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- Start of Business
- DISTINGUISHED VISITORS
- MINISTERIAL STATEMENTS
- Courts and Tribunals Legislation Amendment (Administration) Bill 2012
- Migration Amendment (Unauthorised Maritime Arrivals and Other Measures) Bill 2012
- Water Amendment (Water for the Environment Special Account) Bill 2012
- Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012
- STATEMENTS ON INDULGENCE
- Appropriation (Implementation of the Report of the Expert Panel on Asylum Seekers) Bill (No. 1) 2012-2013, Appropriation (Implementation of the Report of the Expert Panel on Asylum Seekers) Bill (No. 2) 2012-2013
STATEMENTS BY MEMBERS
- Million Hearts, One Voice
- Petrie Electorate: Cancer Council Relay for Life
- Aarons, Mr Joe, OAM, Lawn Bowls
- Storm, Ms Emmalee
- North Queensland Opera and Music Theatre
- Petition: Research and Development
- Driver's Licences
- Atkinson, Commissioner Robert, APM
- Wheat Exports
- Petition: Parliamentary Behaviour
- QUESTIONS WITHOUT NOTICE
- DISTINGUISHED VISITORS
QUESTIONS WITHOUT NOTICE
(Katter, Bob, MP, Gillard, Julia, MP)
(Hayes, Chris, MP, Albanese, Anthony, MP)
(Turnbull, Malcolm, MP, Swan, Wayne, MP)
(Rishworth, Amanda, MP, Gillard, Julia, MP)
(Bishop, Julie, MP, Gillard, Julia, MP)
(Champion, Nick, MP, Burke, Tony, MP)
- North Queensland
- DISTINGUISHED VISITORS
QUESTIONS WITHOUT NOTICE
Fair Work Act
(Pyne, Christopher, MP, Gillard, Julia, MP)
(Livermore, Kirsten, MP, Shorten, Bill, MP)
(Fletcher, Paul, MP, Gillard, Julia, MP)
(Parke, Melissa, MP, Burke, Tony, MP)
(O'Dwyer, Kelly, MP, Swan, Wayne, MP)
(Georganas, Steve, MP, Combet, Greg, MP)
(Bishop, Bronwyn, MP, Gillard, Julia, MP)
- Fair Work Act
- QUESTIONS WITHOUT NOTICE: ADDITIONAL ANSWERS
- PERSONAL EXPLANATIONS
- QUESTIONS TO THE SPEAKER
- QUESTIONS WITHOUT NOTICE: ADDITIONAL ANSWERS
- PERSONAL EXPLANATIONS
- MATTERS OF PUBLIC IMPORTANCE
- Australian Charities and Not-for-profits Commission Bill 2012
- Australian Charities and Not-for-profits Commission (Consequential and Transitional) Bill 2012
- Wheat Export Marketing Amendment Bill 2012
- Start of Business
- Meals on Wheels
- Blair Electorate: River Heart Parklands
- Parliamentary Friends of Small Business
- Deakin Electorate: Great Ryrie Primary School
- Bradfield Electorate
- Kennedy Electorate: Sikhs
- Men's Sheds
- Morris, Mr Ivan, Halvorson, Aunty Mavis
- China Study Tour
Wednesday, 31 October 2012
Mr FLETCHER (Bradfield) (12:52): It is a pleasure to rise to speak on the Fair Work Amendment Bill and to follow the member for Throsby. As it happens, I find myself following a former union official—but that is not a statistically unlikely thing to happen when one stands up to speak following a Labor member of this place. However, it is somewhat unlikely to find oneself following a member who was actually speaking about the wrong bill and who spent some 13 minutes telling us about the transfer of business provisions, which are not dealt with in this bill at all. They are dealt with in a bill which is to be debated two bills later on. But I suppose he would argue that it is 'the vibe'.
I do want to speak about the bill that is before the House this afternoon. In particular, I want to focus on the provisions in this bill which supposedly reform the arrangements under which modern awards specify default superannuation funds. The provisions in this bill dealing with those matters are a classic example of this government looking after its mates in the union sector—union officials who run superannuation funds at the expense of the broader community and going in completely the opposite direction to that which sensible procompetitive economic reform would dictate.
