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Wednesday, 15 May 2013
Page: 3213

Ms O'NEILL (Robertson) (11:05): I rise to speak in continuation on the Superannuation Legislation Amendment (Service Providers and Other Governance Measures) Bill 2012. The last time that I was in the chamber addressing this bill I was able to refer to the previous time I spoke on this matter and that was at the tabling of the Parliamentary Joint Committee on Corporations and Financial Services report of the inquiry into the bill which we held in November 2012. Essentially, this bill deals with the fourth tranche of legislation implementing the MySuper and governance measures of the government's Stronger Super reforms and it is in this tranche that the government will further implement the recommendations of the very important Cooper review. Not only are we are going to make amendments to those first three tranches of legislation to enable them to operate more effectively; also in this piece of legislation we will respond to the recommendations that were made by the PJC and I am very pleased that the government saw the merit in the further consultations that we had.

Indeed, the whole of this process has been marked by a wonderful coalition of conversations about how to do the very, very best with these MySuper reforms. That was acknowledged by the Australian Institute of Superannuation Trustees, who actually stated—and we were able to put this into our report—that they acknowledged the preparedness of the government and the Treasury to consult with the industry about all of the Stronger Super changes and in particular the matters that are contained within this bill and previous iterations of it. Obviously the consultation was reflected in changes between the consultation draft and the bill. This is reflected overwhelmingly in the positive comments that we and others have made about the legislation in our submissions. That consultation did continue after our report was handed down.

This bill is a set of amendments that represent a significant reform to Australia's superannuation system that is replacing existing default superannuation products with a simple, low-cost default superannuation. Thankfully, it is not called that anymore. It is simply called MySuper. What could be of more interest to Australians who are commencing or ending their working lives than what is going on with MySuper? That is why it is so appropriately named.

From 1 July this year superannuation funds will be able to offer MySuper, a product that is intended to improve the simplicity, the transparency and the comparability default superannuation products. From 1 October, employers must make contributions for employees who have not made a choice of fund to a fund that offers a MySuper product. They will need to do that in order to satisfy superannuation guarantee requirements.

To be more particular, this bill, and the amendments that are contained within it, respond to recommendations of the Parliamentary Joint Committee on Corporations and Financial Services in relation to a number of matters, firstly in relation to infringement notices and the use of service providers. The amendments will also allow a single cap to be applied to percentage based administration fees for MySuper products and clarify the application of the MySuper administration fee rules. The amendments to this bill will also, very importantly, make changes to the product dashboard requirements and delay the commencement of portfolio holdings disclosure requirements. The amendments will also clarify that no member who holds a MySuper product can actually be precluded from holding a choice product and vice versa. Finally, the other significant amendments will be consequential ones to reflect the change in the title of Fair Work Australia to the Fair Work Commission.

With regard to infringement notices, during the inquiry we heard that this is a method used by APRA in other situations. We heard that the sector saw that sometimes with the proposed infringement notice there would be inadequate information, so essentially this amendment fulfils the PJC recommendation that if APRA does issue an infringement notice, the notice should be giving some adequate detail about the alleged contravention, not only because that makes clearer what the transaction between the regulator and the person receiving the notice is but also because it is an opportunity for ongoing education about this new suite of legislation and making sure that the affected person absolutely understands the nature of the problem in their current practices that have brought on this infringement notice. With regard to infringement notices and the penalty amounts, the amendment before the House today also fulfils the PJC recommendation that for infringement notices that relate to civil penalty provisions the penalty amount under a notice should be one-fortieth of the maximum penalty a court could impose.

Further, the PJC recommended that the bill's provisions relating to the use of service providers be tightened up. The original bill avoided any provisions in a fund's governing rules that required a trustee to use a specified service provider, a specified investment entity or a specified financial product. The amendments limit this. It is very important so that a governing rule is only void to the extent that it is contrary to the prohibition of bill. The outcome of this—although the language around it is sometimes a little unclear—is essentially an improvement for members and trustees by an increase in the certainty with which they can look at these products.

