Outlook conference: Bill Shorten to shake up bank superannuation

Bill Shorten has flagged forcing bank-owned retail super­annuation funds to appoint ­independent trustees.

Bill Shorten at the Melbourne Institute/The Australian Economic and Social Outlook Conference dinner last night. Picture: AAP

Bill Shorten has flagged giving ­financial regulators the power to force bank-owned retail super­annuation funds to appoint ­independent trustees to ensure members’ interests are put ahead of profits when dealing with workers’ compulsory retirement savings.

In a threatened regulatory shake-up of the profit-driven funds, the Opposition Leader will also consider giving the Australian Prudential Regulation Authority powers to sack trustees of habitually underperforming funds.

Mr Shorten’s comments to the Melbourne Institute/The Australian Economic and Social Outlook Conference dinner last night came after he was put under pressure by peak industry groups to back Scott Morrison’s move to accelerate company tax cuts for small and medium-sized businesses.

The Opposition Leader left open the possibility of backflipping on Labor’s position for a second time in four months.

Mr Shorten’s comments on super reform follow a recent ­Productivity Commission report that found up to a third of all ­superannuation members were in continuously underperforming funds.

Mr Shorten, a former assistant treasurer responsible for superannuation, argued that there was a conflict for banks running super funds in the interests of superannuation members and shareholders and their competing responsibilities.

Bank-controlled for-profit superannuation funds have ­received criticism for under­performing not-for-profit industry funds in terms of returns to members, charging excessive fees and underpaying on cash rates.

 

“One idea that has emerged from some quarters is: should banks actually be in superannuation?” Mr Shorten said last night.

“I don’t know about that. One idea, and it’s only an idea … you could require for-profit funds to outsource the trusteeship to genuinely independent organisations.

“Of course you would need the regulators to help you enforce that genuine independence.’’

Mr Shorten said his biggest concern was with underperforming superannuation funds. He said his comments were “initial thoughts’’ and would need further examination.

The Prime Minister yesterday warned that the plan to fast-track company tax cuts for small and medium businesses could be jeopardised by a defeat in next week’s Wentworth by-election.

“You’ll get then a hung parliament, and we’re all in there negotiating with independents,” Mr Morrison told Sky News.

“The small business tax relief that I’ve announced today which I want to start legislating next week, all of these become uncertain. We add further uncertainty in our political environment.”

Labor’s promised tax grabs would raise almost $160 billion over a decade and cover the funding of a faster rollout of a 25 per cent tax rate for businesses with a turnover of up to $50 million.

Over the forward estimates the Opposition Leader’s tax policies would raise $30.5bn, while the fast-tracked tax cuts announced by Mr Morrison yesterday are ­estimated to cost the budget $3.2bn over the same timeframe.

Mr Shorten’s wavering on Labor’s company tax policy comes after he was forced by his shadow cabinet in June to back down on a captain’s call to repeal legislated tax cuts for businesses with turnovers of between $10m and $50m. Labor’s current policy is to support the 27.5 per cent tax rate for companies with an annual turnover of up to $50m, but it would repeal the lower 25 per cent tax rate.

Under the government’s new plan, the legislated 25 per cent tax rate would be delivered in 2020-21 — five years ahead of schedule.

“We will consider it if it can be afforded,” Mr Shorten said. “In a beauty parade between giving tax cuts to corporations, and funding education for kids, to funding our hospitals, making sure that the sick can afford to see a doctor, I am always going to pick our kids, and I’m always going to pick the sick over corporate tax cuts.

“But if it is affordable, then we will look at doing both. But at this stage we want to crunch the numbers and I need to go through the proper processes consulting with my colleagues.”

Business groups were buoyed by Mr Shorten’s initial response to the government’s revised company tax cuts plan. Australian Chamber of Commerce and ­Industry chief executive James Pearson urged politicians who proclaimed support for small business to “put their money where their mouth is”. “We would strongly urge Labor to back the bring forward of the tax cuts for small, medium and family businesses,” Mr Pearson said.

“The Labor Party has repeatedly said that it is a supporter of small business. There is no better way to demonstrate that right now than to back the bring forward of the tax cuts which parliament has already legislated, that otherwise will not come into force or will not start coming into force for another three years.”

Mr Shorten last night denied his agenda was “somehow about envy” but stressed everyone needed to feel like they were getting a “fair go”, using Mr Morrison’s catchphrase.

Finance Minister Mathias Cormann said that if Mr Shorten “cared about working families” he would support the faster tax cuts for businesses that employed about seven million Australians.

The government could legislate the quicker timetable without Labor’s support but is one crossbench vote short of clinching the numbers to pass the bill through parliament. One Nation leader Pauline Hanson, who controls two votes in the Senate, said she would discuss her “concerns” about the government’s plans with her colleague Peter Georgiou. “I’m more inclined to see the government make arrangements with the states to roll back payroll taxes, which will offer businesses who employ staff genuine tax cuts and generate further employment across the nation,” she said.

Cory Bernardi, David Leyonhjelm, Brian Burston, Derryn Hinch, Fraser Anning and Centre Alliance senators Stirling Griff and Rex Patrick support a quicker rollout of the existing tax cuts.

Independent senator Tim Storer has previously said he sees no evidence to introduce them sooner but said yesterday he would consider the legislation on its merits.