industry superannuation funds, which are the primary target of this legislation, have consistently out-performed retail and corporate superannuation funds over many, many years. We see a government which claims to be about the free market, about prosperity, about lifting economic growth and about making everyone wealthier. It's ironic, then, to see this very government introduce some legislation which interferes with the operations of the most financially successful superannuation funds around—being industry superannuation funds. I could understand the government wanting to take some action if there were a demonstrated poor record from industry superannuation funds, which are run by a combination of employer and union representatives. I could understand it if there were problems there and if members of those funds were essentially being dudded out of their own retirement savings. But it is quite the contrary. If you look back on the record of industry superannuation funds—the funds that do have employer and employee representation on their boards—you see that they have outperformed retail and corporate funds. So, if anyone needs a bit of a look at them, it's surely got to be the retail and corporate funds rather than industry superannuation funds.

We know that, over a long period of time, large banks have lobbied this government very heavily to get their hands on the massive and growing pile of retirement savings that has been built up by these industry funds on behalf of ordinary working people. We know that lobbyists have been in and out of the doors of ministers' offices and government departments, putting the case for why banks should be able to have greater control over those funds. I don't understand why they've been given much consideration by this government, when, again, if you look at the record of funds that are run by banks, they have a much poorer financial record than the industry funds, which, now, this government wants to tinker with. I would've said to them: thanks; but why don't you go and get your own house in order before you come knocking on the door, seeking to get your hands on the funds which have been run highly effectively on behalf of working people through a combination of employer and employee membership?

I noted that this bill, the strengthening trustee arrangements bill, essentially replicates a similar bill that was brought forward and introduced by this government back in 2015—before I was here, but I remember the debate on it occurring at the time. At that time, Labor senators also put forward a very strong dissenting report on a similar argument—that the right way to go about building up retirement savings is to have them administered by a combination of employer and employee representatives. The government was not able to get that legislation through at the time, and they should've read something into that: this Senate, and the opposition, does not support this attack on industry funds and the retirement savings of working people.

Labor's position on this 2017 bill is very similar to the position that we took back in 2015, and we continue to have the same primary concern, which is that this bill seeks to impose a corporate governance model on funds which operate under a trustee governance model. You've got to acknowledge that the way these industry superannuation funds operate is fundamentally different to the corporate approach taken by retail and corporate superannuation funds. It's quite appropriate that retail and corporate funds have imposed on them a governance system that is based on what happens in the corporate world, but industry superannuation funds effectively run as trustee arrangements, and they need a different approach, accordingly.

Some of the problems of the imposition of this corporate governance approach were highlighted in the Labor senators' dissenting report on this bill, where they acknowledged, at paragraph 1.13, that:

Corporate governance—

the model that's sought to be imposed here—

faces particular issues which need to be addressed and include:

As I say, it was a fundamental principle in the Hawke-Keating government's embarking on this approach that the administration of industry super funds would be done on a cooperative basis, with agreement reached, hopefully, between employer and employee representatives. It is important that working people have confidence that their retirement savings are being managed in a way where their interests are paramount, not the interests of shareholders in a company. We know that we have a corporate law system where, in large corporations, the interests of shareholders are paramount. That's fine. That's appropriate for a corporate environment. But if we're talking about a system that is designed to protect and grow workers' retirement savings, surely the biggest priority should be to make sure that the interests of those working people who've made their contributions—and employers who've made contributions to these funds as well—remain paramount over the interests of any particular shareholder. That's what's at risk here if these amendments do go through. Similarly, it's not appropriate that the fiduciary duties that directors of corporate funds have, again, primarily being to a shareholder, be simply transferred across and put onto a trustee based fund, when other considerations are important—the needs of the employers and working people, who this system is designed to benefit. Those are the kinds of considerations that are much more appropriate for a trustee based system. But, unfortunately, if this bill is passed, that's what will be removed.

Equal representation of employers and working people, through their unions, on superannuation boards has been a very longstanding arrangement. It's served Australians well and it is something that Labor believes absolutely needs to be maintained. I just don't understand why the government is so hell-bent on changing a system that works, changing a system that has consistently delivered better financial returns to members than the returns provided by retail and corporate funds. Even if you look away from the benefits to the individual members of these funds, the system that we have in place for superannuation at the moment, the legislative architecture that we have in place, has not only served the members of those funds well but it's actually served the nation well. It's built up a massive, world-leading pot of funds across superannuation that has been effectively invested to the benefit of members of the funds but also to the benefit of the nation, through investments in infrastructure, property and other Australian companies, as well as overseas companies, but there has been a direct benefit to Australia and the Australian economy through the very system which this legislation now seeks to undermine. Over the last 10 years, the analysis conducted by APRA shows that not-for-profit superannuation funds have outperformed bank-owned super funds by, on average, more than two per cent. That's something that we should be encouraging. We should be encouraging the actions and operations of not-for-profit superannuation funds which are overseen by joint employer-employee directors. We shouldn't be trying to undermine them, which is what is sought to be done here.

