Finance Your Super Superannuation reforms in doubt as crossbenchers voice discontent

Superannuation reforms in doubt as crossbenchers voice discontent

Warringah MP Zali Steggall is one of several backbenchers to oppose parts of the reform package. Photo: AAP
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The Morrison government faces an uphill battle passing its controversial Your Future, Your Super bill after a string of crossbench MPs publicly opposed the reforms.

Former Liberal MP Craig Kelly’s defection to the cross bench in February means the Coalition has just 75 votes in the 151-seat House of Representatives after taking into account the speaker, Tony Smith, who must support the status quo.

That means the Morrison government needs the vote of at least one crossbench MP to pass the legislation through the lower house.

And many have already said they would reject the bill in its current form.

The main sticking point is the ‘directions power’ in the bill that would allow the Treasurer to cancel any investment made by a super fund if he deemed it contrary to the national interest – even if it was in the best financial interests of members.

Described by Labor and industry lobbyists as an “investment kill switch”, the measure has been criticised for creating sovereign risk and discouraging overseas investors from investing in partnership with superannuation funds. And that could lead to lower returns for members.

On Monday evening, Mr Kelly told The Australian Financial Review he believed the measure was one of several in the bill that were “contrary to Liberal Party values”.

Fellow crossbench MP Bob Katter said he “absolutely” agreed with those sentiments in an interview with The New Daily on Tuesday.

“Josh is one of the greatest pro-free market men in the Parliament … and so it’s very ironic that he’s putting in the complete antithesis [to this],” Mr Katter said.

The Queensland MP said he was also concerned with the government’s plan to “staple” Australians throughout their career to their first super fund.

Queensland MP Bob Katter said the proposed reforms would give the Treasurer too much power. Photo: AAP

Mr Katter said the measure was well intentioned, with the government aiming to save members from paying fees on multiple accounts, but would leave many Australians languishing in dud funds as “the average person” does not keep a close eye on their superannuation accounts.

“The outcome is very negative,” he said.

The New Daily contacted every crossbench MP to find out where they stood on the reforms currently before Parliament.

Most were concerned about the Treasurer’s proposed power to cancel super fund investments, while some said they were still working through the detail of the bill.

Independent Member for Warringah Zali Steggall told The New Daily she was opposed to the directions power and was “in active discussions with the minister” over her proposed amendments to remove it from the legislation.

“I am strongly against the inclusion of the directions power in Your Future, Your Super Bill as it introduces uncertainty and inappropriate intervention in the market,” she said.

Helen Haines, the independent Member for Indi, Victoria, expressed similar concerns, while representatives for independent MPs Andrew Wilkie and Rebekha Sharkie said they were both still considering their position.

Neither The Greens nor Labor support the bill.

Labor superannuation spokesman Stephen Jones says the government’s reforms will create “sovereign risk”. Photo: AAP

The Morrison government has made two major changes to the original bill introduced in 2020 – incorporating admin fees into its annual performance reviews and changing its performance benchmark to include investments in unlisted property and infrastructure.

But the annual reviews still exclude one in three superannuation funds, and the introduction of a new ‘Best Financial Interests Duty’ could require funds to conduct an analysis of every line item of expenditure they incur, including spending on stationery items or travel.

This is because the measure has no “materiality threshold” and flips the evidentiary burden of proof, so that funds have to prove their spending is in line with members best interests’ rather than requiring regulators to prove the opposite.

Members of the superannuation industry told a Senate committee in April that this would lead to higher costs for members as funds would have to carry out additional compliance “without any corresponding benefit”.

The New Daily is owned by Industry Super Holdings