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Thursday, 23 June 2005
Page: 172


Senator LUNDY (6:48 PM) —The incorporated speech read as follows

INTRO

The fact that we are here today debating yet another major change to this Government’s Super Choice legislation just weeks before it comes into operation highlights the fact that this is poorly considered policy…

Poorly considered policy that will put both small businesses and consumers at risk.

Policy that is too complex and unsafe for both employers and employees.

This legislation encapsulates small business in even more red tape and exposes vulnerable employees to fierce marketing from superannuation providers attempting to sell a product many consumers do not understand.

SMALL BUSINESS

In 1996 the Government made a commitment to reduce red tape for small business by 50%.

Yet this Government just keeps handing small business more hoops to jump through—first it was Goods and Services Tax and Business Activity Statements and now with this super choice legislation it is more red tape, more forms and more time spent for businesses complying with new Government policy rather than focusing on their customers.

The Howard Government has not only misled Australian Small Businesses into thinking they will reduce red tape—they have increased it and increased it exponentially!

Smarter and wider consultation with small business—one of the major stakeholders in respect to this change would have shown this Government that they had needs that required respect and consultation.

Consultation would have shown the Government what a red tape nightmare the super choice regime would become—only adding to the pressures and uncertainties of running a small business.

They would have seen that prescribing big business policy does not work for small business with less than 20 employees and made changes and exemptions accordingly.

Instead small business once again is stuck with the compliance burden suited to big business—there is no doubt that the Government has made a mess of this legislation.

This legislation changes the way small businesses deal with employees superannuation.

As of July 1 the process will change from a three step process that has operated since the introduction of superannuation. Where the employee makes contributions in accordance with the relevant state or federal award or you make contributions in accordance with your workplace agreements or certified agreements. If neither of those applies, you make contributions as determined by the employer and employees.

This legislation will see that small businesses go from that simple three step structure to a 34 step process!

Super Choice is not new.

Many small businesses already give their employees choice in regards to their superannuation fund.

Choice does not always work for the small business owner…

Bruce was a franchisee—he employed nine staff he offered his staff a choice of superannuation funds. For his nine employees they chose six different funds. Each fund required a different form and a different web interface and multiple lodging. Bruce had to take on an additional employee to deal with the additional paperwork.

Bruce realised that choice was not efficient for his business and spent 12 months working with staff to get back on to one scheme.

Around 70% of small business already offer choice—however most of these funds are dealing with only 2-3 funds.

The difference between choice of fund as it stands now is that it is under a measured approach that the small business puts in place—it is not controlled by ill-considered Government guideline and regulation.

This regime is not one that where employers can assist their employees by offering examples of research and some constructive advice.

Under the Government’s regulatory regime—a small business operator providing any form of financial advice would be liable for penalties of up $22,000 and 2 years imprisonment.

THE CONSUMER/EMPLOYEE

The Howard Government tries to offset the burden on small business with the immense benefit to the employee.

They continue to tell the Australian public that this legislation is about giving consumers a choice about their superannuation needs.

What the Government does not tell employees is that to make an informed choice…

  • They will need to know the intricate ins and outs of the way Australian superannuation schemes operate to generate returns.
  • They will need to read a booklet over 50 pages in length to understand the government’s new scheme.
  • They will then need to identify, consult and compare particular funds by wading through piles of fund specific information laced with fine print.
  • They will need to be savvy enough separate super funds marketing tactics from their actual benefits.
  • And finally—they will need to make this choice without any advice or assistance from their employer.

What is worse is that when the employer sees that the employee is making a poor choice they cannot do anything… They must sit back see the employee suffer and hope that the employee will realise on their own that they are making the wrong choice!

How does this Government expect any employee who could spend most of their lives organising their family, moving to and from work and going to the footy on the weekend, to be able to sit down, and work their way through the complex problem of superannuation choice with no assistance from their employer—who in most cases is the only logical person who they may be able to contact for help?

This legislation exposes vulnerable employees to fierce marketing from superannuation providers attempting to sell a product many consumers do not understand.

The Howard Government did not consider the complexity of superannuation advice when drafting this legislation. They have provided the power for superannuation providers to specifically target those with the least ability to understand the fine print in the volumes of information provided to them.

This poorly considered policy that can only be seen to benefit a few of the Howard Government’s ‘big business mates’—small business and vulnerable consumers will suffer.

Debate (on motion by Senator Colbeck) adjourned.