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Wednesday, 1 April 1998
Page: 2099


Mr KELVIN THOMSON (1:01 PM) —It is entirely appropriate that we are debating the Workplace Relations Amendment (Superannuation) Bill today, April Fools' Day, because, by introducing this bill, fools are what the government must be taking Australian workers for.

Let us make no mistake: this is a bill which will leave thousands of Australian workers and their employers worse off because it will remove a mandated right to superannuation and the protection of an independent arbitrator to make award determinations on superannuation matters. If the government believes that Labor and the Australian people will take that lying down, this is an April Fools' joke which is about to blow up in its face like a joke cigar.

Let me say at the outset that Labor will be opposing this bill. In opposing this bill, we will be exposing it for the vitriolic and unwarranted attack on thousands of workers' superannuation entitlements that it is. It is a nonsense claim that employers will be better off because of this bill. In addition, we intend to refer this bill to the Senate Select Committee on Superannuation for a thorough examination by the public and by the Senate.

I want to respond to what the Minister for Workplace Relations and Small Business (Mr Reith) said in his second reading speech when he introduced this bill. Although it was a short speech, it was very indicative of the way this government treats Australian workers. The minister said that this bill will remove a layer of complex detail from awards and relieve employers of the burden of complying with an extra set of obligations. He is dead wrong. The fact of the matter is that many employers benefit from the administrative simplicity that award-based superannuation arrangements provide. For example, employers benefit by having to pay employee superannuation contributions into only one fund rather than having many funds into which to pay those contributions. Imagine the increased compliance costs that an employer of 100 people would have if that employer had to pay superannuation contributions into 100 different superannuation funds. In addition, employers benefit in general by having an independent third party, the Australian Industrial Relations Commission, resolve disputes in relation to superannuation—something which this bill will specifically and deliberately take away.

Employers also benefit from knowing that, where their employees are members of industry funds, they are generally getting the best superannuation product that exists in the market. Industry funds operate on a not-for- profit basis and they have continuously out-performed the rest of the market in both returns on investments of members' funds and, importantly, on fees and charges.

Industry funds in general are tailored to suit the specific needs of workers in particular industries. For example, the C+Bus industry fund covers workers in the building industry and provides a range of specific features which building workers most need. This bill potentially will see thousands of building industry workers lose their automatic membership in the C+Bus industry fund or be lured away by funds which do not really meet their specific needs, whatever the claims of the glossy brochures may be.

Industry funds in general have outstanding insurance cover for death and disability at a price which would be impossible for any one individual to negotiate directly with an insurance company. So it is generally through award-based superannuation that employers are able to fulfil their common law duty of care provisions to their employees.

The minister also said that this bill complements the new choice of fund arrangements in Taxation Laws Amendment Bill (No. 7) 1997 . The implication from this is that employers will get a dual benefit—that the removal of superannuation from awards and the choice of fund will be like Christmas come twice for employers. On the government's own admission, the explanatory memorandum of Taxation Laws Amendment Bill (No. 7) states that employers will face increased compliance costs to the tune of up to $21 million in the first year of implementation and up to $15 million every year thereafter. And that from the government which promised small business a 50 per cent reduction in red tape. That does not include any estimate as to the cost to employees as a result of the government's model.

The minister also said in his second reading speech that this bill will prevent the Australian Industrial Relations Commission from dealing with disputes about superannuation by arbitration. He said that the commission will not be able to prevent or settle disputes about superannuation by making awards or orders, or maintain the settlement of such disputes by varying awards or orders.

The government has been accused on many occasions of seeking to deliberately provoke confrontation between employers and employees in the workplace. No better example exists than in its current attitude to the waterfront dispute, where all the evidence which is emerging suggests that the government has been an active provocateur—it is not simply some disinterested bystander, but is actively doing its best to promote and maintain that dispute.

This bill is the next secret ingredient in Mr Reith's special recipe for creating industrial disharmony in Australia. It is not enough for him to ram through draconian industrial relations laws which have undermined the legitimate rights of workers; it is not enough that he has since tried, on numerous occasions, to fiddle with that legislation—which he boasted, in the first instance, was fantastic—by altering the rules which apply to unfair dismissals to make it easier for employers to sack people. No, that is not enough for this minister. Now, as well, he wants to throw superannuation into the pot and to give it a good stir in the special way that only he knows how. This concoction that he has planned for Australian workers, particularly for part-time and casual workers who will be worse off if this bill is passed by the parliament, leaves a very bad taste in the mouth indeed.

It is my belief that if we remove the role of the Industrial Relations Commission from the settlement of disputes concerning superannuation we will go back to the days in the 1980s when there were quite a few disputes concerning superannuation. As someone who is Melbourne based, I can well recall the dispute between the storemen and packers and Woolworths when the catchcry of the workers was `choice of fund'. They said, `We want the right to choose where our superannuation money goes.'

