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senate vote 2021-06-17#7
Edited by
mackay staff
on
2022-04-15 09:49:08
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Title
Bills — Treasury Laws Amendment (Your Future, Your Super) Bill 2021; in Committee- Treasury Laws Amendment (Your Future, Your Super) Bill 2021 - in Committee - Delay commencement
Description
<p class="speaker">Jane Hume</p><p>by leave—I move the government amendments on sheets PM122 and QJ145 together and table a supplementary explanatory memorandum relating to the government amendments moved to this bill:</p><p class="italic">PM122—T reasury Laws Amendment (Your Future, Your Super) Bill 2021</p><p class="italic">(1) Schedule 1, item 17, page 8 (line 14), omit "1 July 2021", substitute "1 November 2021".</p><p class="italic">(2) Schedule 1, item 17, page 8 (line 15), omit "1 July 2021", substitute "1 November 2021".</p><p class="italic">(3) Schedule 1, item 24, page 10 (line 26), omit "1 July 2021", substitute "1 November 2021".</p><p class="italic">(4) Schedule 2, item 9, page 17 (lines 31 and 32), omit "are met for that class of Part 6A product", substitute "for that class of Part 6A product are met for the Part 6A product".</p><p>We also oppose schedule 3 in the following terms:</p><p class="italic">(5) Schedule 3, item 3, page 29 (lines 8 to 10), to be opposed.</p><p class="italic">QJ145—T reasury Laws Amendment (Your Future, Your Super) Bill 2021</p><p class="italic">(3) Schedule 3, item 20, page 32 (lines 17 and 18), omit subsection 220A(3).</p><p>We also oppose schedule 3 in the following terms:</p><p class="italic">(1) Schedule 3, item 10, page 30 (lines 17 to 19), to be opposed.</p><p class="italic">(2) Schedule 3, item 14, page 31 (lines 7 to 9), to be opposed.</p><p class="italic">The CHAIR: Even though the minister has moved these together, they need to be split because they have different outcomes. I will put the question that amendments (1) to (4) on sheet PM122 be agreed to:</p><p>Question agreed to.</p><p class="italic">The CHAIR: The question now is that amendment (5) on sheet PM122—that item (3) of schedule 3 stand as printed—be agreed to.</p><p>Question negatived.</p><p class="italic">The CHAIR: I'm now going to put amendments (1) and (2) on sheet QJ145. The question is that items 10 and 14 of schedule 3 stand as printed.</p><p>Question negatived.</p><p class="italic">The CHAIR: I'm now going to put the last of those amendments moved by the minister by leave, and that is amendment (3) on sheet QJ145. The question is that the amendment be agreed to.</p><p>Question agreed to.</p> <p class="speaker">Rex Patrick</p><p>by leave—I move amendment (1):</p><p class="italic">(1) Clause 2, page 2 (table item 6), omit the table item.</p><p>I also oppose schedule 3 in the following terms:</p><p class="italic">(2) Schedule 3, page 29 (line 1) to page 34 (line 17), to be opposed.</p><p>I know that the government's amendments that have just passed have removed some of the offensive parts of schedule 3. These amendments seek to remove the entirety of schedule 3.</p><p>Question negatived.</p><p>by leave—I move amendments (1) to (7) on sheet 1269 together:</p><p class="italic">(1) Schedule 1, item 17, page 8 (line 14), omit "1 July 2021", substitute "1 July 2022".</p><p class="italic">(2) Schedule 1, item 17, page 8 (line 15), omit "1 July 2021", substitute "1 July 2022".</p><p class="italic">(3) Schedule 1, item 24, page 10 (line 26), omit "1 July 2021", substitute "1 July 2022".</p><p class="italic">(4) Schedule 2, item 9, page 17 (after line 1), after paragraph 60B(a), insert:</p><p class="italic">(aa) a choice product; or</p><p class="italic">(5) Schedule 2, item 9, page 18 (after line 9), after subsection 60D(2), insert:</p><p class="italic">(2A) Regulations made for the purposes of subsection (1) must specify requirements that ensure that administration fees and expenses are taken into account in assessing the performance of Part 6A products and in comparing and benchmarking performance.</p><p class="italic">(6) Schedule 2, item 9, page 26 (lines 18 and 19), omit ", to the extent that it relates to Part 6A products that are MySuper products,".</p><p class="italic">(7) Schedule 2, item 10, page 27 (lines 3 to 9), omit subitem (1), substitute:</p><p class="italic">(1) Subject to subitem (2), the amendments made by this Schedule apply in relation to Part 6A products on and after 1 July 2023.</p><p>These amendments seek to delay the stapling until 1 July 2022. They also seek to include choice products in the performance test, because they are currently not in the performance test. They include administrative fees in the performance test. They also delay the performance testing commencing until 1 July 2023.</p> <p class="speaker">Jane Hume</p><p>The amendments to schedule 1 that delay the start date of the stapling reforms by 12 months to 1 July 2022 as put forward by Senator Patrick will be opposed by the government. The amendments to schedule 2 to increase the coverage of the performance test in the YourSuper comparison tool to choice products and mandate the inclusion of administrative fees as part of the performance test and methodology also delay schedule 2 so that the performance test will commence for all products on 1 July 2023. Delaying schedule 1 by even one year means that more unintended multiple accounts will be created in the additional year, which will have a significantly detrimental impact on people's retirement savings. Members' retirement savings will be boosted if action is taken as soon as possible.