Senator MARGETTS (5:59 PM) —The Taxation Laws Amendment Bill (No. 3) has a number of components, and I would primarily like to comment on the choice of superannuation fund and the savings rebate provisions in the bill. There has been a continual call from the Greens to ensure a greater level of choice in obligatory retirement savings schemes. The Greens WA believe that choice, in principle, is a worthy goal that allows consumers to identify and promote their individual interest. It allows them to have control and ownership of their investments and to choose to support investment companies that are in line with their own financial or ethical interests.

Choice gives credence to different values, priorities and ideas. Choice is a great concept in theory. In reality, the choice scheme presented by the government comes with a whole lot of problems for consumers, employers and fund providers. In reality, the problems are so significant that it is dubious that there will be an overall positive outcome for this regime.

Before I launch into a discussion of the bill at hand, I would like to make a point that I have made many times before. There has been a call from the Greens to recognise that obligatory investment programs, such as compulsory superannuation or RSAs, are not necessarily the best investment vehicle for workers. We have continually pointed out that investment in such things as a small business or a home may provide more substantial and far reaching benefits. This goes beyond the direct benefits as financial investments and recognises that there may be substantial or ongoing human benefits in terms of use value of such investments and, in the case of investment in small business, ensuring the capacity of older people to continue working.

Getting back to the bill, there is a plethora of extremely worrying issues in relation to the issue of choice in superannuation funds. The government's approach is haphazard, inconsistent and ideological, and it fails to recognise the realities of the superannuation marketplace. The government has been claiming it has been doing a wondrous thing for Australia's citizens by providing them with choice in their superannuation funds. The reality is less than wondrous.

Firstly, the Senate Select Committee on Superannuation received a substantial amount of evidence indicating that employees were not especially interested in choice, nor were they equipped to handle it. The government's push for choice seemed largely based on an ideology that sees liberty as paramount in all circumstances, rather than on a genuine pragmatic interest in responding to community desires.

Secondly, the regime provided is significantly substandard. What they have really provided is a regime that offers employers choice. Employers are the ones that choose what range of choice they will offer their employees. Employers will benevolently decide to offer unlimited choice, and employers will still have the power of veto over their employees' choices. To rub salt in the wound, there is no independent arbiter to whom the employee can appeal.

It is a regime that leaves underinformed consumers with an uphill battle to understand the differences in funds. It is a regime that diminishes the longstanding union involvement that has protected union rights. It is a regime that gives consumers few opportunities to gain redress if funds are sold for the wrong reasons. It is a regime that increases compliance for employers, and marketing costs for fund holders. It is interesting that this government, which calls welfare beneficiaries `customers', seems to think that the customers of superannuation do not have the right to have some accountability in what has been happening.

It is a regime that may not actually usher in real investment choice. A choice of four different funds does not necessarily translate into four substantially different investment choices. The focus of choice is not on which financial institutions can make similar investments but on the choice of investment targets. It is a regime that does not consider or accommodate people who may want to invest ethically or locally. Despite all these problems, it is a system that, until a short time ago, the government was attempting to rush through parliament before 1 July 1998.

Let us look at real choice. The crux of offering real choice, we believe, could be seen as threefold. Firstly, real choice offers the ability for employees to choose substantially different funds. The funds must provide the ability to choose the level of risk and growth, the locality of the investment—it could be off-shore or in Australia, and it could be regional—or the type of investment, ethical or otherwise.

The Greens WA have continued to call for options that support the Australian economy and employment within an ethical context. We have frequently pursued options within superannuation funds for investment in locally or regionally owned small or medium business; ecologically sustainable investment; non-military oriented, peaceful investment; investment that does not exploit people from developing nations; or options which do not force individuals to invest in industries that they believe are unethical—because my ethics may not be the same as everybody else's, and in fact I am sure they will not be.

Secondly, real choice requires comprehensive education so that each individual can determine what their interests are and which fund matches those interests most closely. Thirdly, real choice involves uniform disclosure among competing funds. Consumers must be able to accurately and confidently distinguish between the products offered. Associated with education and disclosure is the notion that real choice involves the absence of unrelated influencing factors. The lure of a kickback for an employer or the promise of a get-rich-quick scheme by rascally commission agents should not be considerations. It is broadly agreed that education and uniform disclosure standards are crucial.

These suggestions have been coming from a whole range of participants in the industry. Yet the government plans to make this change without ensuring or providing the resources for education, as Senator Conroy has mentioned. The resources are downright inadequate to provide clear and easily accessible information on which to base decisions. The Australian Consumers Association has estimated, by looking at the budget of the Australian Taxation Office, that the government has allocated the hearty sum of $1.60 per fund member, to be spent over four years. Whoopee!