It was only through the later involvement of the Australian Industrial Relations Commission and through the establishment of industry funds with their joint employee-employer representation that these disputes were resolved. But this government wants to turn the clock back on all that. I foresee, anticipate, predict, that there will be more industrial disputes if this bill is passed.

Currently, employers must comply with both award superannuation obligations and the Superannuation Guarantee Act 1992 obligations. This bill will amend the Workplace Relations Act 1996 by removing superannuation from the list of allowable award matters and also by expressly precluding the Australian Industrial Relations Commission from making what is called an exceptional matters order about superannuation.

The amendments will make current enforceable superannuation provisions in awards unenforceable from 30 June this year, and they will remove the Industrial Relations Commission's jurisdiction to prevent or settle disputes about superannuation by making awards or orders or varying any awards or orders.

Why are workers, particularly part-time and casual workers, going to be worse off under this bill? The answer is simple. When Labor introduced the superannuation guarantee in 1992, it was always intended as a minimum standard for employers to follow in paying superannuation contributions on behalf of employees. For example, the superannuation guarantee requires employers to pay superannuation contributions to those employees who earn more than $450 per month.

It also requires superannuation contributions to be paid by 28 July, following the end of the previous financial year—that is, it effectively requires employers to pay superannuation contributions once a year by that date or lose the many incentives that paying superannuation contributions provides, one of which is tax deductibility. Those minimum conditions are just that: they are the minimum conditions which employers have to meet. But, when Labor introduced the superannuation guarantee, we made it possible for employers to meet both their superannuation guarantee minimum obligations and their award-based obligations where the two differed.

The reason for that was that some industrial awards provide employees with superannua tion entitlements which are better than the superannuation guarantee minimum conditions. For example, many awards prescribe that employees should receive more frequent superannuation contributions than just once a year. This could mean more frequent payments on a monthly, or perhaps even on a quarterly, basis. This issue of how frequently superannuation contributions are paid is no small matter. For example, if a company becomes insolvent, there is a real prospect that, if the superannuation contribution has not been paid, the employees will miss out for that period, despite it being a legitimate entitlement.

The issue of employees missing out on their legitimate entitlements is one that has arisen very recently with circumstances such as Cobar and Woodlawn, and it is something that I know you, Madam Deputy Speaker, are personally concerned about. Employees should not miss out on their superannuation entitlements and, if we have payments on a monthly basis or on a quarterly basis—better arrangements in awards than are provided for by the superannuation guarantee—that will represent a greater protection for workers. It is a protection which they should not be deprived of.

The other point about more frequent payments is that it actually adds value to your superannuation at the end of your working life. The Australian Institute of Actuaries has done some modelling on the issue of frequency of payments. It has calculated that employees who receive payments on a more frequent basis than annually are significantly better off in terms of higher income on retirement. For someone who spends, for example, 40 years of their life in work, the difference between annual payments and more frequent payments could mean the equivalent of two years worth of age pension.

I need to remind this government that superannuation is about providing retirement incomes for workers. The government is obsessed with the idea that this is about strengthening trade unions, but it is about providing workers with decent retirement incomes. The government needs constant reminding that superannuation is about pro viding a better standard of living for all Australians, not just the privileged few who used to have access to superannuation before award-based superannuation was introduced by Labor.

Before Labor's superannuation reforms, only about 30 per cent of Australians had access to superannuation. I think now—and it is a figure that I note the Assistant Treasurer (Senator Kemp) uses from time to time—some 90 per cent of employees are covered by superannuation. The reason for that is award-based superannuation and Labor's superannuation guarantee. They are figures that we all ought to be proud of. The government, rather than trying to turn the clock back on these things, ought to be taking pride in the fact that in this country over 90 per cent of workers have superannuation.

Many awards specify better than superannuation guarantee minimum contribution levels, particularly for casual and part-time workers. It ought to be noted that the superannuation guarantee does not require contributions for workers who earn less than $450 per month. There are over 26,000 employees in the hospitality and textile, clothing and footwear industries who earn less than $450 per month.

Obviously many are part-time and casual workers and many are women. Under the relevant industrial award, those 26,000 workers receive superannuation entitlements at the rate of at least three per cent of their wage. So they are getting some superannuation from their award even though they get no superannuation under the superannuation guarantee. That translates into a modest accumulation of superannuation but, when taken over the long term and allowed to compound, could translate into a healthy account balance used to supplement a retirement income. The passage of this bill would immediately remove the entitlements of these workers unless they can be secured in an Australian workplace agreement or a certified agreement.

