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Wednesday, 22 August 2012
Page: 9545

Ms GRIERSON (Newcastle) (11:38): It is a pleasure to rise and follow the member for Makin, who I think captured so well the Labor principles and policies we have introduced and why we have introduced them into superannuation reform. I too rise to speak in support of the Superannuation Legislation Amendment (MySuper Core Provisions) Bill 2011. This bill seeks to amend the Superannuation Guarantee (Administration) Act 1992 and the Superannuation Industry (Supervision) Act 1993 creating a cost-effective no-frills superannuation default product. It was the Australian Labor Party, under the Keating government, that first introduced compulsory superannuation, and today in 2012 our present government is building upon our great legacy by strengthening superannuation, by creating options for ordinary consumers and by increasing superannuation from nine to 12 per cent. With this bill we are implementing the central elements of MySuper and delivering on our government's election commitment to deliver a simple and affordable super product that will replace existing default super products. These reforms are part of Labor's Stronger Super package. It is a very extensive one and one that all of us on this side of the House take great pride in.

This bill authorises APRA (Australian Prudential Regulation Authority) regulated super funds to offer a MySuper product from 1 July 2013. The bill will make it mandatory for an employer to make superannuation contributions to funds that offer a MySuper product from 1 October 2013 ensuring that superannuation guarantee requirements are met. I must say that in all the time I have been here, one of the proudest achievements for me personally has been making sure the Australian Taxation Office took very seriously the matter of contributions from ordinary people, and from the businesses that employ them, actually being put away. I have seen the ATO become much more aggressive on that and I have seen government follow the recommendations. To see people die in their workplace only to find their superannuation entitlements were not being put away has a devastating personal impact on families and on people left behind.

This suite of legislation is something that we really should be very proud of, all of us. It makes it mandatory for an employer to make those contributions to funds that offer this product. Employers that pay default super contributions into funds that do not offer a MySuper option will, from that date, be in breach of their obligation and, as such, liable for the shortfall. This is about fairness for ordinary working people and ensuring that they have more money to retire with.

Within this bill are also the requirements for authorisation of MySuper products, as outlined by APRA, that must be met by fund trustees offering a MySuper product. It also contains the key features of such a product, as well as the permitted fees and charges associated with them. I think we know how important that is. There has not been consistency. There has been great inconsistency about fees in superannuation funds, and we want to see a downward pressure on those so that people do have confidence that the money they are putting aside is accumulating at the right rate and is not being eroded by a fee schedule that is too high.

The key features of a MySuper default product include a single diversified investment option. All members must have access to the same options, benefits and facilities. The same process must be adopted in crediting and debiting member accounts. Member's interests cannot be transferred without consent except to another MySuper product within the fund. To add to this, trustees will be permitted to charge only six types of fees within a MySuper product. These fees must also be described in the same way, ensuring that members, employers, advisers and analysts can make direct comparisons of MySuper products based upon actual fees paid. APRA will make this information publicly available, ensuring that those offering the MySuper product are acting in a transparent and accountable manner. How important is that for young people who are often not very aware of where their money is being put, or how it is being managed in superannuation funds, and who may be in several superannuation funds in part-time work?

MySuper will build upon and improve the standards of default funds, with RSE licensees having increased obligations to act in the best financial interests of those members of default funds. BT Financial Group has indicated that within 10 years our nation's superannuation pool will double to around $2.8 trillion. Superannuation is for many Australians their only source of private savings for retirement. By 2035, our superannuation system is expected to grow to $6.1 trillion, according to Treasury projections. Such a large industry and one than it is compulsory deserves our ongoing attention as a government to ensure that the financial interests of all Australians are managed effectively and efficiently. It is our responsibility as a Labor government to ensure that this vast pool of money is secure and managed in the best interests of working Australians and their families, now and for future generations of retirees.

Our strong super reforms have come about in response to the Cooper review into the governance, efficiency, structure and operation of Australia's superannuation system, commissioned in 2009 by our government and handed down the following year. As then minister for superannuation, Minister Bowen, stated:

However, with challenges such as the ageing of the population, we must improve the system for the future. Every dollar we save in unnecessary fees and costs will help Australians' retirement savings go further.

Australians are ageing. That is something our government recognises and is preparing for, not only in our reforms to superannuation but also through our $3.7 billion aged care reforms, ensuring that options are available for older Australians to retire with in comfort and security.