As I mentioned, there is only one explanation I can come up with for why the government would want to ignore the evidence, ignore the economic benefit to the nation, ignore the financial benefit to members and ignore the many benefits that flow to employers who participate in industry super funds as well. The only explanation I can come up with is that they've been worn down by the lobbying of big banks and big financial services companies. Indeed, Minister O'Dwyer, who oversees this legislation, let slip what this legislation is really about in November last year, when she said the government needed to 'lift superannuation funds to at least the same standard as other financial services organisations like banks and life insurance companies'. That came from a report in the Financial Review on 23 November 2016. Clearly there is an agenda at play here from this government and from this minister to ignore the proven track record of industry super funds based on a cooperative approach between employers and employees, throw the baby out with the bathwater, copy what's being done by their mates in the banking industry and throw that into the mix as well.

This is the real aim of this bill. It's to make the governance of superannuation funds the same as that of the big banks. You really have to wonder why any minister would want to put forward a change to our internationally successful superannuation system to make it more closely modelled on what happens with the banks. You would have to wonder why any minister would want to do that, after the litany of scandals that we have seen from Australian banks over the last few years. I've lost count of the number of scandals that we've seen, particularly involving the Commonwealth Bank but across our banking system more generally, with insurance and other products being sold to people who didn't need them, the tying of commissions to the number of sales of products, which perversely incentivises people working in the banking system to sell people products that they don't necessarily need, because that's the only way they're going to get their bonuses.

We know very well that the Australian public have had enough of this, and that's why the calls that Labor has made for a banking royal commission, backed in by some members of the government and crossbenches as well, has resonated with so many people out there. They're sick of seeing the scandals that we see day after day, month after month, year after year from the big banks. Despite that, despite all the evidence that there are some serious culture problems in our banks, this government now wants to take the approach that banks use, apply it to a successful industry superannuation scheme and provide an avenue for the banks to come in and get their hands on workers' money. I think that the banks, before they're given that opportunity, need to get their own house in order. They need to show that they actually have changed, that their culture has changed and that they recognise their responsibilities to look after their customers as well as their shareholders before we even give any consideration to giving banks a greater opportunity.

It's going to be very interesting, when the House of Representatives comes back in a couple of weeks time, to see where a number of government members of parliament stand on the issue of a royal commission. There have been a number of lower house members from the government, particularly from my home state in Queensland, who've been very vocal about the need for a banking royal commission. But every time there's been the potential for them to vote it in they've either gone missing in action or voted with their own government colleagues. The member for Dawson is probably the best known example. He's an absolute champion of rights for people against the banks when he's back home in Mackay, but the minute he comes down to Canberra he gets taken aside and told what to do, because we all know that he isn't independent of mind and he takes his writing instructions from Canberra and then runs back to Mackay to do what he's told.

I can't remember whether it's on this issue—the banking royal commission—or one of the other many issues that the member for Dawson has grandstanded about, where he has actually said he won't be voting against the government while the former Deputy Prime Minister, the absent Deputy Prime Minister Barnaby Joyce, is campaigning. That's how strong the commitment of the member for Dawson is to a banking royal commission. It's a perfect example of the fact that he's actually got his own government's interests at heart rather than those of his constituents, who want to see something done about the banks.

I wouldn't be at all surprised if we see some sort of a debate about the need for a banking royal commission in the last two weeks of the House of Representatives, and it's going to be a real test for the member for Dawson to show where he stands. Does he actually believe the things when he's out there back in Mackay or running around the Bowen Basin beating up the banks, saying that they need a good talking to and they need a royal commission, or is he going to come back down to Canberra like he's always done and fold and lose the chance to put in place a banking royal commission?

It's not just him. The member for Capricornia is another. We know that there are many problems that her constituents have been experiencing with banks. It's a great opportunity for her as well to actually flex her muscles and show her government that she's going stand up for her constituents, when her vote could actually make a difference and could actually drive a banking royal commission.

In conclusion, I don't understand why we would want to tamper with a world-leading superannuation system. It has served us, its members and the Australian economy very well, having that cooperative approach between employers and employees. The last thing we should be doing is letting the big banks get their hands on this before they fix up their own problems.