26-July-2005
Speeches, Workplace Relations
Mr ROBB (Goldstein) (8.31 p.m.)—I rise in support of the Superannuation Legislation Amendment (Choice of Superannuation Funds) Bill 2005. This bill consists of measures the government seeks to put in place to ensure that the transition to super choice on 1 July is as easy as possible for businesses and employees and to minimise the burden on employers in complying with the new super choice regime.
Superannuation choice allows employees to choose the fund into which their compulsory employee contributions are made. This superannuation choice measure complements a range of important superannuation initiatives that the government has put in place to increase the savings pool for the Australian community—initiatives such as the co-contribution, which has been hugely popular, and the scrapping of the surcharge, which will provide people with a significantly greater incentive to save and make provision for themselves rather than rely in future on taxpayers to support them.
This government believes in choice. The member for Hunter, in the previous speech on this bill, repeated much of what he said in 2003 about the original legislation and claimed that the bill is not about choice but about ideology and an objection to industry funds. Maybe the member for Hunter has not noticed, but this government is all about choice, and not just in superannuation. We have had a concerted program over 9½ years of government to increase choice in education, in health and now in industrial relations—in a host of areas. In education we have got tremendous opportunities for parents around the country to choose between government schools and private schools, independent schools. There has been a concerted program which has increased the excellence of our schools right across Australia. These are not the class based policies which the Labor Party presented at the last election. Those policies, I might add, have not been rescinded; they remain Labor policies.
Mr Deputy Speaker, you also see choice in the health sector. We have got 56 per cent of all operations conducted in private hospitals. We have got a great model of private and public hospital provision. Again, that is a very significant and deliberate approach taken by this government to increase excellence, to provide choice and to provide efficiencies across all sorts of sectors. Again, in industrial relations, which we have been talking about in the last few days, we are not scrapping awards; we are providing choice, serious choice, so that we can increase the flexibility and the efficiency of the workplace.
In that same vein, the government is offering choice in superannuation, and not through any ideology or any preconceived view about industry funds—they are free to participate and to operate in this whole choice equation with other funds. The choice in superannuation will allow Australians to take control of their own superannuation savings and consequently their futures. Being involved in the decisions about where their superannuation contributions are paid will mean that employees will start to consider the adequacy of their retirement savings sooner rather than later. This is a good thing. The policy provides for choice right at the start of a person’s employment life and causes them to reflect upon the provision they are making for the future. It is not smart to start thinking about the adequacy of your provision for retirement as you approach retirement. Choice will play a big part in helping to focus the minds of people throughout their lives on the adequacy of provision of funds for their retirement.
Choice of funds will also mean that the superannuation industry and individual funds will need to be more competitive and responsive to the needs and wants of Australians in terms of their superannuation investments. Greater competition means greater efficiency, which should drive improved returns on superannuation, lower charges and lower administration fees. Already we are seeing considerable evidence that super funds are reducing fees and administrative charges in the lead-up to the provision of choice on 1 July. Competition is already starting to deliver results. This is not ideology; this is the power of choice with regard to superannuation.
Choice will also be an advantage for people who want to change jobs on a regular basis or are involved in casual or temporary work. If people are allowed to choose their fund, it will ensure that lost superannuation money will become a thing of the past. In 2003, when this legislation was being debated, there was around $7 billion and 4.6 million accounts on the lost member register of the Australian Taxation Office. That is a very significant item, one that needs to be dealt with and one that will be dealt with by the provision of choice.
The current arrangements also disadvantage those in itinerant work and those in multiple part-time jobs and, again, this will be addressed by the provision of choice. There is a further, intangible benefit when individuals are empowered to make decisions on things such as their superannuation savings: they become far more aware of the broader economic decisions and events that will impact upon their future livelihood. This is a good thing. It is a very good thing to increase the awareness of people right across the community about things that will improve their lives and the provision of funds for their retirement. Choice and individual freedom are major drivers of good policy. That is the conclusion. It is a not a matter of ideology; it is a matter of good policy. It is working in so many areas of public policy now as a result of the very deliberate efforts of this government which are delivering great results in all sorts of areas.
