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Wednesday, 15 May 2013
Page: 3223

Mr SHORTEN (MaribyrnongMinister for Financial Services and Superannuation and Minister for Employment and Workplace Relations) (11:48): I would like to thank those members who have contributed to this debate—although I have to say the member for Riverina has not convinced me, with his anti-union bias, to support their amendments. I do think that occasionally the evidence and facts should come in, rather than letting prejudice, bias and anti-union bigotry overcome them. We need to have a debate about fact. Anyway, on the points on which the member for Riverina agreed with our bill, I obviously agree with him.

Mr McCormack: Good on you, Bill!

Mr SHORTEN: It is the least I could do! The Superannuation Legislation Amendment (Service Providers and Other Governance Measures) Bill 2012 is the fourth and final tranche of legislation implementing the government's MySuper and governance reforms. These reforms originated from the groundbreaking work of the government-initiated Super System Review, led by Jeremy Cooper. I am pleased to confirm that Mr Cooper, whose report was so much quoted by those opposite, has in fact agreed to chair the government's superannuation charter group, which will assist in developing the government's proposed superannuation charter.

In support of the government's MySuper reforms, the Super System Review considered the governance, efficiency, structure and operation of Australia's superannuation system. It examined measures to remove unnecessary costs and better safeguard the retirement savings of all Australians. Among the review's findings were that fees and superannuation were too high and that choice of fund in superannuation had failed to deliver a competitive market that reduced costs for members. MySuper was at the heart of the review's recommendations and is designed to focus superannuation funds on the core purpose for which they exist: optimising retirement income for members.

This Labor government has already implemented three whole tranches in this area, and this bill finishes the job—brings home the bacon, as they say. It contains the remaining MySuper governance and transparency reform announced as part of the Stronger Super package in December 2010. From 1 July 2013 funds that have received the APRA authorisation will be able to offer MySuper products, and from 1 January 2014 employers will only be able to make default contributions to a fund that offers a compliant MySuper product. The industry recognises that the improvements in the transparency and consistency of disclosure will result in greater comparability, and it expects that this will result in lower fees. Indeed, we are already seeing MySuper putting downward pressure on superannuation fees and charges, which translates into more money in retirement for Australians.

From 1 July 2013, the requirements for trustees of superannuation funds will rise and trustees will have new duties, including giving priority to beneficiaries over other persons. Also from 1 July, the reforms contained in the Superannuation Legislation Amendment (Trustee Obligations and Prudential Standards) Act 2012 will ensure that the directors of super funds are appropriately accountable for meeting certain duties to members, including acting honestly, managing conflicts of interest and acting in the best interests of the members. These are good reforms on governance and I note for the record that those opposite—who want to talk about governance—choked when they had the chance to vote in favour of better governance and voted against it.

My thanks go to Jeremy Cooper and the members of the Super System Review Panel: Kevin Casey, Greg Evans, Sandy Grant, David Gruen, Meg Heffron, Ian Martin and Brian Wilson. The review was ably assisted by the secretariat, with staff drawn from Treasury, including Roger Brake and the superannuation unit; Roger Brown and Wilson Sy, who were seconded from APRA; Hilda Miller, Philip Russell and Sophie Trumble, who were seconded from ASIC; and Pedro Cafe, who was seconded from the ATO—sadly, he has passed away since the completion of the report. The secretariat also included representatives from the private sector: Scott Donald from the University of New South Wales; Peggy Haines from Freehills; Paul Murphy from UniSuper; and Brad Tallents on secondment from KPMG. I would also like to publicly acknowledge the work of the Stronger Super peak consultative group that provided advice on the design and implementation of these reforms.

Thanks must also go to the superannuation industry, particularly the four superannuation associations—the Association of Superannuation Funds of Australia, the Australian Institute of Superannuation Trustees, the Financial Services Council and the Industry Super Network—for their invaluable contributions. I would like to publicly acknowledge the work of the regulators, both the APRA team led by Katrina Ellis and the ASIC team led by Alex Purvis. Finally, I would like to thank the team at Treasury including, but not limited to, Jonathan Rollings, Adam Hawkins, Alan Mallory and Melissa Bray for their work in developing these significant reforms.

This bill was introduced into the parliament in November 2012. It was then referred to the Parliamentary Joint Committee on Corporations and Financial Services, which reported on 5 February 2013. The committee made eight substantive recommendations, six of which will be implemented through amendments to this bill or otherwise. The government will also be making additional amendments to the bill following further industry consultation. Those opposite are sufficiently arrogant that they think that, when you amend a bill following consultation, it is a sign of weakness. To me that is a sign of flexibility, of pragmatism and of having listened. That is what we have been doing.

