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Wednesday, 23 October 2002
Page: 5728


Senator WONG (3:09 PM) —It is interesting how much the government appears to want to debate the issue of superannuation. I rise to support Senator Sherry's motion to take note of the answer provided by Minister Coonan in relation to the Commercial Nominees case and the failure by this government, as exemplified in her answer, to provide adequate compensation to employees who have been victims of the theft or fraud of their hard won superannuation savings which, as we all know, are supposed to be part of their retirement incomes. It really is indicative of this government's failure to recognise problems in allowing the market to operate unfettered in the area of superannuation, its failure to regulate properly and its failure to ensure that consumers, ordinary Australians, have the opportunity to obtain compensation when their savings are taken away through theft or fraud.

This concern that the government appears to have with regulating the market is also shown when one looks at their position on fees and charges, in particular exit fees. We know that massive exit fees already exist amongst retail superannuation funds. While some of them are reasonable, in the unregulated sectors there are some extremely unreasonable examples of exit fees. These operate as a substantial disincentive to people who wish to leave funds. It is interesting that we have a government that propounds the concept of choice in superannuation but refuses to deal with a policy factor—that is, the imposition of unreasonable exit fees—that is clearly limiting the choices available to Australian consumers.

We are aware of many cases of excessive exit fees charged against superannuation savings, and I will advise the Senate of a number of these. We have one example where, after 12 years, a fund member had built up savings of $65,500. He attempted to transfer his money to another fund and was told that around 18 per cent, being $11,500, would be deducted as an exit fee. This was not explained to him when joining the fund. Other examples are an exit fee of $4,000 imposed on savings of $33,000, an exit penalty of $1,796 on an account of $2,635— around 68 per cent of the total savings—and, most disturbingly, a punitive fee of $3,324 on savings of $3,300, which left the member owing the provider some $24.

Minister Coonan, consistent with her approach today, has previously argued that making the government rather than the market responsible for setting or regulating fees and charges is inappropriate. However, this position of the government bears little logical analysis. It is saying that this should be left to the free market when clearly the free market in this situation is causing significant problems for consumers in this area—it is a disincentive to fund choice. It is extraordinary that the government is refusing to engage in any regulation where there is clearly market failure in some instances on the issue of exit fees. I do note that Minister Coonan did concede at a press conference on 19 September when she was discussing portability that some funds might increase exit fees to stop people withdrawing their money under a choice regime and going to another fund. Despite this, we still see no action from this government to regulate exit fees, just as we see today in the answer given by Minister Coonan no action on compensating adequately Australians whose retirement savings are lost through theft or fraud.

The minister has stated that the government will reserve the right to regulate exit fees but has so far failed to act, despite clear evidence that there is market failure in relation to a number of funds and that this is a massive disincentive to choice of funds for many Australian consumers. It seems that the government is more interested in a superannuation sector which benefits the big end of town who want to get their snouts into the superannuation trough rather than protecting Australian consumers. That failure of the government is exemplified, as I said, in relation not only to exit fees but also to the inadequate compensation of Australians who are victims of superannuation theft or fraud. (Time expired)