Senator SHERRY (10:32 PM) —by leave—I move opposition amendments (1) to (4):

32ZB  Provision of superannuation advice by employers to employees

For the avoidance of doubt, if an employer provides an employee with superannuation advice; and:

the employer is not carrying on a financial services business for the purposes of Chapter 7 of the Corporations Act 2001.

Labor’s amendments go to two basic issues, and I am pleased that Senator Cherry is here. He probably would not have heard my remarks yesterday and today about this legislation. I do not want to speak for too long, because I have made my points on a number of occasions. Interestingly, in the Financial Review and other media reports there is no doubt that there will be a significant additional compliance burden for employers in terms of paperwork, cost, filling in forms, form record keeping and penalty provisions. That is fact: it is extra work for employers. I do not think Senator Cherry, with due respect, will find too many farmers and employers whom he is representing in the Farmers Federation—not that I am criticising that; that is his call—happy with so-called super choice and thanking Senator Cherry for his efforts in this area. I think the Democrats cobbled together a very poor deal. I do not view the outcomes of this piece of legislation with the same excitement that Senator Cherry was bubbling on about earlier.

There is no doubt that there are a range of adverse consequences for employers. If you were going to design a choice of fund superannuation bill, there are other mechanisms you could have looked at so that employers would not have had the additional burdens that have been the subject of debate. I know we will not win that argument, Senator Cherry, so I will not persist. The Labor Party have already commenced consulting business, and we are very confident that we can design a new choice of fund regime. That will be reflected in our policy, which will relieve employers of the new burden that the government and the Democrats have imposed on them, whilst still allowing choice of superannuation fund. This reminds me somewhat of the GST deal, Senator Cherry, in terms of the additional obligations that you have whacked on employers.

Labor has two themes, and one is the complexity of this legislation for employers. Our view is that small business, in particular, should be exempted. I had hoped that the Democrats would see the sense in that. I had some hopes of Senator Murray—but that obviously has not transmitted to Senator Cherry—that there would be some compromise and some concession to small business but that is not forthcoming, as I understand it.

Labor’s second theme is that of safety for employees. I do not know whether Senator Cherry is aware that the PDS statements—product disclosure statements—under FSR are having to be remodelled and simplified. We are not dealing with that in this legislation, but the government has released a draft new PDS. There are some enhancements and simplification under FSR and consumers are faced with 50- to 80-page PDSs. The government has recognised that that is a problem. I certainly think you made the point—I have certainly made the point—that it is a problem and an issue in the context of choosing a superannuation fund.

We will not have the new simplified PDSs until well after 1 July, because the regulations have not been finalised. Then, of course, the financial institutions have to reissue PDSs—not all of them but many of them. So you are going to have very complicated PDSs being handed out up to 1 July and thereafter. So there are poor protections for employees. The other issues are exit fees—I touched on that in my earlier debate—and the issue of trail commissions.

The second aspect of Labor’s amendments goes to removing the two-year jail term and the $22,000 fine on employers if they provide advice to their employees. There is a penalty provision in the choice of funds bill—I think it is up to $500. We believe that that is an appropriate penalty, not two years in jail or $22,000 worth of fines under the FSR regime. Employers should not be advising their employees about which fund to choose, but a penalty regime of two years in jail and a $22,000 fine is over the top in the context of the introduction of superannuation choice of fund. It is over the top. It is inevitable, in our view, that with five million employees at least some of them are going to be saying to their employer, ‘What is all this about? What should I do?’ Not unnaturally, some employers will provide some advice that is outside the parameters of the choice of superannuation funds bill.

I know my words are falling on deaf ears, so I hope that Senator Cherry communicates with me when one of the farmers he represents gets pinged for providing advice. It is almost a certainty that there will be some employers who will end up being caught by this. I notice that ASIC have said they will be lenient and consider it and so on. The fact is that the law is the law. As Minister Brough confirmed yesterday in the House of Representatives, ASIC is obliged to investigate and take legal advice from the DPP. I do not think employers should be put through that sort of scrutiny at this time in those circumstances. Nevertheless, the die is cast. I have put our case on behalf of employers. We have done all we can. The amendments are not going to be carried and we will move forward to present alternative policy in this and a number of other areas to ensure that superannuation choice is simplified and made safer. That is our obligation, and we will be doing that in the next two years.