Mr STEPHEN JONES (Whitlam) (17:52): I'm pleased to be speaking on this bill and also on the second reading amendment that has been circulated. I formally move that amendment now:
That all words after "That" be omitted with a view to substituting the following words:
"whilst not declining to give the bill a second reading, the House:
(1) notes that too many Australians retire without adequate retirement savings; and
(2) reaffirms its commitment to the legislated superannuation guarantee rise to 12 per cent by 2025".
Labor has a very proud track record when it comes to superannuation and we'll continue to fight for a stronger and fairer superannuation system. Because a few things have been said in this parliament today about the role of the Australian trade union movement in respect of superannuation, I want to take the opportunity to acknowledge the great contribution that the Australian union movement has made, together with the Australian Labor Party, in establishing our modern superannuation system.
Labor and the union movement won compulsory employer-paid superannuation through national worker-led campaigns, together with legislative action in this parliament to put together what today is a universal workplace right to occupational superannuation—a right that, in my lifetime, was once available only to politicians, public servants, senior managers and long-serving employees in certain industries, such as the banking and financial industries. Today, it is a universal right and one that is enjoyed by the people who attend us around this parliament, whether they're cleaning our offices or helping us here in the chamber, by the members of parliament, and by other parliamentary staff. It is a universal right.
Labor supports the objects of this bill which are to provide choice in superannuation, but we're committed to ensuring that every worker is in a high-performing fund and that adequate information is available to empower consumers with the information that they need to make choices that are in their own best interests. What is clear is that people do want to make the right choice and do want to have the right to choose their super fund, and the law should support that. But we also are very cognisant of the fact—a fact brought into stark relief by the Hayne royal commission into the financial services industry—that, often, a lot of evil can be done in the name of choice. We want to ensure that workers are not forced into funds either ill-informed of the consequence of those choices or because some other contrary or corollary arrangements have been made by an employer in a workplace with a proponent of that fund which is not in the worker's interests. People are already voting with their feet. In the last 12 months, $20 billion has moved into the not-for-profit sector, with consumers in search of lower fees and higher performance. Choice is already happening.
The Senate Economics Legislation Committee is currently inquiring into the provisions of this bill, and Labor reserves our position on the proposed choice of fund changes until after the Senate committee has reported. We are using the Senate inquiry process to ensure that there are no unforeseen consequences. A lot of evil has been done in the past in the name of choice. It's blatantly obvious that if a consumer, if a worker, is to have choice then that should go hand in hand with them having all of the information available to them. The choice has to be a genuine one. We want to ensure that consumers are empowered with the information they'll need to make choices in their best interest. I foreshadow that Labor will be moving amendments to the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill in the Senate at the conclusion of the ongoing Senate inquiry.
This bill has a single schedule providing that employees under workplace determinations or enterprise bargaining agreements made on or after 1 July this year have the right to choose their superannuation fund. The amendments do not apply to workplace determinations or enterprise agreements made before that date. Enterprise agreements that were made before that date but which apply after that date will also not be affected by these amendments. The default arrangements that apply if any employee does not choose a fund are unchanged. This is a very important point, and I want to re-emphasise it. The bill does not prevent a workplace determination or an enterprise agreement collectively determining the default arrangements which will apply to employees at that workplace—a very important distinction.
Labor note that in the 2014 Financial System Inquiry there was a recommendation that all employees will be provided with the ability to choose the fund into which their superannuation guarantee contributions are made. That said, in a submission on the bill to the previous Senate inquiry, Industry Super Australia indicated that, of those employees covered by an enterprise agreement, only 7.4 per cent have no choice of superannuation fund, which represents something just short of two per cent of the workforce—about 1.9 per cent of the workforce. The industries which have the highest percentage of people who have no choice of fund are education, retail, construction, public administration, wholesaling, electricity and agriculture.
It is worth pointing out that in some but not all of those sectors the collective agreement or workplace determination has provided a superannuation contribution in excess of the current level of 9.5 per cent of employee earnings. I look at public administration as an example of that. In the Commonwealth Public Service and related entities, collective agreements provide arrangements for superannuation to be paid at the rate of 15.4 per cent of an employee's earnings. In the school education sector, in many states around the country, rates are paid in excess of the 9.5 per cent. In higher education, in the university sector, it is not uncommon for workers to receive 19 per cent of their earnings as superannuation through arrangements that have been negotiated collectively with their employers through their union representatives and enshrined in collective agreements. One can only assume that certain bargaining trade-offs have been made to achieve those excellent superannuation arrangements.
