Mr MOSSFIELD (5.09 p.m.) —I rise to speak on the Superannuation Safety Amendment Bill 2003 and also to support the amendment moved by the opposition. This bill attempts to strengthen the current prudential regime that protects superannuation savings in Australia. The primary mechanism by which this bill seeks to achieve this end is the enhancement of the Australian Prudential Regulation Authority's capacity to take preventive action as opposed to reactive enforcement action with respect to breaches of the law. Like so much of the government's legislation, it tinkers at the edges of the problem that exists without ever really addressing the fundamental problems inherent in the system. As Labor shadow minister Senator Sherry said of this bill, it is `weak and wimpy' and completely lacking in detail.

A well regulated and secure superannuation scheme is becoming increasingly important in the modern age. As everybody is aware, we have an ageing population in Australia which will create ongoing problems that will need to be addressed if we are to have a decent society in the years to come. At present, 12.8 per cent of our population is aged 65 and over. By 2023 the Bureau of Statistics estimates that the over-65 age group will constitute some 19.4 per cent of the total population. Those in the 15 to 64 age group—those who make up the bulk of the work force and pay income tax and so forth—will fall in percentage terms over that same time. In other words, the social security system which provides age pensions for our increasing aged population is unsustainable without reform. That reform comes in the form of superannuation—people saving for their own retirement during their working years. That is why Labor, when in government, introduced the fundamental reforms to the super system.

The origins of this bill can be found in an event that I have spoken about on many occasions in this place—the collapse of a company called Commercial Nominees. The complete and utter failure of APRA to properly supervise the goings-on at Commercial Nominees resulted in far more pain and loss than would have been necessary if APRA had stepped in earlier. There are still outstanding questions regarding APRA's action before and during the collapse over three years ago. APRA knew something was wrong with Commercial Nominees—that is why they removed them as trustees for three large super funds. The trouble is that they left Commercial Nominees as the trustees of around 480 small super funds for a further two months. By the time they got around to doing something about the company, that company had collapsed, with at least one director living in South America whilst squandering members' money on a New York vacation and other social pursuits. It then took a further 2½ years for the government to sort out the mess and provide 90 per cent justice to the victims of this company.

I had two constituents caught up in the CNA debacle. I can assure the House that it was not a pretty sight watching the government fumble the issue around again and again through two different ministers while my constituents suffered enormously. I said repeatedly during that long struggle for justice that APRA needed more powers of intervention and that they had to be more proactive rather than reactive. This bill does go some way down the road, but it is only a first step. Superannuation is simply too important for the government to fumble with any longer. After the family home, superannuation is a family's second largest asset. It is too important not to protect properly.

The government do not seem to have the commitment to superannuation that I believe Australia's changing age profile requires. The government know that employers' contribution to superannuation is very important and that employees' contribution to superannuation is important. But they do not seem to think that super is part of a worker's entitlement. That is why they froze the increase in superannuation guarantee levy. That is why superannuation does not rate a mention in their General Employee Entitlement and Redundancy Scheme or GEERS, as it is more commonly known. When a company goes bust, there is legislation that will cover employees for some of their entitlements, but never for the loss of superannuation. For example, the Minister for Health and Ageing and Leader of the House is on the record in this place when he was in opposition as saying:

Compulsory superannuation is one of the biggest con jobs ever foisted by government on the Australian people.

He does not believe in it. We on this side of the House believe in superannuation, though. We believe that super is a fundamental right of every employee. More than that, it is necessary to provide people with a comfortable future in retirement. This bill supposedly addresses the issue of safety of superannuation, but it only does that in a very small way. I said earlier that superannuation is not covered by GEERS when a company goes bust leaving its employees in the lurch.

I wish to raise the case of another of my constituents, Mr Jacob Amari, who worked at a company called Jenoa Plastics for nine years before it went into liquidation in July of last year. Every fortnight Mr Amari would receive his pay slip, and on it at the top left-hand corner was an amount of superannuation and the name of the super fund, AMP CustomSuper plan. The trouble is that Jenoa Plastics had stopped paying AMP Mr Amari's superannuation contributions some two years previously. The employees of this company, including my constituent, had gone home with their pay slip every fortnight thinking that their futures were secure and that their superannuation was being looked after—after all, it was there on the pay slip—only to find out that the last payment of superannuation was for the month ending 30 June 2001.

I understand that AMP had sent some reminder letters to Jenoa Plastics, which were obviously ignored by the company. However, AMP sent nothing to Mr Amari or any of the other employees to inform them that their employer was ripping them off, and nothing to ASIC or APRA to say that this company was in default of its superannuation payments. AMP knew there was a problem with Jenoa Plastics, and the only people it told, it appears, was Jenoa Plastics—the company at fault in the first place. Quite frankly, this is simply not good enough.

