Andrew Bragg (NSW, Liberal Party) Share this | Hansard source

The point here is that the super scheme has been running for almost 30 years and only in 2021 was the parliament able to enact the sorts of changes that should have been features of the original scheme's design. That goes to having a performance test, it goes to reducing multiple accounts, it goes to putting beyond doubt the legal obligations of the trustees to work only in the interests of the members and not to waste members' money, and it also goes to the transparency arrangements which the Labor Party has now stripped from the legislation.

Those four things are all designed to ensure that the system is being run for the members, because this is one of the biggest things that we do here in this parliament: we pass a law that takes away 10.5 per cent of the worker's money and puts it into a mandatory scheme. There may be good arguments for this, if it were to be well run and if it were to reduce the call on the taxpayer over the longer term. And there are strong arguments that we have not achieved that. But the idea that the concept of a performance test; and the idea of reducing multiple accounts; and the idea of putting beyond doubt the legal obligations of the trustees to the members, not to the vested interests of the banks or unions; and the idea that member statements, which transparently provide the information about where their money is going, would be bad things is insane. But that was the position of the Labor Party when they voted against the legislation here in this place in the last parliament, and that is the position today of the Labor Party.

I call this government 'the government for vested interests', and the king of vested interests is Mr Stephen Jones, who is the minister. You go through his first priorities since being in this portfolio, and his first priority is to strip out transparency. While he is stripping out transparency through the regulation that he's made, he's also reviewing the best financial interest test. Why would you review the best financial interest test? The only reason you would review the best financial interest test would be to admit payments from funds which are banned today. The reason the best financial interest test was put in place was that, at Senate estimates, it was very clear that the prudential regulator, APRA, was not enforcing the prior law, which was the sole purpose test. There were funds that were making political donations. Political donations are not payments from super funds to unions. They are explicit payments that have been paid from a super fund into the coffers of a political party. There was a fund called Sunsuper which had made direct political payments into the Queensland branch of the Labor Party. At Senate estimates, APRA said it was okay for super funds to do that. That led the then government to legislate to ensure that that point was beyond doubt, that that could not happen. Why would you be reviewing the best financial interest duty unless you wanted to admit some sort of murky payment? That is going on in the background. That is something that Minister Jones is pursuing through the Treasury.

The other thing he is doing, concurrently, is he has legislation before this parliament to change the performance test. He wants to create a special class of funds, religious based funds, which he wants to allow to perform less strongly than all the other funds. That is an extraordinary precedent when you think about it. You could have a faith based fund being given a licence to perform less strongly than any other fund. That is a shocking precedent. I say to the people who love superannuation: this is a very bad idea. There are a lot of kooky ideas in this place, and if you break the dam wall and break down that key test—that the money is only there for the members and the workers—then you will have all sorts of crazy ideas being used as justification.

But the matter before the Senate today—I commend Senator David Pocock for moving this disallowance—is about transparency of the expenditure of the funds. That's what it's about. Minister Jones put out an exposure draft of the regulation at 5.30 on a Friday night a few months ago. He must have been very proud of it. He talked to the industry about the regulation and took a few submissions in. Then he put out another; he made the final regulation. The only difference between the regulation that was an exposure draft and the final one was that he explicitly said he wasn't going to let political donations be made.

But the real money here is not political donations. As I said before, there would be only a very small number of instances where a fund has made a direct payment into a political party. The big money here is the transfers to the unions—on the most recent data we have from the AEC, it was $12.9 million in 2020-21, it will be $15 million this year most likely and it will be getting up to $30 million by the end of the decade. Some funds are gifting the unions $2 million and $3 million in a financial year. That information is only available because of the AEC records. It is only available because the unions, which are registered organisations, have to lodge returns with the Electoral Commission, and on those returns they have to say, 'Here is where my income is coming from.' Because of that we were able to work out where the money is going.

As a result of this regulation having now been made to cover up the itemised expenditure, a member of a super fund can now get more information about their fund's activities by trawling through the paper based returns that are stuck on the AEC's website than they can in their own member statement that they're supposed to receive once a year. That is an extraordinary turn of events. But of course it is a lot of money, and these organisations have a lot of influence over the government.

An amount of $30 million by the end of the decade would include some of the largest contributions to any organisation in Australia that wanted to run any kind of campaign, so I understand why they want to cover it up. But the purpose of the change is clear. The outworking of the change through the initial disclosures, as Senator Pocock referred to, indicates that a fund like Australian Super, because of this regulation, is now able to cover up $109 million in related party transactions which were required to be released under the old regulation. In addition to that, there is a bit over $1 million in payments made to unions, or industrial body payments. Previously we would have been able to see which unions these funds were going to.

People want to talk about the whole superannuation industry. Why would you not have a situation where all of the funds had to disclose all of their related party transactions? It doesn't make any sense to cover this up for any purpose. The fact that it's being done so brazenly, and the fact that this chamber is going to give cover to this, really is the most disappointing feature. People who have argued for transparency and people who have argued that it's important to have integrity in government are now going to permit this huge covering up.

The good news is the longer this regulation that Mr Jones has made remains in force, the stronger the case will be for there to be another regulation made to go back to the future. Ultimately, it can't be sustained that it's in the country's interests to run a disclosure regime where you can hide literally hundreds of millions of dollars in related party transactions to God knows who and, in addition, hide millions of dollars in payments to unions and other bodies. That is the key point.

This is an unsustainable position that the chamber has taken today on this disallowance. There is no question that we'll have to come back and revisit this. The only key point that's left to say is that the longer the regulation is in place the stronger the case for reverting will be. Members will be able to see as much information on their member statements as they would be able to access from the AEC. Last time I looked, most Australians didn't go to the AEC website to see what their super fund was doing.