The second reading amendment before the House invites all members of this parliament to affirm their commitment to 12 per cent legislated superannuation guarantee amendments. We'll be putting the amendment. I hope it will be carried on the voices. I hope, when the amendment is put, that each and every one of those members opposite say, 'We support the legislated SGL increases moving from 9.5 per cent to 12 per cent of earnings.'
We move this amendment quite deliberately, because there's been a lot of noise and debate in the parliament, even in the previous debate. There's been a lot of noise and debate in the community. We've had the Prime Minister stand here and say he supports the legislated SGL increases on the very same day that members of his backbench have been out there running a campaign to have those increases cancelled, along with other radical changes to our superannuation system. So we're going to invite members opposite to vote on a resolution of the House, an amendment to the second reading amendment, which will affirm this parliament's support for 12 per cent superannuation. It's very important, because the community needs to know where everyone stands and where this parliament stands.
Today more than 15 million Australians have superannuation accounts with assets totalling nearly $3 trillion. That's about 140 per cent of GDP. This will grow to $9.5 trillion by 2035, expanding the pool of funds available for local investment and creating a stream of foreign earnings from overseas investments. Under current policy settings, the policy settings which I'm inviting all members of this House to affirm their commitment to today, the median balance on retirement for full-time workers will be around $310,819 for women and around $628,634 for men.
Deputy Speaker, you'll note there's a gap. The gap is intolerable. The gap requires a serious policy response. Labor went to the last election with some propositions about how to close the gap. To date, we've heard nothing from the government on this. I'd warrant that this is a far more serious issue than that being advocated by members of the government who are advocating a freeze or a reversal of the current superannuation guarantee provisions.
Despite the low level of engagement, superannuation is popular. There's not a member of this place that wouldn't be happy if they had a 91 per cent approval rating from all Australians. None of us can boast that we have that, not even the member for Grayndler, who's pretty popular at the moment. But 91 per cent of Australians support superannuation despite the low level engagement. That's a higher rating even than the ABC, and that's probably, along with Medicare, two of our most popular national institutions.
Australians now have access to retirement savings accounts that have on average returned somewhere between 6.1 per cent and 8 per cent per annum over the last 10 years. That is a rate of return that I warrant nobody would be able to achieve through a passive investment, such as those that are available as alternatives to superannuation, and certainly not with the security and certainty that superannuation has provided.
The result of Labor's reform is that ordinary workers near retirement today have options that they simply never would have had. And if the Liberals had maintained their comfy, sleepy, pre-Keating, corporate dystopia, those retirement savings would not be there, except for the very, very wealthy or in those occupations I described earlier.
Sadly, the Liberals, the coalition, the government, aren't tackling the issues that really do need to be tackled. They aren't tackling underperformance within some of the sectors of the industry. If that was dealt with in a thorough and ongoing way it would ensure that some workers who were operating in underperforming funds could literally double their retirement savings on current settings, just by lifting the performance of their fund up to the performance of the mean or even the higher-performing funds.
They aren't tackling the issue of excessive fees, which affect about 15 per cent of APRA-regulated member accounts. They aren't tackling adequacy. In fact, many of the coalition backbench want to take the issue of adequacy backwards. They have already said that they want to ensure that the people who clean their offices don't get anywhere near the same superannuation that they enjoy, and that just strikes me as simply unfair. They've got a job ahead of them, I've got to say. How they can go and argue to people in the community that it is fair for them to receive 15 per cent superannuation but the cleaners, the people who make their coffee, the people who look after their kids in childcare centres and the teachers at their kids' schools are only entitled to 9.5 per cent or less.
I encourage any of them to go out there and make that argument: 'It's fair for me to get 15 per cent, but you—know your place; you're entitled to just 9.5 per cent.' That's literally what is being argued by many of the rebels on the government's own backbench. We'll enjoy that debate. They certainly aren't interested in tackling the issue of superannuation theft. In fact, they're bending over backwards to make things easier for employers who have stolen superannuation funds out of their employees' pockets. Don't get us wrong. We're willing to tackle the issues that are currently before the parliament in this bill. But there's a much bigger agenda that needs to be dealt with, and the government simply isn't focusing on it.
A few moments ago the member for Goldstein stood in this place and made all sorts of wild, frothy allegations about participants in the superannuation system. In his peripatetic fashion, he made all sorts of allegations about the motivations of people within the superannuation sector and the opinions held by members on this side of the House and others. I just want to set the record straight on a few things, and it goes to all of these proxy arguments that are being run about why we shouldn't stick with the commitment the government made going into the last election that they'd leave superannuation alone. It is a known fact that wages have been flagging under this government's watch—a known fact, and they have no plan to deal with it. This is a matter of concern to everyone, from the Reserve Bank board to the Reserve Bank governor to senior Treasury officials to even the Business Council of Australia to welfare agencies—in fact, anybody who understands that if people don't have money in their pocket then they're not spending it in shops, they're not spending it on services and they're not spending it in the broader economy. Unless we get wages moving, we simply are not going to do anything about boosting the level of demand in the economy.