That means all those part-time and casual employees in the textile, clothing and footwear industry, the hospitality industry and many more in the retail industry will not be getting any superannuation paid on their behalf by employers. I mentioned earlier that many of the workers who tend to be concentrated in these particular industries are women and they are often employed on a part-time and casual basis which puts their earnings below the superannuation guarantee minimum threshold.

It should come as no surprise that the Howard government is happy about introducing another policy which disadvantages women. That is consistent with the attitude it has taken in areas such as child care, employment programs, aged care and the like. We saw the Prime Minister (Mr Howard) announce with some fanfare on International Women's Day what was described as a policy on superannuation and divorce. When we looked at it we found that it was a policy to develop a policy. It is quite clear when you look at the fine print that they are further behind where Labor was in 1995 when we were considering these issues. This government, after two years and having in its platform the idea that it was going to do something about superannuation and divorce, has in fact made no progress whatsoever in this regard.

This bill also removes the role of the industrial umpire. It places the onus on employees to negotiate superannuation entitlements, above the superannuation guarantee minimum, directly with their employer and have these incorporated in their terms and conditions of employment. How are employers going to do this? If an employer is no longer required to pay a part-time or casual worker superannuation they are not going to. It is that simple. Those workers will not get superannuation payments at all. It is worth noting an article in the Adelaide Advertiser on Friday, 27 March. It stated:

More than 50,000 South Australians could lose a total of $50 million in superannuation entitlements under federal legislation being considered by parliament this week.

. . . . . . . . .

Awards which cover areas including banking and finance, universities, the gas industry and local government involve provisions on superannuation which include a 3 per cent extra entitlement granted in the late 1980s in lieu of a wage increase. Many employers operating with these awards have paid this extra 3 per cent on top of the Superannuation Guarantee Contribution of 6 per cent which is paid to all Australians workers, usually as part of a corporate fund to which employees also contribute.

The risk here is that that three per cent which is currently being paid to all those workers—50,000 in South Australia—will simply disappear. The article quotes industrial relations consultant Mr Paul Acfield as saying:

. . . the erosion of employees' benefits may be an accidental—

I think he is being charitable—

consequence of the changes.

Some employers may continue to pay the 3 per cent . . . but for those who lose this 3 per cent, it will in effect be a 3 per cent wage decrease—the cutting of a wage rise granted 10 years ago.

Absolutely right. We have a situation where, employers having paid that three per cent on top of the superannuation guarantee, those workers in South Australia stand to lose that contribution and in the order of $50 million in legitimate entitlements as a result of this legislation.

The abolition of the Industrial Relations Commission's role creates an imbalance in favour of the employer by requiring those who lack negotiating power to negotiate with those who have negotiating power. I have already mentioned the benefits that employers get from knowing that their employees are in an outstanding product, in the form of an industry based superannuation fund. This bill will also undermine the position of industry super funds which operate as not for profit organisations and have consistently outperformed most other market based superannuation products in all facets—fees, charges, returns, insurance coverage.

It is clear that this bill, introduced by a government intent on dismantling the rights of ordinary Australian workers, will disadvantage a great number of employees, particularly those on low incomes. The government has not put up any credible argument that employees will benefit from the introduction of this bill, because there is none. The minister stated in his introductory speech that the proposal to remove superannuation from awards is not a new proposal but a part of the first Workplace Relations Bill introduced in May 1996.

That is true. However, amendments to the bill negotiated with the Australian Democrats added superannuation to the list of allowable award matters with the qualification that an examination of moving to a single superannuation regulatory regime was worth considering. The minister glibly makes reference to that in his second reading speech as if it is a foregone conclusion that the Australian Democrats will support this bill. But what the minister neglected to tell the House in his introductory speech was that the Australian Democrats had qualified their observations with the proviso that `workers are not made worse off as a result of any overriding or repeal of award superannuation clauses'. If passed, this bill will result in many thousands of workers, particularly casual and part-time women workers, being made worse off. The minister and the Australian Democrats need to be aware of this.

The minister made an extraordinary observation and claim in his second reading speech that award based superannuation provisions have `done nothing more than add to the complexity of superannuation administration'. What an extraordinary claim. Without award based superannuation we would not have the superannuation coverage that we have today.

It has extended the benefits of superannuation to many employees who did not have coverage previously. We have seen thousands of employees have access to additional funds to supplement their retirement incomes. It has provided employees with death and disability insurance coverage at a low cost, which low and middle income employees would never have been able to afford otherwise. It has extended superannuation coverage to part-time and casual employees. It has benefited employers through productivity wage trade-offs which were paid into superannuation accounts. These are just some of the benefits that award based superannuation has provided to workers.

