Interview with Kieran Gilbert, Sky News AM Agenda

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Transcripts

KIERAN GILBERT:

Good morning, welcome to the program. Australians are throwing away $2.6 billion a year in fees and insurance premiums on extra superannuation accounts. This is according to a Productivity Commission investigation out today and it has basically found a third of accounts, or about 10 million, are unintended multiple accounts. The Commission has made a range of recommendations including ensuring people are only placed in a default fund from a best in show list when they start working for the first time; underperforming MySuper would be scaled back; workers would only be allowed to be defaulted in to one account and their employers would lose their power to assign that account fund. The Commission would also push for mergers among smaller funds in the union and employer backed section to drive down account costs. For more on this I spoke to the Financial Services Minister Kelly O’Dwyer and I began by putting to her that the Productivity Commission has confirmed that Industry Funds, union backed Industry Funds, are the best performing superannuation facilities.

KELLY O’DWYER:

It finds that there are some incredibly well performing industry funds. It also finds that the bottom 26 funds are a pretty mixed bag. We’ve got very bad performing retail funds and very bad performing industry funds and the Productivity Commission blows the whistle on the fact that the superannuation industry, Kieran, has not always been working in the best interest of members – it needs to. And they have said it requires significant change and so it backs in already what the Government has announced it will do in the Budget by putting a cap on the fees and charges that can be applied, the administration and investment fees, by banning exit fees, by saying to young people that you don’t have to pay for high insurance premiums for insurance that you don’t want or don’t need.

KIERAN GILBERT:

Sure and there is overlap too if they have insurance in one account and then they are spending the same amount separately.

KELLY O’DWYER:

Well what we have found is that there can be basically zombie insurance within funds. About a third of all funds the Productivity Commission finds are unintended multiple accounts, which means if you are a young person who has done a couple of different part time jobs through your enterprise bargaining agreement you have in fact been forced in to starting up a new superannuation fund, because you have been denied choice, you could be paying three sets of fees, three sets of insurance premiums you can only generally actually make sure that you claim on one set of insurance. So it’s zombie insurance.

KIERAN GILBERT:

But in terms of the industry, in terms of the way that it works at the moment with the Fair Work Commission having a default fund for a worker starting out, isn’t that better to say the independent umpire chooses the best performing fund for a young person 17 years old as opposed to them trying to make a decision for the rest of their life ok which fund is going to suit me forever?

KELLY O’DWYER:

Well it’s not a decision for the rest of their life – I think that would be misinterpreting what the Productivity Commission have said. They’ve said you need to look at what are the best performing funds, what are the top 10, they have called it the best in show, and they’ve said it needs to be taken out of the industrial relations sphere. It doesn’t work under Fair Work. It needs to be divorced from that because it should be about the member and their money and they should choose which fund they want to be in and when they want to choose another fund they should be able to do that but they shouldn’t be forced in to multiple sets of funds either through an enterprise bargaining agreement or because an employer has actually chosen the fund. The money should be with the member.

KIERAN GILBERT:

Ok, so in some sense you endorse the union backed industry funds because a lot of them, the big ones, are the best operating funds like Australian Super and that sort of thing but in terms of their argument that the Fair Work Commission needs to continue to have the default power that’s where you disagree basically?

KELLY O’DWYER:

I think before you put words in to my mouth what I would say is that I am a strong proponent, whether it be an industry fund or a retail fund or a corporate fund or a public sector fund, of low fees, good governance and making sure that the fund acts in the best interests of members. Right now we’ve got legislation in the senate that will give APRA, the regulator, additional powers to be able to look through and see how members’ money is being spent by the fund. We need to make sure it’s not being misused. Now that’s been blocked by the Labor Party just as they are blocking our choice reforms which again are backed in by the Productivity Commission. One million Australians, around one million Australians, right now are forced to create a new fund because of an enterprise bargaining agreement where they might already have a fund. That’s not right and it means that they are ultimately eroding their retirement savings by paying multiple sets of fees and potentially premiums as well. The Government is reuniting people with their money. We announced that in the Budget, around $6 billion of people’s money with their lost or inactive accounts or low balance accounts will be returned to them. These are good changes.

KIERAN GILBERT:

Finally, I should ask you just quickly before you go – big focus recently on Barnaby Joyce, this interview that he is giving is that appropriate? How is that going to be seen by the electorate?

KELLY O’DWYER:

I don’t think it’s appropriate for a parliamentarian to be paid money to do an interview. I don’t think that is appropriate and I think a lot of Australians would be pretty disgusted at the thought that a parliamentarian would take money for such an interview.

KIERAN GILBERT:

So will there be backlash do you think for the Government in that sense?

KELLY O’DWYER:

Well look I think these decisions are decisions taken by individual members and that’s a question you might like to put to him.

KIERAN GILBERT:

Alright, Kelly O’Dwyer thanks so much – appreciate your time.

KELLY O’DWYER:

Pleasure.