Mr ROSS CAMERON (Parliamentary Secretary to the Treasurer) (3:55 PM) —It is my pleasure to sum up and to thank everyone for their contributions to the debate on the Superannuation Legislation Amendment (Choice of Superannuation Funds) Bill 2002. The legislation provides employees with a long overdue right to determine where their superannuation fund is invested. This is a government that believes in choice and believes in allowing people to take control of their retirement savings. The opposition parties have been denying Australians choice in superannuation for far too long. Choice of fund will benefit members through greater competition in the superannuation industry and increased community awareness of the importance of superannuation savings. Competition will have positive effects for members of superannuation funds. For example, in our experience in the telecommunications sector, lowered call costs dramatically followed the introduction of competition; whereas attempting to regulate prices had little impact at all. The government wants the benefits of competition to flow to members of superannuation funds.

The inability of employees to choose their superannuation funds has meant that individuals have been excluded from the process of saving for retirement. It is no coincidence that there is currently $7 billion and 4.6 million accounts on the Australian Taxation Office's lost member register. The current arrangements particularly damage and disadvantage the interests of itinerant workers and those in multiple part-time jobs. It is important that everyone is involved in the decisions affecting their retirement income. Choice of fund not only empowers employees to make decisions but allows them to have a better connection with their superannuation savings. It helps us to avoid the psychology of `set and forget' that many Australians have developed towards their own retirement. Being involved in 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.

As others have observed, the bill provides for choice right at the start of a person's employment life and causes them to reflect on the level of provision they are making for the future. Too often, Australians only start thinking about whether they have made adequate provision for retirement when they reach retirement, and the tragedy is that by that stage it is too late. It is much like an aircraft carrier or an oil tanker that can be moved significantly over time but by relatively slow degrees. We do not want a situation where Australians are in effect all gathered together on the bridge or the bow of the Titanic, seeing the iceberg approaching but being unable to take corrective action at that late stage. We want them to take that corrective action early in their careers by making informed decisions about their own retirement, and that is what this bill aims to allow them to do.

A number of arguments against choice have been advanced. Seven have been put to us in the ALP motion, and I would like to address each one of them briefly. The first argument is that the bill makes no provision for clear disclosure of fees that will accumulate to fund managers. This bill should be read in conjunction with the bill which I hope and pray will pass in this chamber within the hour, the Financial Services Reform Amendment Bill 2003. That bill provides the most comprehensive regime of disclosure for people providing advice and products in financial services that has been witnessed anywhere in the world.

I recently had in my office one of the most senior members of the Thai banking and financial community, a senior adviser to the government of Thailand, and he said frankly that he has not witnessed another regime anywhere in the world with the comprehensive quality of the national licensing regime that is about to be introduced through the Financial Services Reform Amendment Bill 2003 and that will commence operation on 11 March 2004. That regime is a harmonised licensing disclosure and conduct program across advisers and providers of all financial products, from managed funds to insurance and superannuation. Anyone providing financial services such as financial product advice must be licensed or authorised to provide those services. Licensees must have requisite experience, training and qualifications to provide a financial service. In delivering financial services, a licensee must adhere to conduct requirements that prohibit activities such as false and misleading behaviour.

The financial services reform also imposes comprehensive disclosure requirements on service providers such as financial advisers and superannuation funds. Disclosure under FSR occurs at different stages in the supply of financial products and services, including when a licensee provides a financial service, when an adviser then provides advice on a client's specific needs, and before selling a financial product. The criticism most frequently directed at the regime is that the disclosure requirements are too onerous. For example, the product disclosure statement provides essential details about a financial product, including information about fees and charges. So I can assure all members of the opposition—and the member for Solomon, who has just spoken—who have had concerns on this question of disclosure that there is no financial system in the world which will have the levels of transparency and disclosure that Australia's financial system will have after the passage of this bill.

There was concern from the opposition that the bill contained no regulation or banning of fees and charges. The whole point of choice is to foster a competitive superannuation industry that will maintain downward pressure on fees and charges. At the moment, because we are providing, in effect, statutory monopoly organisations dotted all over the financial services world to manage retirement income, there is simply no competitive pressure to force prices down. There is nothing to stop funds jacking up fees when members are not permitted to leave—that is, when there is no real portability. The only way to minimise fees and charges is to build a competitive and efficient superannuation sector. The answer is not the sort of ineffective, bureaucratic, red-tape solution proposed by Labor.

