Coalition Senators' Dissenting Report

Introduction

1.1Coalition Senators do not oppose Schedules 3, 4, 5 and 6. These measures are largely technical and should proceed.

1.2Our concerns relate to Schedules 1 and 2. Coalition Senators support reducing unintended multiple superannuation accounts and protecting employees from inappropriate product steering. However, we are not satisfied that Schedules 1 and 2 are properly designed or operationally ready – particularly when considered alongside the volume of superannuation reforms the Government is seeking to implement this year – such as PayDay superannuation and its new tax proposal.

1.3The evidence before the Committee identified material implementation and competition risks that remain unresolved.

1.4For those reasons, Coalition Senators dissent from the Committee’s recommendation that the Bill be passed in its current form.

Good Intentions, Risky Design

Systems are not ready

1.5Schedule 1 expands the availability of stapled fund information earlier in the onboarding process. In isolation, this is largely mechanical.

1.6Schedule 2 restricts the advertising of superannuation products during onboarding.

1.7Together, these schedules restrict how superannuation options can be advertised at the point when a new employee commences work.

1.8The Government’s objective is to reduce unintended duplicate accounts and prevent inappropriate product steering. Coalition Senators support those objectives in principle.

1.9However, the effectiveness of these reforms depends on reliable, real-time stapled fund retrieval across payroll and onboarding platforms.

1.10Evidence to the Committee indicated that:

The ATO system is unreliable. Stapled fund responses are not consistently returned to employers or onboarding software within the onboarding window;

System readiness varies significantly across service providers; and

Regulatory detail regarding sequencing and compliance remains unresolved.

1.11The Committee heard clear evidence that the current stapled fund API does not consistently return results within the onboarding window. MYOB noted that the service returns a result only around 60 per cent of the time (paragraph 2.25).

1.12SuperAPI similarly raised concerns that reliance on a single retrieval pathway increases the risk of duplicate account creation where retrieval fails (paragraphs 2.59–2.60). Employment Hero warned that, in practice, employees may be shown only the employer default fund where stapled retrieval is unsuccessful (paragraph 2.40).

1.13If stapled information is not returned in time, employers may default employees into a new fund. This risks increasing, rather than reducing, account proliferation.

1.14Parliament should not legislate on the assumption that systems will operate flawlessly when stakeholders have identified clear operational constraints.

These Reforms Don’t Support Choice – They reduce it

1.15Superannuation is a $4 trillion system. Its long-term strength depends on competitive pressure, transparency, and member engagement.

1.16Super is ultimately Australians own money and they should be able to make informed choices about how to invest it. The Government doesn’t tell individuals what businesses to invest in, whether to invest in property or shares, so it is an extraordinary intervention for the Government to attempt to restrict advertising of super funds to members.

1.17Schedule 2 will result in fewer superannuation choices being presented to employees at the very moment when employees are most likely to engage with their superannuation – when they start a new job. This will naturally reduce the choices available to Australians at the key time when they are considering changing funds. It is Orwellian to suggest these restrictions improve choice.

1.18Coalition Senators are concerned that the advertising prohibition will:

Reduce the visibility of alternative products at a key decision point;

Entrench structural advantages for default arrangements – which will benefit already dominant funds;

Limit meaningful comparison between fund types; and

Weaken competitive tension within the system.

1.19Australia already operates a performance test regime that addresses persistent underperformance. Restricting choice to products that pass that test should sufficiently address concerns about employees joining underperforming funds. Any additional restrictions on engagement must be carefully justified with evidence of systemic failure.

1.20Evidence to the Committee also highlighted the structural consequence of tying the advertising exception exclusively to successful stapled retrieval. Under this Bill, where retrieval fails, alternative sources of existing fund information cannot be presented, even where such services are already operating effectively (paragraphs 2.63–2.65).

1.21Without public reporting, it will be difficult to assess whether the reforms are reducing duplicate accounts or increasing duplicate accounts.

1.22Coalition Senators are not persuaded that sufficient evidence has been provided demonstrating that the current onboarding framework is causing widespread harm. By contrast, there is a credible risk these changes will narrow choice and risk worse member outcomes.

A Real Risk for High-Risk Workers

1.23A particular concern raised during the inquiry relates to insurance adequacy.