In the time that is available to me I want to make three points. Firstly, the current default arrangements for default superannuation funds are a cosy and anti-competitive racket. Secondly, the present introduction of the low-cost, generic MySuper product is a perfect opportunity to introduce more competition by saying that any MySuper product can be a default fund. Thirdly, the Minister for Financial Services and Superannuation has in this bill squibbed the chance to introduce increased competition. In fact, he has made the process less competitive. He has handed even greater power to the cosy club of retired union officials who run Fair Work Australia.
Let me turn firstly to the proposition that the current arrangements for default superannuation funds are a cosy and anti-competitive racket which serves the interests of a cabal of union officials. The superannuation system has grown enormously. There are now some $1.4 trillion under management in that system. In 2011-12 some $90 billion of funds flowed into the sector largely because of the compulsory superannuation arrangements. Of this, nearly two-thirds went into two classes of funds: industry funds and public sector funds. These two classes of funds generally use the so-called equal representation model, with half of the directors appointed by a union and half by an employer association. If you look at the statistics put out by APRA, the industry regulator, you find that in February 2012 there were 76 funds listed as industry or public sector for the 2010-11 financial year. If you analyse the annual reports of all of those funds, what you find is there was a total of 575 directors on the boards of whom 180 were appointed by unions.
The Labor Party over many years has consistently used the compulsory superannuation system to increase the power, influence and financial position of the union movement and its key personnel. Indeed, the current Minister for Financial Services and Superannuation and Minister for Employment and Workplace Relations is a former secretary of one of the largest unions in the country, the Australian Workers Union, and a former director of the largest industry superannuation fund, AustralianSuper. The default fund arrangements—or, I should say, the union involvement in superannuation—were specifically designed into the superannuation fund system when it was set up by the Hawke and Keating governments in the early 90s. Today the boards of industry super funds are stuffed with union bosses including: AWU boss, Paul Howes; Queensland ALP heavyweight and AWU strongman, Bill Ludwig, who is the father of the present minister for agriculture; TWU secretary Tony Sheldon and; until recently, Health Services Union officials Kathy Jackson and Michael Williamson.
Under the Fair Work Act, the so-called modern awards must contain a clause specifying the superannuation fund into which the employer must pay the employee's superannuation contributions. To be nominated as a default fund under a modern award is very valuable because it guarantees a stream of contributions. The current process for the selection of default funds lacks transparency, is littered with inherent conflicts and quite inappropriately favours union-dominated industry superannuation funds. Analysis conducted by the Institute of Public Affairs in 2010 found that across 166 modern awards approved by Fair Work Australia, there were a total of 566 superannuation funds specified. Of these, 513 were industry funds or public sector funds. AustralianSuper was specified as a default fund in over 70 awards.
Why is it that Fair Work Australia so readily signs off on modern awards which entrench the flow of contributions to union-friendly superannuation funds? It might be that Fair Work Australia is stacked with ex-union officials. Between December 2009 and December 2011, 10 people were appointed as Fair Work Australia commissioners by the Rudd-Gillard government and, of these people, eight had union backgrounds. These arrangements give the unions a degree of control of superannuation which goes much further than the small and shrinking share of the workforce who are union members. Union membership is now down to about 18 per cent of the workforce and around 12 per cent of the private sector workforce. But these arrangements serve the interests of unions very well because, amongst other things, it means a large number of well-paid directorships to be allocated amongst the union mates. The annual report of one industry fund, Cbus, revealed that two directors—presumably one was the chair—received over $90,000 a year and that several other directors received more than $50,000 a year. In some cases these fees are pocketed by the individual union nominated directors; in other cases the fees are paid to the union. But in either case the arrangements suit the union movement very nicely.
The Cooper review into superannuation recommended that the current equal representation model should be comprehensively reformed. Curiously, former union official Bill Shorten has ignored that particular recommendation.
Opposition members interjecting—
Mr FLETCHER: That is an extraordinary surprise, as my colleague points out. Let me turn, therefore, to the opportunity which the introduction of MySuper products offered to introduce more competition. MySuper was recommended by the Cooper review, and the notion is to have low-cost, default superannuation products designed to meet the needs of those Australians who are not actively engaged with their own superannuation and do not make an active choice.
The government is currently in the process of legislating the consumer protection requirements, which it considers important in a default fund product, through the various pieces of MySuper legislation. These products are going to be very widely offered, including by retail superannuation funds. There is no reason at all that every product which qualifies as a MySuper product should not be able to compete freely in the default fund market. After all, if the policy objective is to ensure that somebody who defaults into a fund—that is, somebody who does not make an active choice but simply ends up in the fund specified by the modern award which covers his or her industry—ends up in a fund which is low-cost and tailored to his or her needs as a customer with low engagement, then by definition any MySuper product should fit the bill nicely. But the minister has a very different policy objective. His objective is to ensure that the current cosy arrangements stay in place so that the industry and public sector funds continue to get the lion's share of contributions—and they are doing so, of course, at the expense of people whose money is taken by force of legislation. That money is being used to contribute to the size and scale of economic entities largely controlled by union officials.
