Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Hansard source

The spaghetti got you excited, Senator? Yes—you probably haven't had dinner yet. It's a quarter to seven. We aren't quite sure how it's all going to fit together at this stage, yet we're dealing with putting architecture in place to set up a one-stop shop, a super mechanism for dealing with victims of financial crime and financial complaints.

Let's talk a little bit about superannuation. We know that complaints are significantly lower in number than those about banking or other financial advice, and there is a chance that superannuation oversight could be pushed off to the side in relation to the avalanche of banking complaints. That's certainly been one of the key issues that's been raised in relation to this. We also know that there's a different subculture in relation to superannuation and other financial services. There are some fundamental differences in the products and their nature, and we're not convinced that due consideration has been given to the merging of the different cultures and stakeholders at this stage. We are concerned about job losses and whether the merger is driven purely by wanting to get more efficiencies and cost savings than necessarily driving through a larger mountain of complaints, and we haven't been able to secure any guarantees that there won't be job losses, especially from the SCT when it's merged into the new entity.

We have some really basic legislation here tonight, but we actually don't have any detail. There is considerable uncertainty around this legislation because there is no detail around the terms of reference. The minister herself has been quite open that they are under negotiation and they may take some time. She wanted to get the legislation in place before the terms of reference were sorted out, but that's one of the key reasons that we have such uncertainty on this legislation, especially in relation to the superannuation scheme.

Very quickly, I want to talk a little bit about the SCT. I want to acknowledge that I got a letter from Choice. Choice are a stakeholder that I've worked very closely with since I've been a senator on issues like the watering-down of the FOFA laws. Choice were brilliant, as they were in providing a lot of good advocacy work around the dangers of the Trans-Pacific Partnership Agreement. They are an organisation I respect. They have made it very clear to me, as they have to other senators, that they don't want to see the SCT removed from AFCA. They say the goal of a properly-functioning external dispute resolution scheme is to provide fast, fair and free resolution. On these grounds, the case for moving away from a rigid tribunal structure, which they believe the SCT is, to a more responsive ombudsman-style scheme is clear.

As outlined in the report of the Ramsay review, it took an average of 796 days for disputes that reached determination to be resolved by the existing Superannuation Complaints Tribunal, the SCT. This contrasts with an average of 62 days for the Financial Ombudsman Service, the FOS, in 2015-16. They highlight that some stakeholders have argued that these delays could be addressed through more funding, but repeated funding injections have failed to have any impact on delays. This is due to the inherent limitations of the tribunal model, where processes are determined by legislation, appointments of tribunal members are often delayed and any change to funding is dependent on the government cycle. They talk about the contrast of the flexibility around the ombudsman schemes. So they are a clear supporter of the government's legislation.

As I said earlier, I don't believe that Industry Super Australia or other stakeholders, like ASFA, the voice of super, which is for both the retail and the industry super funds, have the same clear view, and nor do the union, the CPSU, that represent the workers. I have a letter from them as well, with the signatures of the workers who currently work for the SCT. They believe the current bill actually weakens current appeal rights and protections for complainants, specifically around appeal rights and privacy. They have raised these issues in numerous letters, and they don't believe there has been anywhere near enough consultation. They agree the SCT is not perfect. They believe it has been chronically underfunded for years, a fact that has been universally acknowledged by both friends and critics of the SCT: 'Over the last year, we've seen just under a third of our workmates made redundant, and those of us who have remained have struggled with a growing backlog of complaints. An increase in funding would be welcome and would ameliorate our current problems. However, a permanent solution is needed.' They don't believe merging into the AFCA is the permanent solution that they need. They go on to say: 'The current industry funding model for the SCT is opaque and indirect. The money received by the SCT is determined by government and then recouped from industry membership fees and regulated by APRA. The funding needs to be transparent and linked to the number of complaints we receive.'

They have been constructive as well, saying there is a better way forward for them, and they have also questioned why the minister has made sure that AFCA has very similar statutory powers to resolve disputes in superannuation, which was the reason that they were set up and that they were different. They are saying that, by default, the minister has admitted that they are unique, they deal with different issues to the FOS and the CIO and they should remain separate.

I've got a number of issues that have been raised with me by groups such as Industry Super. They say they have expressed concerns about the new arrangements and how they could result in superannuation trustees or members of these funds subsidising an EDR process primarily used by non-superannuation financial providers, and this would be in conflict with trustee obligations, including their obligation to act in the interests of all members. They believe this legislation will be tested in the Federal Court if it's passed. They've also talked about funding issues. They prosecute the case that superannuation fund members should not, and legally cannot, subsidise other financial service disputes and, further, that self-managed super funds must contribute to the scheme or pay on a cost-plus basis when utilising the scheme.

In relation to governance, they say they will argue that there should be a separate AFCA superannuation panel with expert representation, which, most importantly for them, must include not-for-profit representation, a debate that we've been having in this chamber on other superannuation bills in recent days. That is the beauty of their model. They believe it works and it gets good results for their members. They also highlight that there's no detail in this bill. The terms of reference haven't been sorted out. We've seen criticism around that.

Finally, that leads me to talk about ASFA. ASFA's position is quite interesting. They step out the key reforms. They talk about their positions. They agree the minister has worked to meet many of their concerns, but they still have many key concerns. I'd like to read one of them because it relates directly to the commencement and transition period. ASFA is concerned that the implementation process has been rushed because the government was trying to get legislation in place to ward off a royal commission. They're my words, but they do believe this has been rushed.

ASFA considers it preferable that the Bill nominates a specific commencement date – no earlier than 1 January 2019.

The commencement date in front of us is July next year. They don't believe that this can be done effectively with SCT in that time period. There hasn't been the consultation and this has been rushed. This is coming from the retail end of the superannuation market as well as from the industry super funds. They go on to talk about how the wind-down period is not sufficient and that the merging of the two entities should occur over a longer period of time.

When we get to looking at some of the key stakeholders in the super industry, they're clearly not happy with this bill. My advice to the minister would be: let's pass the merging of FOS and CIA tonight. Let's get the architecture in place for a new tribunal that looks at both those entities and delivers better results for consumers, as I believe it should. I support that and the Greens support that. But, given the uncertainty around the terms of reference and the need for extensive consultation, I'd suggest a way forward would be to talk with the industry body about a potential phase-out of the SCT or a merger over a longer period of time. That should be considered as an option. It's obvious to me there's no confidence or trust between super industry stakeholders and this government. This government has totally politicised the industry super issue. We talked about it this week. Minister Dutton was talking about it around the royal commission. There's no trust. There has to be a process that builds trust between superannuation stakeholders and any government before the SCT is merged into any AFCA. There's a process here for going forward— (Time expired)