1.24Employees entering hazardous industries may be stapled to a fund that:

Does not provide default insurance cover;

Contains occupational exclusions; or

Provides cover that is misaligned with the risk profile of the new role.

1.25The Bill does not mandate clear, standardised disclosure of insurance status when stapled fund details are presented.

1.26The Committee received specific evidence that workers entering hazardous industries may be stapled to funds that do not provide appropriate insurance cover or contain occupational exclusions (paragraphs 2.41–2.46). These concerns relate to total and permanent disability and income protection settings that differ materially across funds. The Bill does not mandate standardised disclosure of insurance status when stapled fund details are presented.

1.27That is a significant gap in this legislation. Superannuation operates as both a savings and insurance system. Reform should not inadvertently weaken insurance protection for workers in high-risk sectors such as construction, mining or emergency services.

Legislating Before Systems Are Ready

1.28Coalition Senators are concerned by the degree of reliance on future regulations and regulatory guidance.

1.29Key compliance questions remain unclear, including:

The precise scope of the advertising prohibition;

When onboarding is deemed to have concluded;

How neutral factual information is to be distinguished from promotional content.

1.30Employers and onboarding providers require certainty to implement system changes effectively and proportionately.

1.31Digital Service Providers also raised serious concerns about the proposed commencement date. Evidence at paragraphs 2.73–2.74 indicates that the proposed 1 July 2026 start date may not align with technical readiness across payroll and onboarding systems, particularly given concurrent implementation of Payday Super reforms. While the Committee supports alignment with Payday Super (paragraph 2.103), system capability concerns remain unresolved.

1.32Primary legislation should provide clear guardrails. It should not rely heavily on later clarification through subordinate instruments or ATO guidance.

1.33At the same time, the Coalition would welcome clear guidance from the ATO and ASIC regarding the compliance approach to these reforms. Like the PayDay Super reforms, the ATO and ASIC should consider whether guidance could be offered to better support employers and onboarding software providers.

A Better Way Forward

1.34Coalition Senators believe that the objectives of reducing duplicate accounts and protecting employees from inappropriate product steering can be achieved without undermining competition or creating operational risk.

1.35Accordingly, we recommend:

1.36That Schedules 3, 4, 5 and 6 be separated from Schedules 1 and 2 so they can be passed without delay.

1.37That Schedule 2 be amended to:

Permit neutral, factual information about an employee’s existing super fund to be provided where stapled fund retrieval is delayed or unsuccessful during onboarding;

Clarify how the default fund exception operates and when the advertising prohibition ends;

Require clear disclosure of insurance cover and any occupational exclusions when stapled fund details are presented;

Require regular publication of stapled fund retrieval performance data to monitor how the reforms operate in practice; and

Enable broader access to verified data service to reduce the risk of duplicate account creation.

1.38That commencement of Schedule 2 be deferred until system readiness is demonstrably sufficient to support reliance stabled fund retrieval at scal across major onboarding and payroll platforms.

1.39That ASIC publish regulatory guidance prior to commencement setting out practical compliance expectations and a proportionate transition approach.

1.40That a statutory post-implementation review be conducted within two years of commencement to assess impacts on duplicate accounts, competition, member engagement, insurance outcomes and compliance costs.

Conclusion

1.41Confidence in the super system depends on competition, transparency, and trust that reforms are carefully designed and properly implemented.

1.42Coalition Senators support practical improvements to reduce duplicate accounts and strengthen system integrity. That is why the Coalition were the architects of the performance testing system.

1.43However, Schedules 1 and 2 introduce structural and operational risks that have not been adequately addressed. Without amendment, these measures will reduce meaningful engagement, distort competitive dynamics, and weaken insurance safeguards.

1.44In Coalition Senators views, the evidence presented suggests it is likely that systems will not be adequately in-place to allow for effective roll-out of the changes – especially when the ATO also has to deliver other superannuation reforms such as PayDay Super.

1.45For these reasons, Coalition Senators dissent from the Committee’s recommendation that the Bill be passed in its current form.

Senator Kerrynne LiddleSenator the Hon Matthew Canavan

MemberMember

Liberal Senator for South AustraliaNationals Senator for Queensland