Chapter 2 - The Bill
Provisions and objectives
2.1 This is a very brief Bill, containing two amendments to the Workplace
Relations Act 1996.
2.2 The first clause of the Bill repeals paragraph 89A(2)(s) of the Workplace
Relations Act 1996. This amendment removes superannuation from the list
of allowable award matters set out in the Act.
2.3 Removing superannuation from the allowable award matters list means
that the Australian Industrial Relations Commission (AIRC) will no longer
be able to deal with disputes about superannuation by arbitration. The
commission will not be able to prevent or settle disputes about superannuation
by making awards or orders or maintain the settlement of such disputes
by varying awards or orders. [1]
2.4 The second clause of the Bill amends Subsection 89A(7) of the Act
by inserting the words 'the matter is not superannuation and' before the
words 'the Commission is'. This amendment removes the AIRC's power to
make "exceptional matters" orders about superannuation, including
but not limited to choice of fund, types of employees to be covered, rate
of contribution and employees' ability to access entitlements. [2]
2.5 The amendments will also have the effect of removing superannuation
provisions from existing federal awards. [3]
It has no effect on state awards where superannuation remains an industrial
matter.
2.6 Currently, businesses must comply both with award provisions and
with the obligations imposed by the Superannuation Guarantee (SG) legislation.
In his second reading speech, the Minister for Workplace Relations and
Small Business, the Hon. Peter Reith, explained that this Bill will simplify
the superannuation arrangements with which businesses must comply:
The bill will ensure that businesses will no longer have to meet the
complex and confusing standards imposed by the current regime which
requires them to comply with award superannuation obligations on top
of another set of requirements provided for in the superannuation guarantee
legislation. [4]
2.7 The result of amending the legislation will be that a single set
of superannuation requirements, imposed by the SG legislation, will be
in force. The Government considers that this will be simpler for businesses
to administer.
2.8 In his second reading speech, the Minister also reminded the House
of Representatives that when the Workplace Relations Bill was originally
introduced into the Parliament, the allowable award matters list did not
include superannuation. Amendments, subsequently agreed with the Australian
Democrats, added superannuation to the list of allowable award matters.
2.9 The Minister stated that it was always intended as part of that agreement
that this would only be a temporary measure, and that superannuation would
be removed from the allowable award matters as part of the 'Choice of
Fund' legislative package. [5] The nature of
the agreement was set out in a letter dated 18 October 1996 from the Leader
of the Australian Democrats, Senator Cheryl Kernot, to the Minister for
Industrial Relations, the Hon. Peter Reith, MP. In that letter, Senator
Kernot stated that the foreshadowed choice of fund legislation 'must ensure
their workers are not made worse off as a result of any overriding or
repeal of award superannuation clauses'. Senator Kernot advised the Minister
that if agreement were reached on the choice of fund legislation, the
Democrats would then be prepared to support repealing award coverage of
superannuation. She concluded :
However, until that legislative package is finalised, we believe that
it would be premature to repeal superannuation coverage by awards.
2.10 The Minister also foreshadowed that the government will introduce
provisions to enable employers to continue to use existing earnings bases
following the removal of superannuation as an allowable matter under federal
awards. [6]
The issues
2.11 Essentially, the issues associated with this bill centre on whether
the process of simplifying employers' superannuation obligations to their
employees by removing superannuation from the federal awards system will
unduly affect the current entitlements and protections afforded to employees
by awards. The awards system also provides a dispute resolution procedure
through the AIRC.
2.12 The Australian Chamber of Commerce and Industry (ACCI) agreed with
the Government's view that current arrangements under which employers
have to satisfy obligations under both the awards system and SG are excessively
complex. The ACCI considers that there is a need to simplify employers'
superannuation obligations.
2.13 Other employer organisations invited to give evidence, the Business
Council of Australia, the Victorian Employers' Chamber of Commerce and
Industry and the Metal Trades Industry Association, declined the Committee's
invitation to present their views.
2.14 Trade union representatives strongly opposed the bill, advising
the Committee that removing superannuation from the allowable award matters
list and the jurisdiction of the AIRC would considerably disadvantage
workers.
2.15 The Association of Superannuation Funds of Australia (ASFA) also
expressed concern about aspects of the proposal.
2.16 In evidence, Trade Union representatives and ASFA identified a range
of reasons why they thought superannuation should remain in the allowable
award matters list. The major concerns identified fall into several broad
areas.
- First, persons who currently receive superannuation under award provisions
may lose this and other entitlements if SG becomes the only obligation
on employers.
- Secondly, SG imposes less stringent obligations on employers in respect
of frequency of payment of contributions. This may have implications
for insurance coverage and the rate at which contributions accumulate
interest.
- Thirdly, there is concern that if the AIRC loses jurisdiction over
superannuation matters, there will be no dispute resolution mechanism
available if disputes arise between employers and employees in respect
of superannuation.
- Fourthly, inconsistencies will arise between employees who are covered
by federal jurisdictions and state industrial tribunals where superannuation
will remain an industrial matter.
- Finally, there is a possible issue of timing in respect of implementation
with the Choice of Fund legislation.
Footnotes
[1] Second reading speech, p. 1.
[2] Explanatory memorandum.
[3] Second reading speech, p. 1.
[4] Second reading speech, p. 1.
[5] The choice of fund legislation is contained
in schedule 5 of Taxation Laws Amendment Bill (No.7) 1997, which, at the
time of preparing this report, was still before the Senate.
[6] Second reading speech, p. 1.
Top
|