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HANSARD EXTRACT

Superannuation Legislation Amendment (Choice of Superannuation Funds) Bill 2005: Second Reading

31 May and 1 June  2005

Mr HAYES (Werriwa) (10.23 p.m.)—I rise today to speak in strong support of the amendment put forward by the opposition to the Superannuation Legislation Amendment (Choice of Superannuation Funds) Bill 2005. I cannot help but think what the small business owners and operators must be thinking about this bill. Here we are 30 days away from the introduction of superannuation choice for all employees, except for those who are ineligible, and the government is hurriedly trying to get through the finishing touches to this legislation—finishing touches, mind you, that have been foreshadowed since March but have only recently been introduced to the parliament.

This is legislation that should have been completed long ago. It is a mess that we are in, but I am glad that this has occurred because it has given the opposition the opportunity once more to try to convince government to take some notice of the concerns of small business. It is another opportunity to point out the serious flaws in this superannuation choice plan. It is another opportunity for Labor to add a few of its own finishing touches to the scheme. It is another opportunity for the government to support the exemption of small business from the super choice plan.

Whilst some may think that Labor’s campaign to exempt small business from super choice and to point out the flaws in the legislation is merely an attempt to differentiate itself from the government this is just not the case. The opposition is clearly concerned about the position of small business—a position that has been reflected through the electorate in the real and genuine concerns of small business owners and operators across the country. Let me take the opportunity to have a closer look at some of the concerns of small business owners and operators.

Small business owners are concerned primarily with the compliance costs of the scheme and the associated penalties. First, let us consider the compliance costs. Although small businesses are used to filling out plenty of forms and paperwork for this government, it is surprising just how much time is spent in complying with these requirements. As I began to come to terms with the amount of paperwork involved with super choice, it was at that point that I realised that I was glad to have recently left my small business and entered this parliament.

In order to work out exactly what small businesses are obliged to do under the scheme, small business owners have to go through a 16-page document entitled ‘Choice of superannuation funds—guide for employers’, which outlines what has to be done in order to meet their obligations. I can see what is going to go on. Despite the government’s generosity in investing more than $19 million in its super choice advertising campaign with its catchy theme song, most people would not have thought much about superannuation. Regrettably, it is a fact that most people probably do not spend much time thinking about superannuation. However, shortly they are going to have to, as this is what I imagine will be the likely scenario come 1 July.

The night before superannuation choice forms must be provided, in many houses, in thousands of small businesses and home based businesses, you will hear the sounds of modems dialling. They are going to log on and get the form and they are going to have to print it off, because the ATO will not be providing all the necessary forms. They are going to download all the forms on superannuation choice on the web site—provided it does not crash. The next morning they are going to hand the standard form to their employees and tell them that this is the form they need to fill out for super choice. The employees are going to say, ‘Super what?’ This is where it is going to get tricky. Of course, having read the publicity available, small business owners know that they can only provide information to employees about what superannuation choice is, about their obligations as an employer and about how the employee nominates their fund. Words during this conversation will be chosen very carefully as small business owners know that if they say or do anything that may be considered as advice or a recommendation they could be faced with criminal sanctions of up to two years in jail and a $22,000 fine.

We have all heard that in a few weeks time it is expected that some five million employees will be handed one of the super choice forms. It is a relatively straightforward document. It is two pages in length and gives an employee the opportunity to choose a super fund into which will go their employer’s contributions. Of course, if the employee wishes to investigate further and find out exactly what they are filling in, that straightforward two-page document comes with a very handy 55-page compendium which will give them more information on super to help them make the super choice decision. After receiving the form and getting the limited help that the boss is able to provide, the employee, form in hand, will still be as confused as ever as they walk away wondering what they are going to do next.

Let’s face it: this is not a small decision. It is a very significant one. This is about saving for people’s retirement. Even the Minister for Revenue and Assistant Treasurer concedes that this is the second largest financial decision that people will have to make in their lives other than the purchase of their homes, and they cannot take advice from their bosses, no matter what their relationship with their employer is. Being a small business person myself and knowing many other people in a similar position, I have to say that we actually have a reasonably caring attitude to staff—at least in my case—and to think that small business operators would not be so disposed to help employees and to give advice if they are asked is just nonsensical.

As I mentioned earlier, before I entered this place I was a small business person. I worked pretty hard in my business and I do share the concerns of other small business people. But, in my case, I had one employee. As I read about superannuation choice, I wonder what my position would have been come 1 July. I seek leave to continue my remarks later.

Leave granted; debate adjourned.

1 June 2005 in continuation

Speech

Mr HAYES (Werriwa) (9.06 a.m.)—In continuing the remarks I was making last night on the Superannuation Legislation Amendment (Choice of Superannuation Funds) Bill 2005, I take the opportunity to remind members that I have a background in small business. I understand how small business feels when it is confronted with a new system and new paperwork.

