Kelly O’Dwyer has increased pressure on Bill Shorten to pass stalled legislation aimed at driving out underperforming funds from the $2.7 trillion superannuation savings sector before adopting royal commission plans to establish single accounts for working Australians.
The Jobs and Industrial Relations Minister said pushing ahead with royal commissioner Kenneth Hayne’s proposal to create a “default” super arrangement for new workers before the government’s legislation was passed risked shunting savers into underperforming funds.
While Labor has said it will implement all the recommendations of the royal commission, Ms O’Dwyer believes a key test for the Opposition Leader’s resolve to take action on financial sector misconduct will be whether Mr Shorten backs the government’s super package, which remains stalled in the Senate.
“As the Productivity Commission and royal commission make clear, millions of Australians have been cheated out of billions of dollars of their retirement savings because the current system doesn’t put members first,” she said.
“This must change — and can — if Labor supports reforms currently before the Senate.”
The Coalition and Labor are at war over reforms, announced in last year’s May federal budget, that aim to give the superannuation regulator more powers by clamping down on life insurance fee-gouging by super funds and consolidating lost and forgotten savings through the Australian Taxation Office.
The seizing of close to 10 million inactive zombie superannuation accounts — which are unintended multiple accounts created by workers being defaulted into new super funds each time they change jobs — would threaten the viability of a number of small funds, including many in the union and employer-backed industry fund sector.
Assistant Treasurer Stuart Robert has indicated he is willing to accept Labor’s proposed amendments, including one that would ensure workers in high-risk occupations would not be left uninsured.
Ms O’Dwyer, the former financial services minister, said Labor “can’t say that they support the recommendations of the royal commission and not support these (government) reforms”.
“People shouldn’t be forced into underperforming funds, which is the case under the existing default arrangements,” she said.
Opposition Treasury spokesman Chris Bowen has embraced Mr Hayne’s idea of having a single default account “stapled” to each worker, to avoid workers collecting numerous unintended accounts over their working life.
However, the proposal appears inconsistent with the wishes of the union-backed Industry Super Australia lobby group, which is pushing for automatically rolling over workers’ super balances into different funds each time they switch jobs.
Mr Bowen said he accepted the commission’s recommendation “in principle”, but refused to answer when asked whether the industry funds’ idea could yet be implemented.
“There will be a range of views expressed and unlike the government, which is cherry-picking which parts they like and which parts they don’t like, we accept the recommendations in principle and will move in close consultation with all affected parties,” he said.
Labor also hit back at the failure of the government to put its superannuation reforms to a vote in the Senate, which have stalled after Mr Robert couldn’t convince enough crossbench senators to accept the proposals without amendments. The Senate passed 174 government bills last year, 102 of which were passed since the superannuation bills were first available for debate.
“The notion that Labor is holding up this legislation is laughable,” ALP financial services spokeswoman Clare O’Neil said.
“The government is divided and dysfunctional and can’t even bring this bill on for a vote.
“We need to crack down on the rorts and rip-offs in the superannuation industry, and we are calling on the government to bring this bill on for a vote. We are ready — bring it on.”
Meanwhile, Mr Hayne’s recommendation that industry codes be beefed up by making them mandatory and enforceable by the Australian Securities & Investments Commission also risks putting Labor out of step with the industry fund sector.
By Michael Roddan & Joe Kelly
The Australian Business Review
6 February 2019