The bill includes the Cooper recommendation which will override any provision in a fund's governing rules that stipulates that a trustee may or must use specified service providers or only invest in or through specified entities. The bill also renders ineffective any provisions in a fund's governing rules that prohibit a director or an individual trustee from voting on a matter relevant to the fund. Limited exceptions will be allowed, such as when a conflict of interest or duty exists. This will ensure that a superannuation fund's governing rules operate in the best interests of its members.

This bill addresses a regulatory gap identified by the Cooper review by removing exemptions from certain Corporations Act resourcing requirements for entities that are regulated by both APRA under the Superannuation Industry (Supervision) Act 1993—the SI(S) Act—and by ASIC under the Corporations Act 2001. Under the bill, these entities will need to meet Corporations Act resources and risk management requirements in respect of their non-superannuation activities.

The bill increases the time limits for members and beneficiaries to lodge complaints with the Superannuation Complaints Tribunal so these will be more closely aligned with the time limits of the courts and the Financial Ombudsman Service. Members will be able to obtain information from trustees in relation to the decisions that affect them, which will improve transparency and promote accountability among superannuation funds.

This bill responds to the views of the superannuation industry and concerns about director liabilities that were raised in relation to the Superannuation Legislation Amendment (Trustee Obligations and Prudential Standards) Act 2012. Firstly, the bill inserts a requirement for persons seeking to take legal action against a director for the breach of their duties to initially seek leave from the court. Secondly, the bill extends the availability of the defence of directors and trustees that their breach was due to a reasonable mistake. This defence will now cover breaches of MySuper duties. A third change is being made, following consultation on exposure of this bill, to the defences in relation to investment and management of reserves; the changes will clarify the defences available where a trustee or director can establish compliance with the covenants and MySuper obligations that are relevant to the particular loss or damage suffered. These changes have been developed in consultation with industry and are designed to better balance the rights of super fund members and the protection of directors and trustees against frivolous or vexatious litigation.

The government will move two sheets of further amendments to this bill. These amendments respond to the parliamentary joint committee's recommendations and to further consultation with, and listening to, industry. These Stronger Super reforms deliver on our election commitment to provide a better deal for the many Australians who choose not to take an active role in the management of their superannuation but who instead rely on superannuation funds to act in their best interests. These reforms will also improve the governance, transparency and integrity of Australia's superannuation system.

More importantly, the MySuper reforms are a great example of the triumphant power of good ideas and the importance of looking forwards, not backwards. MySuper, this bill and the other bills show that ideas remain powerful in Australian politics—especially when they are backed by belief, listening and strength. The idea that Australians, irrespective of their level of engagement with their superannuation fund, deserve a better deal from their super fund is a powerful idea. The record will reflect that these ideas will become law. It has taken a lot of argument, persuasion and debate to get MySuper on the statute books but it will happen. As a result of this bill and the ones preceding it all Australians will retire with more superannuation, they will end up paying less fees and they will have a better standard of living in retirement to enjoy those 20, 30 and 40 years of retirement. This is an argument worth having in this parliament.

Labor is the party of superannuation. Every time the coalition have had an opportunity to vote to increase superannuation they have said no. Every time they have had a chance to promote mandatory universal superannuation, as the record reflects, they have voted against it. They voted against a rise from three per cent to nine per cent. Former Prime Minister Howard broke his promise to take superannuation to 15 per cent in 1996 and yet again, as recently as last year, when we proposed increasing superannuation from nine to 12 per cent, the coalition returned to their DNA and voted against it. But, nonetheless, the good ideas have triumphed over the bad ideas.

We believe fundamentally that, because of these reforms, we have a unique national institution of compulsory savings which puts us among the best in the world. The opposition have always reflexively voted against increasing compulsory superannuation. Only Labor has the conviction and the foresight to increase universal superannuation to 12 per cent. We are once again looking ahead—not to the next poll, but to the next generation—and planning for the future. We are advancing an idea to empower the ownership of superannuation policy by the people through a charter of superannuation overseen by a 100 per cent apolitical council of superannuation custodians.

The coalition have said, yet again, that they will not proceed with this very good idea. But we shall not relent on this argument either and eventually we will succeed. They would rather see superannuation stuck without a consistent regime, that does not prioritise the needs of adequacy, fairness, sustainability, longevity, certainty and prospectivity in our policies. We want to have a regime which looks over the 20-, 30- and 40-year horizon ahead. In a debate on superannuation and this bill, all of this amounts to one party looking forwards and one party looking backwards. Superannuants deserve better. Australians deserve better. I commend this bill to the House.

Question agreed to.

Bill read a second time.