Opinion Pieces

Time to end super loophole

The Australian | March 09, 2020

Few people would believe that in 2020, there are laws that stop Australians from selecting a super fund of choice.

Yet that is the case in Australia today. Workers are regularly banned from getting a better deal for their super.

Back in 2005, after protracted negotiations, the Senate supposedly delivered super choice for Australians. Then Assistant Treasurer Mal Brough said: “The Coalition made a commitment before the 1996 election to give Australian employees this important right. After 9 years of opposition from the Labor Party, that promise has been delivered.”

But the deal created a loophole which has undermined the promise.

There is now anew bill before the Parliament, which if passed, will finally guarantee choice of super fund for all Australians.

There are three reasons why this bill must be passed.

Firstly, the loophole has been used ruthlessly by big unions and big business to relieve workers’ of their rights.

Let me explain how it works.

The two representative groups (a business and a union) create an enterprise agreement which removes the ability of workers to pick a fund. Instead it entrenches the fund selected by the two groups as a compulsory fund.

There is no way out of it.

One outrageous example is a Toll Holdings agreement which bans workers from choosing their own fund.

This deal was examined by the Trade Union Royal Commission. It emerged Toll truck driver Paul Bracegirdle tried to pick a fund other than TWU Super to boost his savings to provide for his daughter.

Bracegirdle’s request was legally denied and he was told by a union official to “f**k off, no one cares Paul. Go away.”

Yet the trade unions say: “The Bill abolishes the ability for workers and their employers to agree to specific benefits only available with single fund workplaces.”

In other words, we don’t think workers should be trusted to make their own decisions and the union Tsars know what’s best.  

Yes, the unions are pretending the information doesn’t exist, but they are not alone.

There is a well concealed reason prior attempts to move on this issue have been stymied.

Big business has been part of the problem.

As someone who has worked in “big business”, it has shocked me how business can be complicit in anti-worker conduct.

Unions cannot doit without being in bed with bosses. Enterprise agreements require both sides to agree.

Secondly, the case for more choice and competition in financial services has been made. It was made by Ken Hayne in his Royal Commission!

The great pull of the Morrison Government’s reform agenda is to drive more competition. More choice. Stronger consumer powers to select banks or energy providers.

That’s why we are progressing open banking and the Consumer Data Right which puts Australia as leader in empowering consumers to get a better deal.

The maintenance of a system which demands that people have multiple superannuation accounts is costly and unfair. One brave soul, Luke Zhou, a university academic told the Senate Economics Committee:

“Due to provisions in the (UNSW) enterprise agreement, casual staff employed by the university are unable to exercise choice of fund, being compelled to contribute into UniSuper. This is highly detrimental to my peers, as they are often confused as to why they are defaulted in two superannuation funds, which automatically deduct two sets of fees and insurance premiums.”

Mr Zhou is a rare beast. A worker who has been prepared to put their name to a good reform. I have spoken to many employees of universities who are afraid to speak about these changes publicly - for fear of reprisals.

Thirdly, it is urgent.  There are workers who want to choose different funds which perform better than the funds into which they are locked into.

TWU Super is one of the loudest interests arguing for the status quo.

They say: “For those people currently covered by collective choice agreements the bill actually increases their vulnerability to being sold inferior outcomes amid incentive driven sales practices.”

In truth, the TWUSuper and TWU itself have performed poorly compared to industry fund averages.Over 10 year, the return according to the prudential regulator APRA was 8.1%.

This compares to9.0% at Aust Super, 8.9% at HostPlus and 9.7% at UniSuper.

TWU Super is governed at the board level by union officials. Like one who had ‘no problem’ with $190,000 pay for six days’ work, topped up by the superannuation fund

They are rightly scared of competition.

Moreover TWUSuper have been a huge donor to the TWU.

$8.6m over the past 10 years has been sent from TWU Super to TWU itself according to the electoral commission.

That is a bonanza which the unions clearly want to protect as revenues from union memberships collapse.

I understand that self interest is important in driving people and institutions.

Jack Lang was the mentor of the superannuation system’s creator Paul Keating. His great saying was “in the great race of life, always back self interest, at least you know it’s trying.”

The Parliament should now enact our super choice bill to close a loophole which should never have been created. No one should be afraid of competition; unless of course, they should!

Andrew Bragg is a Liberal Senator for New SouthWales & member of the Senate Economics Committee


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