</p><p>On the issue of underperformance and coverage, the performance test isn't relevant for products in which the members themselves select their investment. Further, retirement products have much broader goals, such as income stability and flexibility, as well as longevity risk management. Expanding the coverage of the YourSuper comparison tool will severely diminish the usability of the tool.</p><p>On the issue of underperformance of administrative fees, the bill as drafted doesn't preclude the inclusion of administrative fees. Specifying that the regulations must include administrative fees in the methodology would limit the scope for flexibility to respond to changes in the future. On the issue of underperformance and delay, delaying schedule 2 would also delay the commencement of the YourSuper comparison tool and mean that members will remain in underperforming products for an additional year.</p> <p class="speaker">Rex Patrick</p><p>I just want to check with the minister, because I know there are some other senators who are a little bit confused about this: can you confirm at this point in time that the current bill leaves some funds that are not subject to the performance test?</p> <p class="speaker">Jane Hume</p><p>When the government announced the Your Future, Your Super policy back in October 2020, we set out a path for the extension of the MySuper products in the first interest to include trustee directed products from 1 July 2022, with an intent to expand to other investment options over time. The Treasury estimates that the performance test will cover 90 per cent of APRA regulated accumulation assets from 1 July 2022. Delivering on the intent to further extend the reach of the underperformance test, the government has tasked Treasury with undertaking a consultation process by 1 July 2022 to consider how best to expand the annual performance test to other superannuation products, and that includes non-trustee directed products and retirement phase products. So this will ensure that the performance test continues to have appropriate coverage.</p> <p class="speaker">Jenny McAllister</p><p>The opposition will be supporting Senator Patrick's amendment. Let's be really clear about the advice that's just been provided by the minister in response to this suggestion. The minister is confirming that the war on industry super continues. The minister is confirming that the government's endless ideological preference for paying a lot of attention to those funds which the PC and Commissioner Hayne said perform quite well for members will continue, but no attention will be paid to the for-profit funds where the PC and Commissioner Hayne found a lot of problems. That's the problem with this bill. It is a bill that is incredibly partisan in its nature. It's a bill that refuses to engage with the evidence about actual performance in the system. Everybody wants a high-performing system. Everybody thinks that, when a worker is putting money into a superannuation fund, it should be a high-performing fund. It's not what this bill delivers. This bill delivers a lot of scrutiny for the funds that do quite well and no scrutiny at all, for a very long time, for funds that have been shown again and again and again to be ripping off members. It's pathetic.</p> <p class="speaker">Pauline Hanson</p><p>I'd like to ask the minister a question on the factors. Isn't there an eight-year review period during which these funds are reviewed and looked at on a performance basis and, if they're not performing, they will be adhered to by this legislation?</p> <p class="speaker">Jane Hume</p><p>Yes, Senator Hanson, that's correct. The performance test, or the underperformance test, will apply to eight years of performance of funds, and that includes both investment and administrative fees. If a fund hasn't performed—if it hasn't lived up to its expectations or what was written on the box isn't what is being delivered to members—then that fund will have to write to members and tell them that it has underperformed, and not only that but members also will be directed to that online comparison tool so they can be given a nudge, essentially, to find a product that might be better suited to them. If a fund underperforms two years in a row—and we're talking 50 basis points below its own benchmark on a rolling eight-year average—then it won't be allowed to accept new members. Existing members can stay there, but new members can't join. The government believes that this is a very reasonable underperformance test and will sift out those that are good at what they do and those that aren't good at what they do—those that are delivering to their members and those that aren't delivering to their members and are hiding behind the skirts of those funds that are performing.</p> <p class="speaker">Pauline Hanson</p><p>Therefore, I want to ask you a question. If they're underperforming, the fact is that they're not returning high returns to their customers. Basically, could they then reflect on the amount of fees that they're charging their customers and possibly reduce the fees to the customers to give them a better return on their funds? Is that a possibility?</p> <p class="speaker">Jane Hume</p><p>Senator Hanson, that's exactly what they can do. In fact, this underperformance test will put a competitive pressure onto funds to reduce their fees, particularly those that have been close to that underperformance benchmark for some time. They will be encouraged to reduce their fees in order to make that underperformance hurdle.</p><p class="italic">The CHAIR: I'm just going to the Leader of the Government in the Senate.