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Tuesday, 25 March 1997
Page: 2432

Senator SHERRY (Deputy Leader of the Opposition in the Senate)(9.27 p.m.) —I indicate that the opposition will be opposing the following:

(18)   Clause 53, page 38 (line 24) to page 39 (line 16).

We seek to delete section 53 which provides for information that is to be given to employers who open accounts on behalf of employees. Our reasons for doing this are that we do not support the ability of employers to open accounts on behalf of employees. We have been very consistent about this throughout this debate. It is our belief that, under section 153 of the Superannuation Industry (Supervision) Act, employers have to seek consent from employees in order to open a fund account on their behalf.

Superannuation funds provide a range of services and benefits and a good investment return to members. Those institutions that are seeking to provide RSAs are not currently proposing to make available insurance cover, for example; access to cheap home loans—that would certainly be against the banks' interests; or other services that are offered by some funds. It is concerning to the opposition that the possibility exists under the present bills for employers to enter into a commercial relationship which may be of benefit between the employer and the RSA provider, provided the employer opens RSAs for employees.

We would argue the reality of the industrial situation is such that if employees are presented with the option of either accepting an RSA or no superannuation and no job the employee will obviously take the RSA option. The government has said that these products are to be for low income earners, casual part-timers and itinerant workers. It is these workers who are in the least powerful industrial position to negotiate where their superannuation contributions are to be placed.

It is these same workers who are the very workers who need to save for their retirement through superannuation as their superannuation guarantee contributions will be relatively modest and it is one of the few ways which will ensure some stability and security in their retirement. It is therefore critical that superannuation they are able to save is in a fund that performs consistently and provides retirement benefits. But RSAs will not achieve this end.

Whilst RSAs will undoubtedly be consistent, they will be consistently performing at a rate varying somewhere between one-half, one or two per cent below that of other funds. This will fail to produce maximum retirement benefits. I have already illustrated that the Australian Consumers Association gave some figures to our hearings about the lower interest and the resulting outcome can leave people significantly worse off.

It is difficult to see how the employer would be in a position to really consider what would be the best retirement option for an employee's superannuation savings. Why should the employer be involved in such a direct way in effectively choosing the retirement options for their employee? That is the consequence of the approach of the government. The employer is inevitably going to be more concerned about the commercial per formance of their business, as they should be. They are more likely to require an employee to join a particular RSA—and this would not be all employers, but there would certainly be some—in order to gain some commercial advantage.

You only have to ask the banks. Clearly, ANZ, National Australia, Commonwealth, et cetera, will target their business customers and they are most likely to sell products through that link with their employer who is a business customer of theirs at that point in time. They will use that commercial connection to gain the advantage in respect of that employer's employees. I do not think it will be coincidence that we will have banks—

Senator Harradine —It is sticking out a mile.

Senator SHERRY —Yes, it is. We will have a situation where the ANZ, for example, has a commercial relationship with an employer and co-incidentally—surprise, surprise!—all the employees who work for that employer are in the ANZ's RSAs. I am sure there will be a correlation. It will be interesting to have a look at this as it evolves over time. But there will certainly be a connection.

Why should the employer use what is a different set of relationships, commercial relationships? It is their business that rises or falls on their own performance, but why should that affect an employee's retirement income? So it is for these reasons that the opposition seeks to delete this section. I would ask the committee to give very serious consideration to the arguments that we have presented in respect of removing clause 53.