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Monday, 23 October 2017
Page: 11500

Ms O'DWYER (HigginsMinister for Revenue and Financial Services) (13:10): I'd like to thank those members who have contributed to this debate, in particular the very eloquent and thoughtful contribution from the member for Banks, who also takes a strong and special interest in this subject as the chair of the House Standing Committee on Economics. I commend you, Member for Banks, for the great work you're doing there.

The measures in the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017 will ensure that choice of fund is provided for over one million more Australians and that salary sacrifice contributions are reflected in members' retirement savings. It is part of a broader package of government reforms that is squarely focused on protecting members' money and members' interests with a strong prudential regulator, APRA. Schedule 1 of this bill extends choice of fund to around one million people covered by federal enterprise bargaining agreements. David Murray, former chair of the financial system inquiry, said of the financial system inquiry at a recent Senate committee inquiry hearing:

… we found that the outcomes for members were weaker than they should be … driven by a weakness in competition around choice of fund, choice of product, a sameness of asset allocation in the system and weaknesses in information for members.

As a result of this measure, more people will be able to choose for themselves where their compulsory superannuation contributions are paid, including into a self-managed superannuation fund. It will no longer be possible to deny choice to individuals on the grounds that they are part of an enterprise bargaining agreement or similar determination.

An example which shows the problem that this bill will address is best demonstrated by evidence heard in the Heydon royal commission from Mr Bracegirdle, who, when he became a full-time employee of Toll Holdings Ltd, discovered that he was not able to have his choice of superannuation fund under the arrangements agreed between Toll Holdings Ltd and the TWU. Mr Bracegirdle has personal reasons for wanting to choose his superannuation fund. His daughter is disabled and will never be able to work. He wants to choose his own fund because he believes that it will enable him to plan the best future for her. The trade union royal commission also heard evidence that TWUSUPER provides a large income stream each year to the TWU.

The government wants people to be able to make choices about their deferred wages and to be active in making decisions about their future. It's great to see the member for McMahon here because I'm about to quote him. In 2015, the member for McMahon also agreed with extending choice of fund when he said in a television interview on the ABC:

… there's a relatively small number of circumstances where an enterprise agreement says you can only go to that fund: that fund alone. And the Government has said that they'd introduce more choice. Of course, that's something that's which would be fine. Who could argue with more choice for members?

We agree. To be clear, this measure does not prevent enterprise bargaining agreements from specifying a particular fund. It simply allows individuals to choose a different fund if it suits them better.

Schedule 2 of this bill will close a loophole that has been used by some unscrupulous employers to short-change employees who make salary sacrifice superannuation contributions. The CEO of CHOICE, Alan Kirkland, said of this measure:

Shutting down the salary sacrifice loophole which has seen an estimated $1 billion stripped from retirement savings by unscrupulous employers is also a great outcome for consumers.

…   …   …

This is a common sense reform which CHOICE fully supports.

There are instances where employees that enter salary sacrifice arrangements discover that their superannuation has increased by less than they were expecting because employers have used salary sacrifice amounts to satisfy their superannuation guarantee obligation or have based their superannuation guarantee contributions on the lower post-salary-sacrifice earnings base. To address these inappropriate practices, the changes in this bill will ensure that an individual's salary sacrifice contributions do not reduce their employer's superannuation guarantee obligation in any way.

If Australians are to continue to have confidence in the integrity of the superannuation system, we must ensure employers are paying workers their full entitlements, whether that be wages or superannuation. After all, it is their money. I commend this bill to the House.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.