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Thursday, 12 September 2019
Page: 2782


Mr STEPHEN JONES (Whitlam) (12:40): The Treasury Laws Amendment (Putting Members' Interests First) Bill 2019 seeks to amend the Superannuation Industry (Supervision) Act 1993 and the Superannuation (Unclaimed Money and Lost Members) Act 1999 to improve the default insurance arrangements for superannuation. It aims to protect the superannuation savings of younger members and members with low-balance funds by removing the default life insurance options for these accounts. This is, of course, an objective which Labor fully supports—that is, the objective of preserving and improving the balances, particularly, of young workers and low-income workers.

Labor have always stood up for the rights of workers to get a fair deal on their superannuation. We believe that every Australian deserves to retire with dignity and independence, and our superannuation system is critical to that. In fact, Australia's superannuation system is one of our most significant financial and social institutions. It sits alongside the Pharmaceutical Benefits Scheme, Medicare and the National Disability Insurance Scheme as one of those cornerstone contributions that have made this country both stronger and fairer. The bill seeks to balance the interests of providing affordable life insurance and effective life insurance cover to employees, many of whom would otherwise be uninsurable, against the public interest of ensuring that members' accounts are not eroded by insurance premiums.

Labor support these objectives, but we have some concerns about some of the consequences, whether they're intended or unintended, of those bills. We have some concerns, and in the consideration in detail of this bill we'll be moving some amendments which address those concerns and, we say, rectify the faults within this bill. The problems that we've identified are the consequences they're going to have for workers in high-risk occupations. We also have some concerns that have been amplified by some of the regulators and some of the funds themselves about the implementation time frames for this bill. We've also been quite mindful of some of the concerns that have been raised both by the Productivity Commission, which I do acknowledge recommended some of these changes, and by funds and other advocates about the consequences for the changes in this bill to increases in insurance premiums. We'll address those in our contributions.

I want to talk to the high-risk occupations, which we have raised with the government and others have raised through the Senate inquiry process, about the consequences of this bill. It is a fact that, by removing the life insurance cover that is available on a group basis through worker superannuation schemes, a lot of workers in high-risk occupations are no longer going to be able to afford a life insurance product—indeed, many of them are simply uninsurable or not insurable at a premium rate that they would be able to afford. You might ask, 'Why does this matter?' Well, let's have a look at the high-risk occupation group. Some interesting evidence that was provided by the ACTU in the Senate inquiry pointed out that more than one-quarter of all workers under the age of 25—and they're the cohort that is going to be caught by these changes—are employed in high-risk jobs with a real risk of fatality.

Between 2003 and 2016, tragically, close to 3½ thousand workers lost their lives at work. This is a real tragedy. Of that group, those 3½ thousand workers, around 335 were under the age of 25. More than 27 per cent of workers under the age of 25 are in high-risk occupations. People under 25 make up about 15.3 per cent of the workforce and suffer injuries at work. We believe that the bill goes beyond what is reasonable in balancing the need to protect member accounts and what is necessary and in the public interest, which is to ensure that a cohort of workers, young workers in high-risk industries, have access to affordable life insurance.

People listening to this debate, following the debate, might ask: what's magic about the age of 25 and what sort of insurance products are we talking here? The age of 25 has been identified as a proxy for the age at which an average worker is going to be married. Why does it matter if they're married? Because a life insurance product, for the most part, provides a benefit not to the worker who suffers a fatality at work, obviously, but to the family of that worker, the dependants of that worker. In identifying the age of 25, the intention is that it be a proxy for the average age at which somebody is married; therefore, if they tragically suffer a fatality at work then they will have a benefit to pass on to their dependants, who are going to suffer more than the emotional distress of losing their loved one. It will be a financial catastrophe for them as well. So, if people are asking, 'What's magical about the insurance product? What's magical about the age of 25?' that is the reason. It's intended to be a proxy date for the age at which the average Australian worker is going to have a loved one, a dependant, whom they could pass a life insurance benefit on to.

Nearly 30 per cent of workers aged under 25, more than 300,000 Australians, are employed in occupations and industries that are inherently dangerous. Some industries are extraordinarily hazardous. In 2016, half of worker fatalities occurred within the transport industry, the warehousing industry and agricultural industries. It would be an absolute tragedy if there were one, but over half of fatalities occurred within those industries. When we think of high-risk occupations, we don't always think of emergency services workers. We often stand in this place and pay tribute to the great work they do during natural emergencies—up in northern New South Wales fighting bushfires, as we speak, or in Queensland during a flood. Being a first-line responder keeping our communities safe, our houses safe, is an inherently risky occupation that's almost impossible to insure for outside of a group life insurance product. We could easily mention the police forces keeping our communities safe in the same breath.

While we're keen to see young workers protected from the erosion of their superannuation balance, it is important that, at the same time, young workers within these industries have affordable cover. I go through these statistics to make a couple of points. It is a truism—it is something that this parliament can take note of—that when a young worker starts work probably the last thing on their mind is a fatality at work, and a life insurance policy is not very high in the order of what they're seeking to purchase with their first, second, third or fourth pay cheques. So for those who say, 'Look, the default insurance product isn't needed, and if somebody really wants it they can simply go out and purchase it,' I think we have to take note of the fact that, for the average young person—and I know; I was in this category—rushing out and buying a life insurance product, whether or not they need it or think they need it, is not the first thing that is on their mind. It's more like a new car, saving for an overseas trip or something like that.