The Labor Party promised in 2010 that it was going to do something about this. It paid lip service to the principle of allowing greater competition and the choice of funds. Its 2010 policy contained a promise to introduce an open, transparent and competitive system with a process to select default funds under modern awards. Bill Shorten dragged his heels for as long as he could before reluctantly proceeding with this. Since that time—
The DEPUTY SPEAKER ( Mr Mitchell ): Order! The member knows to use people's correct titles.
Mr FLETCHER: Thank you, Mr Deputy Speaker. The minister has taken every opportunity to white ant, undermine and ignore the recommendations of the Productivity Commission. When the draft report was released earlier this year suggesting as one possibility the establishment of a new body independent of Fair Work Australia with the sole purpose of selecting and assessing the funds to be listed in modern awards, the minister promptly rushed out a press release on 22 August 2012 stating that the Gillard government would preserve the role of Fair Work Australia in selecting default funds.
With the final report now released and the legislation now before us, it is clear that this government has ignored much of what the Productivity Commission has recommended in framing the provisions of this bill. For example, this bill will impose a limit on the number of MySuper products in modern awards of just 10, contrary to the clear recommendation of the Productivity Commission that there should be an unlimited list of default funds. The Productivity Commission proposed a default superannuation panel. That will now not be created as recommended; instead it will be subsumed into the existing minimum wage panel. The new panel is not the final decision maker under this bill, as was recommended by the Productivity Commission; rather, the full bench of Fair Work Australia will approve default funds in each award after a recommendation from the expert panel.
The process of including funds in awards will only occur every four years, starting in 2014 when modern awards are due for review as opposed to an ongoing application process. The bill will now require that all awards have default funds, whereas currently there are 13 awards that do not list default funds and are therefore open to competition. That is clearly a serious oversight, and the minister has not wasted any time in fixing that up to make sure the interests of his mates are looked after. Instead of ensuring genuine competition, this bill will impose an additional layer of government intervention into the default fund market. There is absolutely no justification for doing this and for imposing the additional cost, complexity and delay which comes with that additional intervention.
Let us be absolutely clear in the House this afternoon. This bill, despite the rhetoric, has absolutely nothing to do with delivering a more competitive process for choosing default superannuation funds. On the contrary, it makes the process less competitive and hands even greater power to the retired union officials who run Fair Work Australia. This is nothing short of a grubby stitch-up by Minister Shorten and the Gillard Labor government to look after their mates in the union movement and put a distant second the interests of the millions of Australians who are compulsory investing in super.
If this bill is passed it will see the continuation of a process under which conflicted parties within Fair Work Australia continue to select default super funds under modern awards. The minister has been so desperate to protect the vested interests of his friends in the union movement that he has lost sight of his responsibility as a minister of the Crown to act in the public interest. What we are reminded of by these developments is the very close relationship between the industry superannuation sector and the parliamentary Labor Party. Let me just remind the parliament that there are four former directors of Australian Super who have become federal Labor parliamentarians or candidates—the minister, Greg Combet, Doug Cameron and Cath Bowtell.
The DEPUTY SPEAKER: Order! Again, the member for Bradfield will once again be reminded to refer to members by their correct title as is required under standing order 64.
Mr FLETCHER: Thank you, Mr Deputy Speaker. You are doing a sage job of trying to defend these current arrangements. This government is clearly not doing what needs to be done when it comes to ensuring that employers and employees in default superannuation can benefit from genuine competition in that market.
It is deeply disappointing that the coalition has been given no time to consider this legislation in detail or to have detailed consultations with stakeholders on this bill. It is clear that the arrangements for this bill coming into the House—the process—do nothing to improve the confidence that the House might have in the merits of the policy that we are considering today. The coalition is therefore gravely concerned about the provisions in this bill. We are certainly reserving our right to move amendments in the Senate. I also make the point that if it is clear that the government is not going to do what needs to be done to improve competition in the field of default superannuation then, if the coalition is elected to government at the next election, we will take the actions that need to be taken to improve competition in this area.