Administration fee caps is another area in which the PJC made a number of recommendations and we have made an amendment which will allow trustees to have a single fixed cap on percentage based administration fees. That will reduce the risk that members pay administration fees which outweigh the cost of administering their accounts. This was a key concern and it is at the heart of why this piece of legislation and the suite of reforms around it are so important. We believe in a fairer Australia, we believe in a stronger and smarter Australia. This legislation is part of ensuring fairness for people who have their money in super, that they are not being ripped off by people who are just taking fees out, lining their own pockets and taking it away from those people who have worked hard and deserve to have the fullness of that money in their account that they call appropriately MySuper—not somebody else's super, not my financial adviser's super, but MySuper as a worker.

Critically, the product dashboard is another of the important tools that this government is establishing through this legislation and associated legislation so that people can basically do a comparison—what if I put my money in product A and product B? What would it look like? How is product A going? How is product B going? This is to take away some of the complexity and make it more transparent to be able to engage ordinary Aussies in improving their financial literacy and, through that, improving their understanding of their investment in their own future with their super. So the amendments here make information on the dashboard even simpler to understand and make it easier to compare performances across MySuper products. They also contain regulation-making power so that further amendments can be added to the dashboard in the future because the sector is working very hard to get this up and running. If they need to make small adjustments to ensure that it works even better as time proceeds, this amendment will allow that.

There is also a portfolio holding disclosure, deferring the date at which trustees will be required to make information regarding their portfolio holdings available, responding to industry feedback about implementation time frames, stretching that out from 31 December 2013 to 30 June 2014. With the MySuper and super choice products, the government has become aware of a fund that intended to structure the governing rules and prevent members from holding a MySuper and a choice product. This amendment will prohibit that.

Adopting these amendments will certainly increase the transparency and fairness for both members and trustees. The amendments will provide members with more meaningful information about MySuper products' performance portfolio holdings, with more information for affected persons in the event that APRA does issue them an infringement notice, with greater clarity about the penalties involved and with caps on percentage-based administration fees to prevent members from paying fees that are higher than the cost of administering their funds. They will prevent trustees from undermining the intent of MySuper and ensure that members can hold MySuper and choice products if they wish to do so.

These are reforms that are coming from a Labor government, because we are the party of superannuation. The coalition never have—and never will—supported superannuation in the way that a Labor government has done and will into the future. Thanks to far-sighted Labor reforms that were denied, decried and voted down by the other side as much as they possibly could workers have $1.5 trillion of retirement savings. The coalition have opposed every single increase in universal superannuation.

Further evidence of this is the fact that the Gillard government today introduced legislation which increases the concessional caps to $35,000 for Australians aged 60 and over from 1 July 2013 and extends this to Australians over 50 from 1 July 2014. To help those nearing retirement to build the adequacy of their retirement savings, the government is introducing a $35,000 cap for older Australians. This means Australians nearing retirement can contribute up to $10,000 more to their super at the concessional tax rate.

This Gillard government—this Labor government—believes that it is important to allow people who have not had the benefit of the superannuation guarantee for the whole of their working lives to contribute more to their super as they near retirement. Accordingly, the government will bring forward the start date for the new higher cap to 1 July 2013 for people aged 60 and over. Individuals aged 50 and over are going to be able to access that higher cap from 1 July 2014.

This is estimated to impact, in a very positive way, 171,000 people. Sadly, there is sometimes a gap in the work that we do here in the parliament. Sometimes it becomes about words, ideas and media stories, but the reality is this legislation is a powerful piece of work to impact positively the lives of 171,000 people when the new, higher cap is introduced for individuals aged over 60, and 363,000 Australians will benefit in 2014 when the eligibility is extended to individuals aged 50 and over.

In conclusion, this bill will complete the legislative architecture of the MySuper reforms. It will improve integrity and governance. It will increase efficiency and effectiveness of superannuation for all Australians, not just some. We are doing this because we as a Labor government believe in the establishment of structures that lead to a fairer Australia. Dignity in retirement at the end of a great working life is a right we believe is there for all Australians. This legislation does its work in leading to a fairer and stronger Australia. It is smart legislation, and it is secured to that fair future for Australians. I commend the bill to the House.