When we look at the data and see that 300,000 young Australians are employed in occupations and industries that are inherently dangerous—of course, not all—and 50 per cent of all of those fatalities are occurring in industries where young workers are employed, we need to have some balance. That is why, in the consideration in detail of this bill at the third reading stage, I will be moving an amendment to this bill which I hope enjoys the support of members opposite which carves out those young members in high-risk occupations. We've had fruitful discussions with crossbenchers in the other place. I hope it enjoys the support of the entire parliament on that issue.

I want to stress that we are not hostile to the underlying intent of this bill. It's about 95 per cent right. But we do say that currently structured it has either an intended or unintended consequence which is disproportionate to the malady that it seeks to remedy. People might sit up, object and ask, 'Are we just removing the right of anybody within that cohort to remove themselves from a life insurance product?' The answer is, of course, no. What we would be doing would be reversing the onus, if you like—giving these workers the right to opt out. But by default they're in, on the assumption that, as a young worker—having been a young worker myself—the last thing that you have in mind when you start a new job is taking out a life insurance product. Many young workers and workers with low-balance accounts would be able to access income protection or life insurance other than through a group insurance product, but, quite simply, this is not the case for those high-risk workers. They would simply be uninsurable.

I want to say something about the value of group life insurance, too, because I'm sure that might come up in this debate. There is next to no evidence to suggest the group life insurance cover—that is, the life insurance cover that is provided, particularly the death insurance—that is provided through superannuation funds is inherently bad value. There is no evidence to suggest that, as a whole, it is inherently bad value. In fact, if you look at the premiums—I've already identified them in my contribution to date—it's quite certain that many of those workers would simply be unable to afford the premiums if they were to try to seek private cover. So it's inherently good value for those workers.

Also, if you look at the way that claims are made on life insurance policies within a superannuation fund, the claims ratio is significantly better for workers covered by group insurance cover, as compared to somebody who has an individual policy in the general market. Of course, there is a reason for that. In fact, there is a reason for both of those things. The collective purchasing power of a superannuation fund operating on the basis of many thousands—in most cases, many hundreds of thousands—of members enables them to strike a better deal, and because they have experts at their disposal, it enables them to strike a better deal in terms of the way that claims are managed and processed as well. So, whilst I don't hold a candle out for the life insurance industry as a whole, I do argue that the cover that is provided within a group insurance policy through a superannuation fund, when compared to the cover that is provided outside one of those funds, is very good value indeed for the overwhelming majority of insured members.

The second amendment that I will be moving in during consideration in detail goes to the problem that has been identified by multiple fund managers, by multiple advocates from within the sector. You might say: 'Of course they would. Of course they're going to argue to that.' Perhaps it's in their interests. But the one we must take note of is the submission from the regulators themselves. They have an interest which sits above the individual interest of any member, any fund or any advocate group. This is particularly in relation to APRA, the Prudential Regulation Authority. They have an interest in the sound management of these funds—in the prudential management of these funds—so parliament must take particular note of the concerns that have been raised by APRA themselves.

I quote from some observations that the Australian Prudential Regulation Authority made to the Senate committee which inquired into this bill. They said of the putting members' interests first bill:

The PMIF Bill measures are also proposed to commence from the day after the date of Royal Assent, with the PYSP Bill measures applying after 1 October 2019 …

We should take note of that. Today, I think, is 12 September. It's due to apply in less than two weeks time. I can tell you from my own experience—I'm interrupting the quote here—that the consequences that were put in place from the previous round of reforms, which we supported, were overwhelming for the fund managers. They got absolutely smashed. Their call centres, which they staffed up, were unable to deal with the staff loads. Was it any wonder that they said:

… the PYSP Bill measures applying after 1 October 2019 to members with balances under $6,000 and new members under 25 years of age. Requiring superannuation funds to implement the changes in the required timeframe—

and this is important—

will pose significant challenges for industry, particularly given the extent and complexity of the changes that will need to be undertaken, and current legislative uncertainty around the product level application.

That's not a comment made by a Labor senator. That is not a submission made by a fund. That is not a submission made from a retail fund, an industry fund or a peak body. That is a submission made by the regulator themselves—by APRA themselves. They say in their submission—and this is important to our amendment:

APRA considers an appropriate implementation timeframe would be, at minimum, 6 months but preferably 12 months from the finalisation of both the PMIF Bill and proposed PYSP Act amendments.

That is a minimum of six months and a preferable maximum of 12 months. The amendment that Labor will move picks up the recommendations of the prudential regulator, and we call upon all sensible members of this place to take note of that recommendation and adopt the Labor amendments.

I would like to address some other comments that have been made in this debate, but, before I do that, I think it's important that we have an understanding of the human face and the consequences of what we are legislating on and what we are legislating for. Throughout the course of the consideration of this bill, I've had the benefit of looking at evidence that's been presented in the other place, consulting with industry and consulting with families of fund members who have tragically lost their lives at work.