The opposition has proposed that there should be an exemption for small business. The bill carefully balances concerns about compliance costs with the need to provide universal coverage and benefits to all Australians. This government believes in superannuation choice for everyone. It considers choice in superannuation a basic right and will not seek to carve out large numbers of employees, as proposed by Labor. There are already financial institutions that disburse superannuation on behalf of employers to the different superannuation providers of each employee, significantly helping to reduce compliance costs. In fact, I am aware of financial institutions that provide this service free of charge, provided the employer selects a fund operated by that institution as their default fund. Small businesses, and employers more generally, will write only one cheque to the clearing house—which is exactly what they do now.

There were suggestions by the opposition that funds under this regime will cease to provide a life insurance option. This claim is also false. IFSA, a major industry group that also represents insurance companies, testified at a recent Senate hearing that choice would not jeopardise group life insurance. It was also suggested that there is no provision for a comprehensive and effective consumer education program. It is my pleasure to disabuse the opposition of this concern and to confirm that the government has allocated $14 million to a member education program.

One of the key messages for employees will include which specific employees are affected by choice of fund. The education program will encourage employees to take an interest in what is being offered, as different options in superannuation suit different people. The education program will reassure Australians that they do not need to change funds—they are under no compulsion to do so—and that their best option may be to stay with their existing fund. In fact, research shows that a majority of employees, when offered choice, remain in their existing relationship, so concerns about a wholesale churn after passage of the bill are not well founded. Most people are happy in their current fund, and the point of the measure is to ensure that those who are not happy are not held hostage under some regulatorily sanctioned monopoly. Another key message of the education campaign, to be run by the ATO, will be that, while the task of employers is to provide information to their employees, they are not under an obligation to advise—and nor should they accept responsibility for advising—employees about which fund to accept.

This, of course, is a key point. While I am excited about the impact of the measure on introducing competitive pressure and driving down costs and fees, the great benefit of this measure, in my view, is the way in which it is going to provide an engine for financial literacy among the nine million Australians in the work force. It is going to provide them with a powerful incentive to understand the way in which saving for retirement works. It is going to cause them to think about the equities market, shares and other assets. They will be educating and informing themselves and, as a consequence, they will be much better equipped to make decisions about their own financial futures. The opposition called for a cap on fees. The enhanced disclosure under financial services reform will lead to increased transparency and comparability of fees and charges.

It was argued that a defect of the bill was that it makes no provision for same-sex couples. In fact, same-sex couples are not covered elsewhere in the superannuation legislation. Same-sex couples will have equal access to choice, just like every other employee in Australia will. Furthermore, the Minister for Revenue and Assistant Treasurer has expressed to the Senate that she is concerned about actual cases of discrimination in the payment of death benefits governed by those other provisions.

The seventh and final quibble or frustration with the measure expressed by the opposition is that there is no prohibition on financial service providers offering incentives to employers to belong to particular funds. This is exactly the kind of problem that choice of funds will remedy. At the moment, there is nothing to stop an employer from signing up their employees to a high-cost, low-service super fund, and if an employer does pay employee super entitlements to high-cost, low-service fund there is nothing an employee can do short of leaving their employer.

In conclusion, the opposition will tell us on a measure like this, like on so many others, that they are not opposed to the principle of choice but opposed to the way in which it is being implemented here. In this case they will find seven reasons why, in spite of their support for us in principle, they cannot engage in the sort of bipartisan practical gesture of support that the new broom—the Leader of the Opposition—would imply. This is a good measure. It is an important reform and I urge the opposition to follow through with their commitments to bipartisanship on matters in the national interest and support this important initiative.

The DEPUTY SPEAKER (Hon. I.R. Causley)—The original question was that this bill be now read a second time. To this the honourable member for Kingston has moved as an amendment that all words after `that' be omitted with a view to substituting other words. The immediate question is that the words proposed to be omitted stand part of the question.

Question agreed to.

Original question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.