I’m particularly pleased to be talking on this bill today because some of the young people who will be affected by our measures in this bill are actually sitting up in the viewing area. They are the wonderful young people from Busselton Senior High School, who are here in the chamber gallery today. I welcome them and I really hope they enjoy their time here today and make the most of this opportunity. It’s a long way to come from Western Australia, and they’ve done exactly that. They’re most welcome. I’m really pleased that it is young people like these young people sitting here today who will be the beneficiaries of this legislation. It will be young people and, as we heard from the previous speaker, women, in particular.
We’re taking action to make sure that these great young people here will be able, when they go to work, to retain more of their own money, ensuring that these young people retain that through personal income tax cuts as well as through the decisions we are making in this superannuation bill. They will actually be able to keep more of their money, particularly when they’re on low incomes at the beginning of their careers. But I’m equally hoping that these young people sitting in the gallery today will take a personal interest in their own superannuation when they go to work. I hope that they will actually take an active interest in what’s happening with their superannuation.
Of course, this bill fixes yet another Labor mess: the decision in 2013 to abolish low-balance protection as part of the My Super changes. Low-balance accounts were very vulnerable to changes through erosion by fees and charges. But, under this particular piece of legislation, we’re going to prevent trustees of superfunds from charging administration and investment fees exceeding three per cent per annum on the balance of superannuation accounts below $6,000. This is really important for people on low incomes. There are around seven million Australians who will actually save around $570 million in just the first year of this change. That’s just extraordinary. The actual figures involved in this are just extraordinary. That’s an extra $570 million that will be retained in superannuation for hardworking Australians, helping them to earn more interest and to accumulate more savings for their senior years.
The senior years are not something that’s going to affect you young people from Busselton for some time, but, when you get there, I want you to have as much in your superannuation accounts as you possibly can. These measures today are going to help with that. They will prevent trustees from charging exit fees on any superannuation product, no matter what the balance is. According to APRA data, one-third of funds charged an exit fee in 2016-17—that was a total of $52 million across the industry. That’s another $52 million of your own funds that will be retained. I think that’s great news.
The bill addresses the provision of insurance through superannuation. When you’re young, life insurance may not be your top priority. But, when a significant proportion of retirement savings, sometimes an entire balance, is eroded by insurance premiums, it certainly is an issue. Again, this was part of the opposition leader’s My Super default, with automatic insurance on an opt-out basis rather than an opt-in basis. I can’t understand why the Leader of the Opposition would have made that decision knowing how badly it would, and has, affect those lower paid workers. We will ensure that members who are at the greatest risk of seeing their account balances eroded will not have to have insurance provided on a default basis. It will be on an opt-in basis for members with balances below $6,000, accounts which haven’t received contributions for 13 months or more and new members from 1 July 2019 who are under the age of 25. These changes will affect around five million people, with the option to save an estimated $3 billion in premiums a year. What we’re doing is giving people choices and options. This is something that is in our DNA. We actually believe in people having choices and having control.
This is a really important issue. I encourage people—and these great young people in the gallery today—to take a direct interest in and know exactly what’s happening with their superannuation because many people do not. We recognise that some don’t take that interest, but we need to make sure that, irrespective of whether people take a direct interest or not, their interests are reflected and they retain as much of their earnings and their superannuation as possible.
A million workers need to have their say on superannuation and their choice of super restrictions, which have been affected and restricted by EBA directions. But in these days of people changing jobs, many millions of Australians have multiple superannuation accounts. Young people in Busselton could have multiple changes of jobs in their lifetime. We want to make sure that, irrespective of how many times they change their jobs, they are able to consolidate that superannuation into an account where they’ll know exactly how much they have at their disposal. It’s interesting that, of the 14.8 million people who have a super account, 40 per cent of them have more than one account and around 176,000 people actually hold six or more accounts. They need to bring them together. That leads to tens and sometimes hundreds of thousands of dollars less at retirement. When young people retire, they’re going to want every cent so that they can do the things they want to do when they’re at a more mature age. I want to see that they get that.
Through this bill, the Australian Taxation Office will be given the opportunity for the first time to proactively return the balances of inactive accounts that people might have from past jobs—but they may not know where that super is—to the people who earned it, along with existing unclaimed super moneys. That’s what we want. We want your money to stay with you, like personal income tax cuts. The ATO estimates it’ll be able to do this within a month of receiving the funds. Like a lot of these young people, one of my staff has had five jobs in 20 years in both the private and public sectors. He did a super search to see what was out there that he didn’t know about and he found over $78,000 in a lost super account. Isn’t this a great reason for young people to take a very direct interest in their superannuation when they go to work? Make sure you know what’s there and that you take control of that. This is a very big issue for one of my staff, and this is a practical example for anybody watching or listening as to why you need to make sure that you know what’s happening with your super.
I congratulate the minister for her efforts in getting this particular bill together. We’re going to see a lot of Australians in the first year—three million people—automatically getting their money back, being reunited with $6 billion of their own money. What a fabulous outcome! It’s a fantastic outcome by this government that we’re going to see three million people reunited with $6 billion of their own money. I commend the bill to the House.