</p> <p class="speaker">Simon Birmingham</p><p>I understand that the calling of the result in relation to Senator Patrick's amendment on sheet 1321, which was that schedule 3 stand as printed, may not have reflected the will of the chamber. It's not unusual that, when we have the 'stand as printed' question, sometimes there's a little confusion in the resolution or application of that. Can I request that that question be put again, please, Chair?</p> <p class="speaker">Jenny McAllister</p><p>I have some questions for Senator Birmingham about his actual request. But, procedurally, can I clarify whether it's possible for Senator Birmingham to make this request at a time when Senator Patrick has another matter before the chair?</p><p class="italic">The CHAIR: We should really deal with the amendments before the chair, but Minister Birmingham has alerted us to the fact that the vote needs to be put again. So I'm in the hands of the Senate. Senator Patrick.</p> <p class="speaker">Rex Patrick</p><p>Minister, I just want to get confirmation about the statement you made about the monitoring of the performance of funds and the notification that members get. I understand that only applied to approximately 90 per cent of the funds. I think that was the number that you used. So there are 10 per cent of funds to which that regime does not apply. Is that correct?</p> <p class="speaker">Jane Hume</p><p>Senator Patrick, that is correct but only for the moment. The government has flagged its intention to extend the performance test to all products in the market and, in fact, has tasked Treasury with undertaking a consultation process by 1 July 2022 to consider how best to do that, because the data does not exist that will allow us to do that right now.</p><p>The most important thing, though, is that the underperformance test applies to MySuper products, to default products, those products that people go into unwittingly and languish in for years unwittingly, particularly if those funds are underperforming. It will also apply from 1 July 2022 to trustee directed products, those multi-asset class products where the trustee is the one that decides what the asset mix is going to be. The vast majority of products that remain are single-asset class products. They are very small in size and they tend to be products that people have gone into on an advised basis. Moreover, they tend to be products that people have gone into as part of a portfolio mix, where you don't put all your money into one gold fund and, if that one gold fund underperforms, it really doesn't make a difference because you've got an equity fund as well—an international equity fund, an Australian equity or an Australian bond fund—and you've done your own diversification. Most of the people in those funds are advised, and that's why they're in there.</p> <p class="speaker">Jenny McAllister</p><p>I am conscious that we are moving rapidly towards the cut-off. I do have a question for Senator Birmingham. In his request that the chamber consider recommitting Senator Patrick's amendment on sheet 1321, the minister indicated that the call had been wrong. Can I just seek clarification? It's not my understanding that the call was wrong; it's my understanding that Minister Hume voted the wrong way, which I would observe is a continuation of a debacle of a process throughout the entirety of the morning.</p> <p class='motion-notice motion-notice-truncated'>Long debate text truncated.</p>-
- The majority voted against [amendments (1) to (7)](https://www.openaustralia.org.au/senate/?gid=2021-06-17.74.1) on sheet 1269, which were introduced by South Australian Senator [Rex Patrick](https://theyvoteforyou.org.au/people/senate/sa/rex_patrick) (Independent).
- Senator Patrick [explained that](https://www.openaustralia.org.au/senate/?gid=2021-06-17.74.1):
- > *These amendments seek to delay the stapling until 1 July 2022. They also seek to include choice products in the performance test, because they are currently not in the performance test. They include administrative fees in the performance test. They also delay the performance testing commencing until 1 July 2023.*
- ### What is this bill's main idea?
- According to the [bill homepage](https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id:legislation/billhome/r6672), the bill was introduced to:
- * *provide that if a new employee has an existing 'stapled' superannuation fund and does not choose a fund to receive contributions, their employer is required to make contributions on behalf of the employee into the stapled fund; and ensure that employers are not in breach of various rules, or are not liable for superannuation guarantee charge, in certain circumstances;*
- * *require the Australian Prudential Regulation Authority to conduct an annual performance test for MySuper products and other products to be specified in regulations;*
- * *require trustees of registrable superannuation entities and self managed superannuation funds and directors of the corporate trustee of a registrable superannuation entity to perform their duties and exercise their powers in the best financial interests of the beneficiaries;*
- * *reverse the evidential burden of proof for the best financial interests duty so that the onus is on the trustee of a registrable superannuation entity;*
- * *allow regulations to be made to prohibit certain payments made by trustees of registrable superannuation entities and prescribe additional requirements on trustees and directors of trustee companies of registrable superannuation entities;*
- * *allow contraventions of record-keeping obligations specified in regulations to be subject to a strict liability offence; and*
- * *remove an exemption from disclosing information about certain investments under the portfolio holdings disclosure rules.*
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