So for the minister to claim that award super has done nothing than add to administrative complexity is ludicrous. It is laughable. Superannuation is a major achievement of the previous Labor government with support from the trade union movement. This bill reveals starkly just how this government plans to treat ordinary Australian workers. The House ought to have its attention drawn to the hypocrisy that the government are displaying in introducing this bill. They want to scrap super in awards, but they want to allow employers to continue to use the notional earnings basis—where do you find this; in awards—in order that they do not incur additional costs. This is an example of the government's hypocrisy on these matters.

This bill comes in association with legislation being brought forward by the government to implement what they describe as choice of superannuation. They want to introduce a situation where employers are required, forced, to offer a range of different superannuation products—they might turn out to be identical superannuation products—to their work force.

The experience in other countries where this has been tried, such as the United Kingdom and Chile, has been that workers have been persuaded to move into second-rate and third-rate superannuation funds and to move away from funds to which employers were contributing: for example, to personal superannuation schemes which clearly could not deliver the same kinds of outcomes. There has been outrage in those countries when the results of these sorts of policies have become known.

The background on superannuation is that back in 1983 less than 40 per cent of the work force were covered and probably less than 15 per cent benefited because often the schemes were not portable and if you did not get to retirement age with a particular company—and they were based on individual companies—you missed out on superannuation. The schemes were heavily biased against women, heavily biased against blue-colour workers and heavily biased against the private sector. Australia faced at that time, and we still face, some socioeconomic imperatives. We need to provide for a rapidly ageing population and we need to create a much larger pool of domestic savings in order to reduce our reliance on foreign debt and loosen the external trade imbalance constraint.

During the 1980s we saw industrial disputes, skirmishes, such as the storemen and packers dispute I mentioned before, and pulp and paper workers, meat workers, seafarers and crane drivers. In 1984 the campaign for occupational superannuation was stepped up in the building industry and it spread from there to metals and transport. In 1986 the Industrial Relations Commission intervened in a significant way to try to regulate the campaign and to resolve disputes concerning choice of fund. Ultimately, the government legislated to create a truly universal system of employer funded superannuation. The union movement had by the end of the 1980s secured industrial awards and agreements covering some 80 per cent of the work force. It had done that with the involvement of the Industrial Relations Commission—the very thing that this government is trying to wind back.

Total superannuation fund assets have grown from around $60 billion in the mid-1980s to $300 billion today and should exceed $450 billion by the end of the decade. To put that in perspective, it is approximately the total current market capitalisation of all the companies listed on the stock exchange. That means that the assets of Australian businesses and governments are, to a very large degree, owned by employees and held in their superannuation funds. Against this background, industry superannuation funds are a recent phenomenon, a uniquely Australian phenomenon, increasingly providing a model for social policy developers around the world. They are providing fully portable benefits in industries where just 15 years ago that was considered impossible—industries like hospitality, building and construction, and retail where casualisation and lack of continuity are endemic.

Those funds succeed because they are simple. The employer contributes to an account maintained in the name of each worker and receives interest based on fund earnings. They succeed because they are supported by unions. Increasingly also, they thrive due to cooperation from employers and employer associations.

You would think, given that kind of background and track record, that the government would be delighted to allow it to continue, to allow Australia's superannuation to build up to give us greater savings individually for our retirement and collectively as a nation. But what has been the government's strategy? It has been to abolish the Labor promise of government matching co-contributions, so diminishing superannuation from 15 per cent down to nine per cent, which we estimate will cost workers on average of the order of $100,000 on retirement. It has introduced the superannuation surcharge, which was said to be an attack on high income earners but is something which impacts on low and middle income earners as well. It has introduced opting out for part-timers and casuals and increased the threshold for opting out. It proposes to introduce the compulsory fund choice environment. Here it says, `We are going to do away with award based superannuation, we are going to do away with the role of the Industrial Relations Commission and we are going to leave it to workers to negotiate individually with their employers over superannuation.'

This contradicts all the objectives of an appropriate national retirement incomes model. We have had an excellent system which Labor has built up—something which has been envied by other countries—and the fact that the government has attacked it in the way that it has, notwithstanding the Prime Minister's promise that no worker would be a dollar worse off, leads commentators inevitably to conclude that government policy on superannuation is being driven simply by resentment of success of the labour movement in terms of its involvement in superannuation and the process of capital formation in Australia.

We are absolutely opposed to this bill. We are absolutely opposed to withdrawing from workers the right to have superannuation included in awards. We believe that the steps that both the Labor government and the trade union movement took during the 1980s were very much in the best interests of both work ers and the Australian nation. This government's steps, including the bill before the House, represent a retreat back to the past, a retreat back to circumstances where workers will be worse off, will not have the money to fund their retirement incomes for which they are entitled and will be dependent on the pension. We will be opposing this bill and we look forward to the support of parties in another place to ensure that it is defeated.