Has Shorten ignored the Productivity Commission’s default super recommendations?

by |

As Minister for Workplace Relations and Superannuation Bill Shorten calls for an “evidence based” approach to default super selection, the Coalition has accused him of trying to bully the Productivity Commission into his way of thinking.

According to a Government statement, it is calling for an “evidence based and expert led process for selecting and assessing default superannuation funds in modern awards which will ultimately lead to more transparency and competition”.

"We want default contributions to be put into the most secure and high performing funds possible so Australian workers can maximise their retirement savings," said Shorten. "It's the Gillard Government's job to make sure there is a transparent and robust process for the selection and assessment of these funds."

A submission by the Treasury and Department of Education, Employment and Workplace Relations (DEEWR) in response to the Productivity Commission draft report into default fund superannuation arrangements for modern awards will ensure default funds in modern awards meet the best interests of members, claims the Government statement.

The joint submission supports the Productivity Commission's suggestion that the selection of default funds for inclusion in modern awards to be undertaken by an expert panel within Fair Work Australia (FWA), it added, before putting a dig in at the Coalition’s superannuation policies:

“Thanks to universal superannuation, which has never been supported by the Coalition, Australians' retirement savings currently total around $1.4 trillion.  The Gillard Government is delivering on its commitment to progressively increase compulsory superannuation contributions from 9% to 12%, commencing from 1 July 2013.”

Coalition fights back

The Coalition has fought back, however, with Shadow Assistant Treasurer and Shadow Minister for Financial Services and Superannuation Mathias Cormann accusing Shorten of trying to bully the Productivity Commission on its views on how best to ensure genuine transparency and competition in the superannuation default fund market “by pre-empting its findings and final recommendations due in October with his announcement today”.

“It is this Labor government which is responsible for the current discredited closed shop and anticompetitive arrangements for the selection of default super funds under modern awards through Fair Work Australia, which inappropriately favours union dominated industry funds,” he said.

“Labor had to be shamed into fixing this in the lead up to the last election. All the way back in August 2010 Labor promised to ensure default funds under modern awards would be selected through a more transparent and competitive process if re-elected to government.

“Clearly guided by a desire to give his union friends the strongest possible competitive advantage, Bill Shorten waited as long as possible before getting the Productivity Commission review underway. Now that it’s underway he wants to gazump the process.”

He added that Shorten has effectively confirmed he will ignore the recommendations of the Productivity Commission so he can continue to put the interests of his union friends ahead of the public interest.

“After ongoing delays the Minister was dragged reluctantly to commissioning the Productivity Commission review. Now his announcement confirms that the government has no intention of even considering the recommendations, because the government has already made up its mind,” said Cormann, adding that, “unlike the Government”, the Coalition will consider the Productivity Commission’s recommendations carefully to deliver genuine competition into the default fund market.

Shorten’s plans

The Treasury and DEEWR submission, which can be seen in full here, proposes funds seeking to be listed as default funds in modern awards should have the opportunity to put an Expression of Interest to the expert panel within FWA, which would assess the funds against legislated criteria proposed by the Productivity Commission.

A Full Bench of FWA would then consider the expert panel's report, hear the views of industrial parties and determine whether or not to vary the relevant awards.

The submission proposes FWA as the most appropriate body to undertake the assessment and selection of default funds given their extensive experience in industrial matters, including setting the national minimum wage and the creation and maintenance of modern awards.

The submission from Treasury and DEEWR does not support the Commission's proposal that employers should be able to unilaterally select a fund which is not a default fund listed in the relevant modern award.

The submission says that allowing employers to unilaterally opt-out of the superannuation provisions in modern awards "raises considerable risks to the integrity of the proposed default fund arrangements, the safety net and the Fair Work Act framework".  The submission confirms employers have never had the option of unilaterally opting out of awards, absent agreement or approval.

The Productivity Commission is due to present its final report to the Government in October 2012. The Government looks forward to the release of the final report and its recommendations.

WP forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Name (required)
Comment (required)
By submitting, I agree to the Terms & Conditions