The decision about which super fund to invest in is, for many people, perhaps the most significant investment in their lives, and the government gives them that princely sum to find out what they are doing. Without adequate resources, even the most creative education campaign cannot operate effectively. The government's pledge of $12 million over four years is judged to be hopelessly deficient on all fronts.

The Greens WA applaud the deferral of the operation of the choice provisions in the bill. The deferral was ostensibly necessary for a proper education campaign to occur. The government, however, did not indicate that they would defer the starting date for such substantive reasons. Their commitment to proper education, therefore, is questionable. The deferral was actually out of necessity, because the legislation was slow in moving through the parliament.

The other fundamental prerequisite for real consumer choice is the establishment of uniform and comparable disclosure requirements. The committee report extensively outlines the need for clear information that is easily digestible and allows consumers to make accurate comparisons between different options. Simple and meaningful key features need to be in a standard format to enable rational and accurate comparisons. The Greens acknowledge that the government is working on this aspect, and we will be keen to scrutinise the regulations.

Let us go to the default fund. The government's treatment of the default fund shows a fundamental misunderstanding of the superannuation marketplace. There is a fundamental refusal to accept the realities of the willing ness, or lack thereof, of the community to take an interest in superannuation. The government has provided that the default fund can be any fund that the employer chooses. There is a fundamental refusal to accept that there are risks involved in leaving this choice to employers. Those people who do not think that coercion exists in the workplace are naive in the extreme.

Let us look for a moment at the inconsistent reasoning behind this whole issue. Let us look at the reason that Australia has decided to have a compulsory superannuation scheme in the first place. The very first point that comes to mind is demographics. It raises a good question: why did this happen? I guess partly it was because Labor did not want to look at what was necessary to provide properly funded pensions, but one fundamental reason is possibly that they thought it was impossible to rely on all Australians to make long-term financial decisions in their own interests.

Of course, on a deeper, structural level, compulsory superannuation was introduced to ensure that government could reduce its obligation in respect of older people on a per capita basis. It is a crucial step on the road to dismantling and stigmatising the universal pension. It fits very neatly with the economic fundamentalist philosophy of absolving governments from all responsibility to maintain equitable living standards for all Australians throughout their lives.

Where there is a compulsory superannuation scheme in place, there will always be a certain number of people who will not actively choose a super fund. Regardless of the amount of education that is offered by the government, there will always be a certain percentage of people who will not investigate which super fund will best meet their needs. It may be for reasons of financial illiteracy or because it is not an issue that they care to turn their minds to, but realistically there will always be this percentage. Indeed, this has been the experience in state schemes in New South Wales and Queensland offering choice, and where choice has been offered between funds. The government, however, has a naive belief that its education campaign can overcome all apathy or ignorance in the communi ty. Clearly this is at odds with reality and experience.

When the reality of apathy is taken into account, the default fund becomes a crucial and important instrument. The employees who do not actively choose a super fund will be left to the whim of what the employer chooses. Granted, this may not always be a bad thing: some employers may choose very good funds to have as default funds. However, this is not assured. On a most conservative calculation, if only one per cent of the work force end up in bad default funds and they lose only $20,000 each, this will total a loss of $2 billion. This possibility does not seem to concern the government.

A major concern is that employers are not subject to any legal action if they fail to act prudently. Employees effectively have no legal redress for negligent decisions by employers. The government has stripped the AIRC of its power to arbitrate on superannuation matters, and the constitutionality of the Superannuation Complaints Tribunal is questionable. Employers will have a distinct incentive to go with the fund that offers the lowest rate of compliance cost or some kind of kickback. There is a clear need for an impartial dispute resolutions body in light of the introduction of the high level of discretion for employers.

The Greens (WA) support the committee's view that minimum requirements should be applied to default funds to ensure their integrity. Such requirements are not especially burdensome as many funds worth their salt would comply with the minimum standards anyway. In addition, the Greens (WA) see merit in determining the default fund by reference to the relevant industrial award where that is applicable.

As I have made clear on previous occasions, I clearly reject the right of an employer to influence in any way the membership of an employee in a retirement savings account. There are clear drawbacks to these accounts. They have no minimal control of some group at least theoretically representing their contributors. RSAs represent investment that is not transparent and which is determined by banks.

Investment in the banking sector is open to international players. Increasingly, even those banks whose character is presented as `Australian' have substantial investments, including ownership of banks, abroad. Ownership of foreign banks often entails a management structure where foreign interests are directly represented and funds are freely transferred and invested in any nation, and assets collected in this nation may be lent in any nation. The interests of management in such banks may be totally divorced from the interests of Australia, Australian investors, Australian industry or the Australian economy. The Greens will be supporting measures to ensure that incentives to commission agents and any kickbacks to employers are prohibited.

