We have come to this House on regular occasions supporting bills that have come before the House. We get tagged with 'constant negativity', but the reality is—from the advice of the Parliamentary Library—that to date we have supported 87.3 per cent of the legislation that has come before us. We have supported 87.3 per cent, so I am perplexed as to where anyone could say that we were not cooperating.
On this particular bill, I am disappointed and appalled at the apparent lack of adequate scrutiny of the bill by the Parliamentary Joint Committee on Corporations and Financial Services because this Labor government has once again rushed an inquiry. The bill is more than 100 pages long and makes fundamental and controversial changes to Australia's superannuation retirement system. Witnesses had a very limited time to make submissions. The Superannuation Committee of the Law Council of Australia—this eminent body— stated:
It is not possible to prepare a well-reasoned and thought-through submission in a week. For the trustee
obligations bill the submission timetable was shorter than the period within which the committee was meant
to release its report. I suppose people have a lack of confidence in the system given this timing.
A previous speaker mentioned that we had been spreading mistruths and misinformation about the time frame allowed. Well, there you have it now on the record: the Superannuation Committee of the Law Council of Australia stated that there was not enough time. Australian public, you be the judge. When you talk about peddling mistruths and misinformation, nothing can ever beat the clanger 'There will be no carbon tax under a government I lead' when it comes to this government spreading mistruths and misinformation.
This is extremely concerning, and I am sure constituents in my electorate of Wright will feel much the same way about it. Remember when we first came to this House? The Prime Minister said, 'We need to open up the blinds and let the sunlight in, let the transparency of this place be divulged.' I wondered where that phrase 'let the sunlight in' came from. I was watching an episode of Yes, Minister, the UK political comic show, the other day and the 'Prime Minister', Jim Hacker, said the very words: 'Open the windows and let the fresh air in.' This is comical, and you can draw parallels from Yes, Minister.
The bill is the third slice of legislation following the recommendations made by the Cooper review, which we are all aware was constructed with the aim of introducing a new, low-cost superannuation product known as MySuper to replace existing default superannuation products. The bill contains a number of what many Australians would deem to be miniscule changes. However, each one of these changes is crucially important. That is why I am proud to represent the people of Wright—because I want to make sure that we get this bill right.
The first part of the bill that I am talking about today legislates to ban conflicting remuneration and entry fees and limits other fees to cost recovery. Under this schedule, a superannuation fund that wishes to offer a MySuper product may not charge members of a MySuper product a fee that relates to a payment of conflicted remuneration. This prohibits the trustee from deducting any amount from a MySuper product that relates to making a commission payment to a financial adviser. And while performance based fees may still be paid to an investment manager in relation to assets of a fund that are attributable to a MySuper product, the trustee must demonstrate that the arrangement promotes the financial interest of MySuper members. This is where my concerns start. To demonstrate this concern, I quote from the Association of Financial Advisers, who stated that intrafund advice will not serve the best interests of clients. They go on to say:
… the payment for personal advice out of an administration fee is a less-than-transparent mechanism and also serves to detrimentally impact the perceived value of any advice that people get. Anything you get for free you do not properly value, and if you can get it for what appears to be free from your superannuation fund then why would you go to a financial advisor and pay for it?
These concerns are very real and indicative of the inadequate examination by the committee. I am appalled that in 2012 we continue to have to address matters such as this.
The next section of this bill looks at new data collection and the publication powers of APRA and requirements for product dashboards and portfolio disclosure. A range of concerns were raised in the inquiry about the practicality of the product dashboard. As stated by the Australian Institute of Superannuation Trustees, there is clear potential for misleading information being supplied on the product dashboard—a real concern.
The only consolation I have is that members of the committee have recognised that the legislation lacks clarity about what is required by the dashboard and are recommending greater certainty for industry participants regarding this measure. Unfortunately the recommendation is of little value, as it merely calls for
APRA to conduct further consultation with industry; it does not call for any real change to the legislation.