On 20 June the Sydney Morning Herald reported that many Australians should expect to spend around one-third of their lives in retirement. The Age Discrimination Com­missioner, Susan Ryan, stated that half the girls born today will live beyond 95. This clearly shows a vast difference between life expectancy during the time when superannuation was first introduced and the long and productive lives that our youngest generations today will enjoy into the future.

Research commissioned by National Seniors Australia indicates that almost 50 per cent of their current members have delayed, or intend to delay, their retirement to ensure their ongoing financial security into retirement. This clearly indicates that not enough is being saved. Of course, we have had the problem of the global financial crisis and the equity market underperforming. Is the reason for most of this that workers are not putting enough of their earnings aside, is it the way in which superannuation funds are structured or is it that money intended for retirement is being spent on the management of default superannuation funds?

Throughout the preparation of the Cooper review significant consultation occurred, with over 450 formal submissions. The review states:

The current superannuation system assumes that all members want to make choices about their superannuation and are interested in receiving a variety of superannuation related services. Default members are not adequately protected and can find themselves paying for services that they do not need or did not request and, on some occasions, they do not actually receive. Trustees are not always focused on acting for the benefit of members and maximising members' retirement incomes in an efficient and cost-effective way.

The simple fact is that consumers have said they would like access to a simple, low-cost, no-frills default option that maximises their interests and that does not have services they do not want—and that is what MySuper will deliver to them.

While there are those who plan meticulously ahead for their retirement, approximately 60 per cent of people in Australia do not actively participate in making choices when it comes to their superannuation fund or its ongoing management. That is understandable. Generally when a person begins a new job or career, perhaps in their late-teens or twenties, and begins their superannuation savings pool, retirement to them is far beyond the horizon, a distant and remote place in the future, something they never even think to consider.

But there is a correlation between high fees and the fact that consumers are not exercising the choices available to them. Unnecessary or unwanted options and services are being provided in cases where they are not requested or utilised. High fees ultimately mean a reduced funding pool for retirement. This is something our Labor government wants to reverse. We want to see lower fees and greater security and greater returns for older Australians—and that is what stronger super reforms are all about.

It is incredibly important that Australians have access to low-cost superannuation funds. Minister Shorten has stated that, on average, Australians pay approximately $85 each month in super fees. Compared to other monthly household bills—food, telephone, electricity and water—it is a considerable amount. Most people do not even know they are paying $85 in fees. Because superannuation is generally paid without us noticing, we lose track of the money trail, often blind to those ongoing fees.

Under our reforms trustees will be able to offer tailored MySuper products to employers of considerable size—those that contribute for at least 500 employees. Multiple MySuper products will only be offered by individual funds in limited circumstances to preserve any existing corporate brand that may currently operate. Of course, such trustees must have each product authorised as well.

By the middle of this century one-quarter of our population will have reached retirement. Today we must ensure that Australians will have enough money in their pockets at the time in their lives when they will need it the most. Labor's ongoing reforms to superannuation will ensure that, into the future, older Australians will have some peace of mind in their retirement, knowing that they will have—we hope—more money in their pocket because of our actions in this parliament today. Because of Labor's reforms, a 30-year-old full-time worker on average earnings will receive over $100,000 extra when they retire. Over the coming years we are gradually lifting superannuation from nine per cent to 12 per cent, benefiting over 8.4 million working Australians and their families.

Members of parliament get to travel around the world, and very few countries have a superannuation scheme such as ours. Many of them have a pension scheme of some kind, but when you consider the longer life span of people and the cost to government of an ageing population, that is not sustainable—and certainly some of the European countries are finding that out now. Yet superannuation contributed to by employers and by employees is one of the strongest policies we have ever seen in this country—it is the envy of the world. By lifting it from nine per cent to 12 per cent we are not just benefiting 8.4 million working Australians and their families but we are leading in terms of a very sensible approach to the demographics that Australia and the world are experiencing and the need for retirement security.

My government is delivering an extra super contribution to 3.6 million low-income Australians earning up to $37,000. Labor is also removing the age limit on the Super Guarantee, which means that over 50,000 Australians aged over 70 years will continue to be entitled to contributions. And people do make the choice to work longer. In the past it has been a disadvantage for them to work longer because of the fact that they were not able to benefit from any contributions to super. Our reforms will boost Australia's savings pool by $500 billion by 2035. This further strengthens our economy and ensures a fair Australia. MySuper is a Labor reform, and I commend the bill to the House.