The federal government’s superannuation reform plans have hit a snag in the Senate and seemingly cannot pass the Parliament before the May budget.
While Assistant Treasurer Kelly O’Dwyer last Wednesday vowed to introduce draft bills to the House of Representatives this week aimed at overhauling superannuation choice and fund investment transparency, neither bill has been listed on the Parliamentary register.
A separate governance bill before the Senate aimed at forcing all superannuation funds to appoint independent directors is also unlikely to be debated this week.
The Senate schedule is set to be subsumed by debate on the Electoral Reform Bill on which the future of crossbenchers hinges.
A spokesman for the Shadow Minister of Finance and Superannuation, Jim Chalmers, told The New Daily that it was highly improbable the government’s three draft superannuation bills would get any airplay this week.
With the only sitting days in Parliament being Tuesday, Wednesday and Thursday, that means the government would only be able to introduce the draft bills before the May 10 budget but they could not be debated beforehand.
Commenting on the proposed bills, which Ms O’Dwyer discussed last week after unveiling a new discussion document around the government’s plans to enshrine the objectives of superannuation in law, Mr Chalmers said they would not be supported by the ALP.
“The government’s approach to superannuation is to always put ideology ahead of the interests of everyday Australians while our focus is to ensure millions of people get a decent retirement,” Mr Chalmers said.
“Labor has said since the release of the Murray inquiry report that we are prepared in principle to look at ways to provide more options to Australian workers for superannuation.
“But we do not support the government’s proposal to remove the safeguards which protect workers in the default system.”
Mr Chalmers said it was critical that the choice system for superannuation funds is underpinned by protections for the vast majority of workers who do not exercise choice of superannuation fund.
“The last thing we’d want is a system where some funds could offer employers inducements for default fund status without it being in the best interests of workers,” he said.
“We believe that the current situation where 38 per cent of the benefits of super tax concessions go to the wealthiest 10 per cent is unfair and unsustainable. Labor has had a Fairer Super Plan on the table for almost a year, while Scott Morrison and Malcolm Turnbull still have not outlined any plan to act on superannuation tax concessions.”
His comments were supported by the chief executive of Industry Super Australia, David Whiteley, who said the government’s legislation, if approved, would be detrimental to many fund members.
Banks come under fire
In particular, he said the government’s plans around investment transparency pandered to the big banks because it would only require them to disclose fees and charges on some of their super fund products.
“The government wants to extend superannuation choice. But at the same time it’s not requiring bank-owned super funds to clearly disclose the fees and returns of the majority of their products in these readily accessible product dashboards,” he said.
“This is just another example of how the banks are successfully lobbying the government to achieve an outcome that suits their objectives.
“Industry super funds support consumers being able to make more informed choices. But supporting choice and then not requiring banks to disclose all of their fees is deeply incongruous and the rationale behind that has not been fully explained.”
Governance moves bypass Fraser independent review
Meanwhile, Mr Whiteley said the government’s moves in the Senate around board composition aimed to circumvent the findings of an independent governance review currently being conducted by former Reserve Bank governor Bernie Fraser.
Mr Fraser is due to release a report from the review at the end of April.
“The Fraser governance review is well underway. It has received over 20 submissions, and there has been an ongoing process of consultation,” Mr Whiteley said.
“They have an expert panel including international governance experts, and they are meeting again next week. There is a process underway.
“If the government was to reintroduce that bill to the Senate, it would be a demonstration of ideology over a more thoughtful approach to the matter.
“The government should give Mr Fraser the appropriate time to complete the review.”
Mr Whiteley said super funds should be given the same flexibility as the government has granted the life insurance industry in the development of their code, “which in the context of the CommInsure scandal looks more absurd by the day”.
DISCLOSURE: The New Daily is owned by a group of industry super funds.