After five years of sitting on top of a flagging economy and wage increase levels that are in the doldrums, these guys have finally lighted upon an idea that the way a worker can get a wage increase is to pay for their own wage increase. It's extraordinary, isn't it? You can imagine how members of this place would react if a proposition was put to them that for the next five years the only way they would get a wage increase would be if their superannuation was cut. I can just imagine the conversations they'd be having in the halls around this joint, if that proposition was put. But somehow the member for Goldstein over there, the member for Mackellar and others of their ilk—some of the rebels upstairs in the other place—think that is a reasonable proposition.
They are quite literally saying to Australians: 'We have not got a clue when it comes to how we increase wages in this country, but the only proposition we're going to put on the table is that we cut your superannuation payments'—not in the guarantee that it's going to flow through to wages but on a wing, a prayer and a wet finger in the air. I could not walk into a workplace in Australia—and I've walked into many workplaces in Australia and have had to put tough arguments to people around wages negotiations—and say: 'We're going to cut your superannuation payments as a way of funding your next pay rise. Nothing else is on the table. And, by the way, your penalty rates have been cut as well.' No worker is going to see that as a good deal. They're going to see it coming. They'll say, 'Why is it good enough for the government to keep their benefits but we've got to cut ours to get a pay rise?' I'd like to see the government make that argument, but that's—quite literally—what they're standing here in the parliament today making out.
In a few moments, when we vote on the second reading amendment, members of the coalition parties will have their opportunity to affirm their commitment to this proposition and reject the proposition that the workers of Australia, somehow, are not as good as them and not as entitled as they are when it comes to superannuation payments. There is a cost to what the government is proposing. It means a person on average earnings will lose somewhere between $60,000 and $80,000 on their retirement savings on what the government has already done. I'm talking about their existing freezes to the superannuation guarantee levy. Those losses will be compounded if these nutters on the other side get their way. We will resist it. We are giving all right-thinking members in this place the opportunity to reaffirm their commitment.
I want to say one final thing on the issue of the link between wages and superannuation. I want to clear a few things up. Labor has never argued that there's not a link. It just beggars belief that when the first accord was made there was a wages superannuation trade-off. In my contributions today I have spoken about unions, which, on behalf of their members, have negotiated wage increases and superannuation increases above the superannuation guarantee level. It beggars belief, if you're sitting around a negotiation table and arguing for both wage increases and superannuation increases, that they're not linked. Of course they are. They're linked in exactly the same way that total wage costs are linked, whether it's payroll tax or any of the other costs that are imposed upon employers and businesses in respect of their workers.
What we simply don't accept and what we simply can't accept is that the only way a worker today is going to get a wage increase under this government—that hasn't got a clue when it comes to economic policy—is if we cancel superannuation increases. We reject that. We also reject the argument that, if you cancel modest superannuation increases, somehow businesses around the country are going to say: 'You know what? I'm going to give all of my workers a wage rise.' It's just simply nuts, and it's not going to happen. But that's what some of these clowns are trying to get us to believe. Let me spell out what these modest superannuation increases are: in June next year, 0.5 per cent; in July next year, 0.5 per cent; in July the year after, 0.5 per cent; and 0.5 per cent for each and every year until 2025. That's five instalments of a very modest 0.5 per cent spread over five years.
We don't argue that there's not a link between wages, superannuation and total employment costs. Of course there is. It beggars belief to argue otherwise. It's not one for one. In some industries, as a result of the bargaining power of workers either collectively or individually, in some labour markets where workers are in hot demand and attractive employment packages need to be offered, in some demographics—senior management are very good at this. Senior management within corporate Australia are very good at ensuring they've got all of these bases covered. Often, the contributions into their superannuation far outweigh their contributions into their fixed wages. So we don't argue there's no link. That beggars belief. What we do argue is that it is a hopeless government, divided and without a clue. It's clueless when it comes to stimulating wage growth in this country and it's clueless when it comes to economic policy in this country. What we do argue is that such a government does not have a right to go raiding workers' superannuation to make up for the fact that it is absolutely clueless when it comes to how to give workers a pay rise in this country.
We are inviting all right-thinking members of this place to come into this House this afternoon, reject the calumny of the other side and vote in favour of the policy that they took to the last election—the policy that the Prime Minister says he supports and that the Treasurer says he supports. Here's their opportunity to come into the House today and affirm that very thing.
The DEPUTY SPEAKER ( Mr Goodenough ): Is the amendment seconded?