Tonight an amendment was moved that seeks to exempt small businesses with fewer than 20 employees. This is a frivolous amendment in the sense that it will cause more problems than it seeks to solve. The fact is that the paperwork requirements for small business, for all business, have been deliberately and very effectively reduced to a minimum. In fact the interaction with small business over the last few months through a very serious education program put in place to educate, advise and communicate to small business the requirements they face—the two-page form they are required to fill out within one month from 1 July, a form required to be filled out once a year—and through the shifting of the onus onto employees has meant that the response from small business is such that, in all of the efforts around the 850,000 small businesses in this country, there is not a concern about the implementation or the paperwork. The only thing that is really worrying small business is the scaremongering being perpetrated by those on the other side of the House. When they have looked at the detail and have looked at what is involved, they are comfortable with what they are required to do—that is, to fill out a two-page form within a month of 1 July and to repeat that exercise every 12 months.
If an exemption were provided for small business, it would mean that a very large number of employees would not be given the right to choose a fund. I have just been through a whole series of advantages that choice will provide to Australian workers right across this country. All of those advantages would be denied to a very large number of employees. Small business accounts for nearly 97 per cent of all private sector businesses and employs 50 per cent of private sector employees. The Labor Party seeks to deny hundreds of thousands, if not millions, of employees the opportunity of choice in super and all the advantages that come with a choice in super. Choice of fund is expected to increase competition. As I said earlier, the fees and charges of various superannuation funds are already decreasing. They are already coming down as a result of the announcement effect and the implementation effect of this policy provision. If small business employees are unable to choose their own fund that will reduce these benefits of competition.
This bill makes some consequential amendments to the Small Superannuation Accounts Act 1995, the Superannuation Guarantee (Administration) Act 1992 and the Superannuation Industry (Supervision) Act 1993. Schedule 1 of the bill amends the aforementioned acts as follows. An employer may not directly charge an employee for the cost associated with complying with the super choice legislation and implementing the choice regime. This bill imposes a penalty on employers who seek to do so. This is important because employees must not be discouraged from exercising their right to choose a fund through the actions of their employer. However, this does not imply that an employer is liable for any financial disadvantage experienced by an employee as a result of their choice of fund decision where this loss is not related to the actions of the employer—for example, if a fund chosen by the employee increases its fees.
Secondly, this bill specifies circumstances where an employer does not have to provide employees with a standard choice form, thus avoiding the imposition of unnecessary costs on some employers. A very serious attempt has been made to minimise the requirements, the paperwork and any onerous provisions on businesses, especially small businesses. A very successful attempt has been made to do that. Section 32NA of the Superannuation Guarantee (Administration) Act 1992 provides for circumstances where an employer is not required to comply with the choice of funds legislation in providing a standard choice form to their employees. This includes situations where the employee was offered choice of fund prior to 1 July 2005. Further, the bill clarifies a number of matters, including the test for whether a defined benefits fund is in surplus, the employer’s obligation to contribute to the fund specified as the default fund on the standard choice form, whether a choice of fund offered by employers before 1 July 2005 is consistent with the choice legislation, and the penalty provisions in relation to these matters.
The bill specifies that ASIC will be responsible for the administration of the ‘no employer kickback’ provisions in the Superannuation Industry (Supervision) Act 1993. Fund trustees must not try to inappropriately induce employers to move their employees’ contributions to the trustee’s fund by offering personal incentives. The bill further amends the provisions in relation to the use of the superannuation holding account special account. This special account was originally established to receive small superannuation amounts from employers who could not find a superannuation fund. In future, employers will not be able to use this fund, because this facility will no longer be needed as retirement savings accounts offer similar low-cost benefits for employers.
The bill will amend the legislation to make the superannuation holding account special account an eligible choice fund until 20 June 2006, giving employers a further year to make arrangements to contribute to a superannuation fund or retirement savings account. From 1 July 2006, the special account will be closed to new employer deposits. All of these provisions are designed to make it easier for employers to implement this scheme and to make it easier for employees to follow the arrangements. They are commonsense and I welcome the support for these provisions by the other side of the House. Choice of funds is an important policy and it is important to all working Australians. This bill makes the necessary amendments to ensure that the transition to choice is as easy as possible for all employees, employers and businesses. I commend the bill to the House.