Prior to the adjournment last night, I was saying that after reading the details of the superannuation choice scheme I was wondering what position I would have been in come 1 July. It is likely that I would have been in a position to sack my single employee without explanation as one of the businesses that would have been exempted from the unfair dismissal laws. That would be a particularly brave move on my part, given the fact that I have been married to my single employee for 29 years! Leaving that aside, it would seem that, come 1 July, I will not be able to discuss her superannuation choice or our future savings for retirement because that could be considered subject to sanctions.

Government members may scoff at the suggestion that small business is concerned about the introduction of choice but, to assure themselves that this is indeed the case, they need go no further than the Council of Small Business Organisations of Australia. In early May this year the council issued a media release titled ‘Penalties for super choice too harsh!’ The council expressed the deep concerns of its membership about the penalty regime imposed under the super choice scheme. I can understand their concerns. I do not know that anyone would like the prospect of a couple of years in jail for a few misplaced words in a conversation. The council’s media release said:

The Shadow Small Business Minister Mr Tony Burke is right when he calls for exemptions for small business.

It is not that I think that the Council of Small Business Organisations could be confused with the ACTU but it is interesting that the Council of Small Business Organisations does emphasise that Labor’s position of calling for an exemption is supported by small businesses across the country. It would seem that small business is genuinely concerned by the introduction of super choice and wants an exemption.

Naturally the media release prompted me to wonder about the government’s motivation for not granting the exemption. I would have thought that, with a group such as the Council of Small Business Organisations of Australia supporting Labor’s calls, there must be a sound reason for the government to ignore them. I dug through old statements by the minister to try to gain some insight as to why the government would not accede to the request of small business and grant an exemption, but the closest thing I found in my research was a statement by a spokeswoman for the Minister for Revenue and Assistant Treasurer. It said:

Exempting small business from offering choice would just create a competitive disadvantage for small business in a tight labour market.

As a small business person, I do not know what that means and neither do the very small business operators in Liverpool who I had the privilege to address recently. While calls from COSBOA may not be enough to convince members opposite to support Labor’s amendments, there are a number of other concerns that must be raised about this scheme.

Most people are well aware that the superannuation industry is a multibillion dollar industry. Recently I saw reports that estimated the assets of the superannuation industry to be in the order of $750 billion, which is a considerable sum by anybody’s standards. The handling of those considerable assets requires management and funds management brings with it fees and charges. Annual revenue from these fees and charges on the management of superannuation funds has been estimated to be between $5 billion and $10 billion—another significant sum.

Superannuation choice introduces a new dimension to retirement savings in Australia. The government has managed to bring together the finance and funds management industries and employees to make decisions on considerable financial holdings of workers with less than full information available to them. It was not all that long ago that people were very concerned because their superannuation funds had fallen. If things go bad again, I am sure government will wash its hands very quickly of this situation and hide behind the excuse that, after all, it was the employees’ choice—that they had the right to choose where their funds went and that whether or not they chose a successful fund was in their hands.

Small businesses must be exempted from super choice. They are concerned about its impact on their business and they are concerned about what might happen to their employees’ retirement savings. Small business operators will be overwhelmed by paperwork as a consequence of this scheme. That is what I find so amazing about the government’s refusal to exclude small business from the choice provisions. This government—the self-appointed best friend of small business—is going to increase the pressure on small business owners. Owners who are already spending many hours every week trying to comply with the ‘simplified tax system’ will have to deal with this as well.

Some time ago I reviewed the government’s document titled ‘Committed to small business’. This document, released last year, outlined the government’s commitment to small business and what it had done to free up small business owners and operators so they could concentrate on growing their businesses. The document went to great lengths to praise the work of small business, to inform us of their contribution to the economy and to report that the government’s commitment to small business had not diminished—noble sentiments that have not been borne out by the government’s position on superannuation choice. The document reported that it has been a priority of the government since its election in 1996 to reduce red tape and that it has made inroads into improving regulatory oversight applying to small business. It included the following statement:

The Government is committed to streamlined, cost effective regulation that does not impose unnecessary paperwork or other compliance costs upon small business. The Government will continue to be responsive to small business needs and concerns on these issues.”

I guess that along with super choice has now come a super change in policy. Super choice is the essence of unnecessary paperwork for small business. The government’s small business policy has undergone somewhat of a change. I guess the great friend of small business owners has now seen fit to abandon them.

Small business owners can handle a fair bit. We have to. In the main we do not enjoy the luxury of having finance departments to take care of the bookwork. We do not have human resource departments to take care of occupational health and safety, or superannuation departments to fill in and comply with the distribution of superannuation forms. For the most part, doing all this in a small business is the sole province of the small business owner and operator. Small business owners can handle having a relatively simple three-step process replaced with a 34-step process, if they have to. Small business owners can handle the extra paperwork associated with superannuation choice and the various aspects of superannuation funds, if they have to. But they do not have to. Government members have a choice. They can live up to their commitment to reduce unnecessary paperwork and compliance burdens on small business by supporting the opposition’s amendment. Members opposite must support the small business call and the call of the opposition to exempt small business from superannuation choice.

 

 

 

 

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