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Wednesday, 23 June 2004
Page: 31304

Mr ORGAN (4:23 PM) —The Greens cannot support the Superannuation Legislation Amendment (Choice of Superannuation Funds) Bill 2003, as amended. The government's agreement with the Democrats to support this bill includes the provision of $2 million for a consumer information centre, the prohibition of kickbacks for employers or unions, five-year monitoring of fees and charges and a five-person advisory committee to formulate an education campaign. This is in addition to the protocols for superannuation and managed fund products which the government released late last week. In the Australian on 17 June, Australian Retirement Fund chief executive, Ian Silke, said of these protocols that the disclosure model `does not constitute a satisfactory consumer protection model'.

The government has included the same-sex and interdependent partner super changes in this choice bill. It is interesting that this was part of the deal made between the government and the Democrats but, for some reason, was not announced in media statements recently. Perhaps the government is, for some reason, hiding something, or is not willing to tell the electorate that it has come to a deal with the Democrats to recognize same-sex marriage. Who knows? The deal opens up $230 billion in funds held by industry, corporate and public sector funds. These are funds that have been off limits to retail managers, including the big finance companies such as AMP, AXA and the big banks.

The Greens do not support the promotion of private superannuation as a substitute for privatising retirement, nor the government withdrawing from its obligations and rolling back the entitlement to an aged pension, which is the aim of the policy of the major parties. However, we recognise that superannuation can play a role in assisting people to save for their retirement and, given the compulsory nature of superannuation, it is critical that people's funds are fully protected. That includes consumer protection. This bill does not go far enough in this regard.

The Greens support allowing people to choose where to invest their superannuation funds. We particularly support ethical investment—people using their personal funds to help direct better environmental and social outcomes. However, the compulsory nature of superannuation means that special rules need to apply. The shortcomings of the deal between the government and the Democrats include the fact that it still permits exit fees. This can restrict the opportunity to make a subsequent choice to shift funds. Also, there is no requirement to show the long-term cost of fees so that people can compare funds.

We should note the recent reports on the poor quality of financial planning advice in Australia and the extent of commissions or soft payments—for example, holidays for recommending certain products—along with the low level of financial literacy. The opposition has stated that the fee disclosure model is inadequate. High entry fees and exit fees should be banned. Commission based selling is still permitted. Obviously, a number of groups have criticised the deal. Philippa Smith, chief executive of the Association of Superannuation Funds of Australia, says that more safeguards are needed. In the Sydney Morning Herald on 22 June she said:

Unless consumers can understand and compare the price tag of superannuation products, informed choice and effective competition are not likely to occur. Indeed, the average costs to consumers could increase.

In the same article, Catherine Wolthuizen, finance policy officer at the Australian Consumers Association, said that more protection is needed:

There are clear and substantial risks if the choice framework does not contain strong consumer protection measures.

The government should not be tying this bill to the same-sex changes contained in schedule 2. This is a tactic that the government has employed time after time—tying contentious measures to those supported across the board.

The Greens have campaigned for many years for same-sex partners to be accorded the same rights and legal recognition as heterosexual partners. The government has finally agreed to this after years of resistance. We note, though, the government's objectionable plans for outlawing the right of same-sex partners to marry. So we wonder about the sincerity of the government's recent conversion on superannuation rights. The Greens support these amendments, but the government could have introduced them in a bill that had Senate-wide and party-wide support. The government need not have tied them to this bill. There are other superannuation bills that could have dealt with this. The Greens cannot support this bill, because the arrangements negotiated by the Democrats with the government do not provide enough protection to consumers.