I want to tell the stories of Jason and Andrey. Jason was a member of the Cbus fund. He finished his apprenticeship at the end of 2017 and decided to go to Canada on a working holiday. A few months in, he had a snowboarding accident that left him a quadriplegic. When Jason started his apprenticeship, he was attending TAFE and it was there that he heard about Cbus, and they recommended he join. After his tragic accident, his mum discovered that he had total and permanent disability insurance by default through Cbus. There is no way a young fellow in Jason's circumstance would have had that cover but for the cover through his insurance fund. It was unexpected, and she says: 'It was so unexpected. If I had to pay for my own insurance, I don't think I would have done it. Luckily default cover with Cbus was a lifesaver.' Nothing is going to bring Jason's mobility back—a tragic accident for a young man—but at least he and his family have some financial security because of the cover they were provided.

It is a similar story with Andrey Lockyer. He was also a Cbus member. When he was a third-year apprentice, he was at work one day unpacking a freight container, which had come in from China, containing 128 pieces of glass. Two straps were inadvertently cut, and 1.6 tonnes of glass came down upon him. Andrey suffered severe injuries to his back and limbs and, according to medical staff, he certainly would have been killed had he been a few inches taller. His wife was heavily pregnant at the time, and the first time he saw his newborn baby was in a hospital bed, recovering from surgery. Luckily for Andrey, his wife and his newborn child, he was insured. He had insurance through the default insurance cover through his fund. The young family used the insurance money to pay off their debt, to pay for groceries and to pay for the expenses associated with a newborn child, and they put money away for future rehabilitation costs. He's since finished his apprenticeship and his family has now welcomed their second child.

These are just two examples. There are thousands more, but sometimes it helps to put a face and a story to the legislation that we're considering in this place.

We think this legislation is 95 per cent good, and it will be 100 per cent good if all sensible members of this place back our amendments, which concern the reverse of defaulting arrangements for workers in high-risk occupations, and if they adopt the Labor amendments in respect to the time lines. I say 'Labor amendments', but they are the recommendations of the prudential regulator, so they should be given important note.

There has been a bit of noise around superannuation. Given that this bill concerns protecting members' superannuation balances, it's important to rebut some of the stuff that's been said in this place around the best methods for protecting and improving retirement incomes. We on this side of the House, as I said in my opening remarks, feel like we are protective guardians of our system of occupational superannuation and the legislative framework for increasing the existing contribution from 9½ per cent, through a very modest series of increases over a five-year period, to 12 per cent. We think it's important. We are very concerned that, when the Howard government axed the scheduled guarantees, workers lost between $60,000 and $100,000 in retirement income. We don't want to see that happen again, which is why I'm deeply concerned that the campaign that has been led by the member for Mackellar and the member for Goldstein—we're told there are 12 of them involved; let's call them the dirty dozen—does not gain momentum in this place, because a worker retiring today—

The DEPUTY SPEAKER ( Dr McVeigh ): The minister, on a point of order?

Mr Wood: That was very unparliamentary language against colleagues.

The DEPUTY SPEAKER: I ask the member for Whitlam to withdraw.

Mr STEPHEN JONES: In deference to the honourable member, I withdraw. The behaviour of the 12 members invites a comparison to the 1967 war classic, The Dirty Dozen. It invites a comparison because their mission is to creep in behind enemy lines and blow up a system. That's what they're on about, and we, on this side of the House, won't stand for that.

The argument that I heard this morning put by the member for Goldstein beggars belief. He argues that if we cancel superannuation increases, which are certain by legislation and due to take place between 2021 and 2025—that is, in two years time—then workers are going to get a wage increase today. You would have to believe in pink unicorns to believe in that logic. It simply won't happen. They might succeed in cancelling superannuation increases, but workers will be dudded twice: they won't get the superannuation increases and they certainly won't get the wage rises.

What beggars belief is the hypocrisy of this argument. What the 12 members opposite need to answer is this: why is it fair for all members in this place to enjoy a superannuation contribution of 15 per cent, but the people who clean our offices enjoy a superannuation contribution of only 9½ per cent? Why should they be denied the legislated increase to take them from 9½ to 12 per cent? I don't know about you, Mr Deputy Speaker McVeigh, but I wouldn't be able to look the people—those people who cheerfully come into my office once a week and empty the bins with a cheery word, and who look after us all in the best way possible—in the eye and say, 'I'm sorry; this is what's about to happen because a campaign has taken off to reduce your legislated superannuation increases.' Whether it's the people who clean our offices here or the low-paid workers everywhere, the people who are going to suffer are women and the people who are going to suffer are low-paid workers. The proposition that this is somehow an advancement of a fairness agenda is absolutely risible. So let's nip this in the bud. Every time one of those members opposite stands up, inviting comparison to that 1967 war classic The Dirty Dozen, we should call them out: why is it fair for you to get 15, but the people who clean your offices only get 9½? Every time they get up they should be called out on that, because it's not fair and Labor won't stand for it.