Banking reform campaigner John Williams blames Labor and Greens for not supporting legislation, but urges PM to try again

This article is more than 2 years old

This article is more than 2 years old

Nationals senator John Williams has urged the Turnbull government to push ahead with legislation that will see superannuation trustees face up to five years in prison for stealing workers’ super savings.

Williams, one of the earliest backers of the banking royal commission, told the Coalition partyroom on Tuesday that super trustees must face civil and criminal penalties of up to $420,000 and five years’ jail respectively for failing to act in the best interest of their members.

He said legislation introducing tougher penalties on super trustees that offer MySuper default products had stalled in the Senate last year because Labor and the Greens refused to support it, but the government ought to revisit it.

“I said to the party room, ‘Bring it on, jam it up there, and let’s see if they’ve got the guts to oppose it this time after what the royal commission’s revealed’,” Williams said.

AMP to compensate super investors after fresh humiliation at royal commission Read more

“I’m confident it will be brought on, and I’d expect it hopefully in the next couple of months, or sooner.”

The royal commission finished its interrogation of the super industry last week, revealing millions of Australians have been ripped off by their super funds with exorbitant fees and charges.

The reputation of institutions such as Commonwealth Bank and AMP took yet another battering, and the embattled wealth management giant AMP agreed to pay $5m to compensate almost 50,000 super fund members short-changed by their investments.

Williams has asked his Coalition colleagues to refocus their attention on penalties for super trustees who fail to act in the best interest of their members.

However, the Greens say the reason they opposed the legislation that Williams is now championing is because it was aimed squarely at MySuper default products which are dominated by “industry” super funds (which are often associated with unions).

They say the legislation did nothing to increase penalties on “retail” super funds, which are run by the major banks, where the billion-dollar scandals have occurred.

The Greens’ Treasury spokesman, Peter Whish-Wilson, told the Senate last year that the bill would increase trustee obligations and regulatory powers in the default super sector, but not the 83% of retail sector assets dominated by the big-bank-owned funds.

“The vast majority – nearly 83% – of bank-owned and other retail superannuation assets are held outside MySuper and will be excluded from the requirement,” he said.

“This is the case notwithstanding that such products, on average, underperform MySuper products, where the majority of industry super funds are held.

“The government still haven’t advanced any evidence that their proposals will improve returns for members. They’ve talked about risk management and improving governance, but at the end of the day the track record is clear: for the 10 years to 30 June 2017, SuperRatings data shows on average that industry super funds have outperformed bank-owned super funds by more than 2% a year.”

The Turnbull government accepts that last year’s legislation was aimed squarely at the MySuper regime, and that if the bill was reintroduced without amendments it would likely get defeated.

It will face pressure to remove the bill’s emphasis on MySuper products if it wants the Senate to pass the legislation.

Whish-Wilson told Guardian Australia that the Greens would not support any legislation that is part of an “ideological attack on industry super funds”.

“If the government wants to do serious reform of superannuation and bring a clean, non-ideological bill that doesn’t impose standards on industry funds that it won’t put on the banks, then we can talk,” he said.

“And while they are at it they can adopt the Greens policy of making the Australian Competition and Consumer Commission the conduct regulator of the superannuation sector, which is so plainly needed after APRA’s failures.”