I would also like to know how the company's auditors did not pick this up when doing the books at the end of the financial year. For two years no superannuation was paid. If the company had not gone under, presumably they would have continued not paying it. How is it possible that the auditors did not notice the gaping hole in the bookwork where the superannuation should have been? Not a cent of super was paid in the financial years 2001-02 or 2002-03. Yet presumably the auditors could see no problem at all with this—either that or they have a major competency problem. There needs to be better supervision than exists now or will exist even after this bill is passed. There needs to be a better arrangement in place to address this problem. The amendment moved by the ALP certainly addresses this particular problem in dot point 2, where it says:

... this bill should also provide full compensation for loss of superannuation where losses have occurred as a result of:

  ...  ...  ...

  superannuation guarantee contributions outstanding on the failure of a business ...

As I have said, my constituent was ripped off by his employer. They effectively stole from him. It was his money, mandated by law, and the company withheld it from him. Worse than that, what I find most appalling is the fact that Jenoa Plastics kept printing the amount of super on his pay slip and pretending that they were doing the right thing. That is theft and fraud. They withheld the money that was rightfully Mr Amari's—that is theft. They told him the money was being paid when it was not; they deceived and misled their employees for the purposes of obtaining the benefit of not having to pay superannuation—that is fraud.

Of course, under section 229 of the Superannuation Industry (Supervision) Act, if it had been AMP that perpetrated this theft or fraud, Mr Amari and the other employees of this company would have had some recourse. It might well have taken two years and another couple of ministers, but there would have been an opportunity for justice. If the government considers superannuation to be an entitlement of employees then super should be included in the GEERS regime. Employer contributions are mandated by law. Why then is it not an employee entitlement?

The best that my constituent—and other employees of the company—can hope for is that when the liquidators bust up the company and sell off the assets he becomes yet another creditor in a line of creditors getting just a handful of cents in the dollar. This is an issue of corporate governance that needs to be addressed. Any system that allows a company to be in default of a legislatively mandated requirement for two years without a single alarm bell being rung is a system that needs to be changed. That, unfortunately, will not help my constituent, but it may protect some people in the future from unscrupulous employers who seek to rip off their employees and then lie to them about having done it.

Superannuation is too important. It needs to be protected. The system has failed my constituent, so we need to make sure it does not fail other people. That is why this bill is disappointing. That is why the amendment moved by the opposition should be accepted by the government. As I said at the beginning of my contribution to this debate, the bill tinkers around the edges and does not address many of the problems that exist. Certainly Mr Amari's problem with the safety of his superannuation has not been addressed in this bill. If the government are serious about this issue then they should adopt Labor's policy, which includes full compensation in the event of theft, fraud or business failure.

We need clear, simple and comparable disclosure of all fees, charges and commissions; tough regulation of some fees and commissions, with entry and exit fees prohibited; commissions either banned or restricted on the compulsory nine per cent superannuation guarantee contributions; and a system of flat fees for advice. Labor's policy also includes member salary sacrifice contributions to be paid to funds quarterly along with superannuation guarantee contributions. The government should take on board Labor's proposal to ban inducements by financial providers to employers to attract employee superannuation contributions. Increased powers and/or resources to regulators like APRA, ASIC, the tax office and the Superannuation Complaints Tribunal also form part of our policy. Improved regulation of superannuation fund trustees and improved consumer protection to reduce poor financial planning advice are Labor's policies. The government would do well to heed the good policy work in this area by Senator Sherry.

Neutral observers of this bill have noted that, for all its rhetoric, it does not live up to its title or objective: superannuation safety. It does not adequately address the potential for losses to those Australians who depend on superannuation for their future. There is also some concern that the proposed new penalties prescribed in this bill will not go far enough to provide either a significant disincentive or a harsh enough punishment.

The provisions in this bill dealing with the disclosure of information seem to have wider implications than the government may first have thought—that is, in discouraging whistleblowers from coming forward. I am sure that it is inadvertent on the part of the government. I am sure that this government would like to see people who blow the whistle on corruption or criminal behaviour protected rather than exposed or hung out to dry. The government just need to think through the issue a bit more and understand the consequences of their proposal a little bit more clearly than they do at the moment.

Superannuation is a compulsory long-term investment for retirement. It needs to be regulated in order to improve the safety of Australians' superannuation savings. Labor's policy will ensure both a safer and a lower cost system. Labor is the party of superannuation for ordinary working Australians. If there are reforms needed—and there are indeed—then it is only Labor who will make the necessary changes rather than simply tinkering at the edges and pretending to make changes as this government is so fond of doing.

Finally, despite the fact that this bill is deficient in some areas and does not go anywhere near far enough in others, Labor will be supporting it, but we hope the government will accept the amendment that has been moved. The bill is a start nevertheless, a small step forward, but there is a great deal more needed in this area if we are to truly make superannuation safe for Australian families.