The legislation seeks to strip superannuation of its status as an industrial relations issue. Significant superannuation gains have been made by unions through both the judicial and legislative process. The industrial setting of superannuation is currently manifested by union representation on industry funds and superannuation clauses in awards. This bill effectively removes superannuation clauses from industrial awards and establishes super as an issue for direct determination between an employer and an employee. Any kind of collective decision making for superannuation arrangements will be watered down significantly. The expertise built up by unions and their important role in consumer protection will be largely lost.

I believe the industry funds have been sensible, secure and valuable investment funds for members in the past. Many of the industry funds already provide choices to employees regarding how their funds are invested. The presence of the unions has meant that many workers have had a strong and informed voice to advocate for consumer benefits on their behalf. In addition, many industry funds were able to keep administrative fees low by economies of scale and minimal marketing.

The proposed choice regime is supposed to provide, as indicated in the minister's second reading speech on the bill, `greater choice and control over their superannuation savings'. As outlined, there is no assurance it will provide choice, and whether it will provide control is highly questionable when many employees have little education or expertise in investment funds.

This industrial relations change is a significant change that should not be lightly dismissed. I notice the Democrats and the ALP have recognised this significance: their respective positions on this issue both attempt to ensure that superannuation remains within the award system. This, we believe, is a valuable goal. The issue for the Greens is going to be whether or not the issues of choice within this bill and within these schemes are realised; so we have a dilemma and we are still listening to the debate as it goes on.

This change is indicative of a broader government plan that undermines unions and other longstanding institutions that were formed to address systematic inequalities of wealth and power. We have the work for the dole scheme and its transfer-the-problem-to-the-individual musical theme of `search for the hero inside yourself'; so if you do not have a job, it is your fault because you have not looked for that hero far enough inside yourself.

The problem comes down to putting the finger on making people feel bad about being recipients of welfare. There are a lot of issues here tied up in these kinds of things about whether or not people have the right to continue to be involved with industry funds, but there is also the issue of whether or not these industry funds can offer the real range of ethical choices that exist.

The savings rebate—or the `tax offset' as it is referred to—is totally inappropriate in the context of the government cutting the services and benefits for the most disadvantaged in our society. It does not even come close to ameliorating the wads of funding the Treasurer has slashed in the last few budgets. The savings rebate is a replacement of the Keating-Willis superannuation contribution matching where the government could match employee contributions. As we pointed out at the time, that scheme had major problems as it used taxpayers' money collected from all to fund retirement incomes on the basis that those who have more shall receive more and those who have less shall receive less. It amplified and extended the imbalances in working life into retirement.

Despite this fundamental inequity, the Keating-Willis plan was worth nearly seven times the benefit of this Costello rebate. The rebate promises a maximum of 15c in the dollar, as opposed to a superannuation contribution that was matched dollar for dollar—thus there is an 85 per cent reduction in benefit. Worker contributions of $1,000 would have gained an extra $1,000 under the Keating-Willis plan. Under the Costello plan, they receive a princely $150.

The savings rebate is typical of the kind of smoke and mirrors approach the government tries to use when it is trying to sell an inequitable measure as a positive for all. For the savings rebate to be characterised as a benefit for all, certain assumptions must be made. There must be an assumption that everyone is financially capable of making superannuation contributions, or that everyone has sufficient savings or investment income to be able to take advantage of the rebate. Clearly, these assumptions bear no resemblance to reality.

Low wage earners and social security recipients spend a high proportion of their income on basic necessities and have a limited capacity to save. Even if these people could save, the level of savings would not enable them to take full advantage of the rebate. They would have to contribute $3,000 per annum to superannuation or save between $50,000 and $100,000 in other savings vehicles to receive the full $450 rebate each year. The main beneficiaries of this rebate are high income earners and wealthy retirees. It is not a progressive measure.

With respect to payment of PAYE, PPS, RPS and so on to the Australian Taxation Office, this bill requires remittances by electronic means. The government has created a curious situation. While an attempt to rationalise and streamline the system of remittance is positive, negative and unfair implications have been ignored. The government has obviously turned a blind eye to the implications that the change has for business. Forwarding payments by cheque has previous ly been a perfectly legitimate form of commercial transaction in this country. Now it is not even an option for large remitters. Beyond the expensive and time consuming compliance measures that businesses are faced with, it will be an offence, and there will be a penalty, for failing to pay electronically. These fines are downright unfair and misguided. They are not aimed at what they are trying to prevent—that is, stopping large payers from deferring payment because a cheque is not cleared for some days.

All in all, I think there are some major problems. The situation that has been presented to us is clearly unacceptable and unfair. It is another example of the government turning a relatively simple concept into a dog's dinner. The bill is a disaster. Nearly every aspect contains anomalies and injustices. This is not a bill to be proud of. It is an embarrassing bill that has wasted a lot of people's valuable time and energy.