I concur with my colleagues in recommending that schedules 4 and 6 of this bill be amended to improve the structure of choice for members moving moneys, in view of the evidence that across many different sectors of the superannuation industry there is strong dissatisfaction about the practical workability of the product dashboard provisions set out in schedules 4 and 6.
The next section of this bill amends the Fair Work Act to ensure a MySuper product can be nominated in a modern award or enterprise agreement. To cut straight to the point of the issue, while every default fund has to be a MySuper product, not every MySuper product will be able to compete freely as a default superannuation fund under modern awards. As a result, the decision on which funds are selected as default funds under modern awards remains therefore with Fair Work Australia through the current widely discredited process.
Even the government had to recognise before the last election that the current process, which heavily and inappropriately favours union dominated industry superannuation funds, is not open, transparent and competitive.
It is appalling that the government of this country admits that their process operates in this manner.
I question this, as any normal member of a superannuation fund should: if this system does not perform to standard then it is the member who will suffer, because their money—the money which they are counting on to support them in their retirement —will go towards administration. With this in mind I implore the parliament to use this opportunity to ensure the introduction of genuine competition in the default superannuation fund market by moving relevant amendments to this bill. It is imperative that employers be given the option to select any MySuper product as a default fund for employees who have not chosen a fund. Doing so would ensure genuine choice and competition in addition to assisting to maximise value for employees who end up in a default superannuation fund.
The final aspect of this bill that I want to speak about today is the requirement for existing member balances to be transferred to MySuper products, and the relevant transitional rules. This is a fairly extensive schedule, so I will keep my comments brief. Firstly, the bill casts a very wide net as to which existing member balances held in existing superannuation funds will be required to be transferred into a MySuper product.
This means that in many cases members who have exercised a choice will have that choice overridden. Put another way, under the drafting, the government has not distinguished between default and personal -non-default- funds.
The second point I want to make relating to this schedule regards the 'opt-out' mechanism. Funds have until 1 July 2017 to transfer all accrued default amounts to a MySuper product unless the member opts out in writing. By that date the trustee of a fund must contact all members having accrued default amounts and notify
them of the proposed transfer of those amounts into a MySuper product. If the member does not opt out by the end of a 90-day period, the trustee is obliged to go ahead and carry out the transfer. This means that, without members being aware that this is happening, the nature of their superannuation product is going to change—and in a material number of cases that change will be adverse to members' interests.
This action by the government is not only somewhat extraordinary; I believe it is also somewhat deceitful.
Furthermore, it is disappointing that a government can choose to set such an example to the wider Australian
business community. I can only hope that business owners will not take this lead in the way they conduct their own businesses. To finish on this point, I concur with my coalition colleagues in recommending that an amendment be moved to the bill to provide that any amount in respect of which a member has made an active choice is not an accrued default amount and should not be moved to a MySuper product, either within or outside their chosen fund.
In conclusion, it is very easy to see that this government has yet again done the Australian people over. The people of my electorate of Wright, whom I serve with honesty and integrity, deserve significantly better. The government has made every effort to deceive the Australian people through this bill. I conclude with the recommendations of my coalition colleagues. I strongly encourage those on the other side of the House to think carefully about the Australian people who will be affected by this legislation and what it means to them. I do not want the mums and dads and the hardworking business owners of my community to be left behind—everyday Australians who work hard to ensure they have a plan for the future. This is what will happen if we do not make every effort to work together for effective policy.
I encourage the government to withdraw this bill, pending further consultation across the superannuation industry and addressing the serious flaws identified by the inquiry. This in turn will allow for the preparation of a full and compliant Regulatory Impact Statement for the entire bill. If those on the other side of the House choose to proceed with this bill in its current form, then I can recommend that at least they adopt the amendments put forward to ensure that a member who has previously exercised choice of fund, while also opting for the default investment option of that chosen fund, cannot be automatically transferred into a MySuper product by having previous contributions defined as an 'accrued default amount' and that any product which qualifies as a MySuper product is able to compete freely in the default superannuation fund market. We recommend that schedules 4 and 6 be amended or removed for additional scrutiny before this bill is considered.