Superannuation - 27/08/2020

27 August 2020



I rise to speak on the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020, and particularly in support of the amendment moved by my colleague the member for Whitlam that calls on the government to ensure that all Australians can enjoy a dignified retirement. After all, that is what superannuation is all about—a good retirement, a retirement that enables a person to enjoy themselves after a lifetime of work. This is ultimately why Paul Keating created superannuation. Keating knew that, despite working all their lives, Australians weren't retiring comfortably. Keating knew that Australians were living longer after retirement and that the cost of pensions to the government would only increase. Keating knew that with an ageing population fewer taxpayers would be available to support the cost of that pension. This is the type of long-term responsible policymaking that we could only dream of—compared to the government of Scott Morrison, a Prime Minister who refuses to take responsibility for the challenges of today, let alone the challenges of our nation next year, in a decade or in a generation. A dignified retirement: is that too much to ask? Clearly, many of those opposite, many of those who form part of Australia's elected government, think that it is. From comments made over the last few weeks, clearly a dignified retirement should only be available for the few.

I've seen Senator Bragg, from the other place, pushing some absurd lines as to why we shouldn't pursue already legislated increases to superannuation. 'It's their money, not the government's,' says Senator Bragg. Of course it is, Senator Bragg. It was also their money before the pandemic; nonetheless, it was not available to them until retirement. This is the fundamental basis of superannuation, and people know it when they earn it. 'Young people could buy a house with their super,' says Senator Bragg. I don't know if the senator owns his own house or not, but the average super balance of a first home buyer isn't going to get anywhere close to providing the 20 per cent deposit that is needed for a house in any of our capital cities.

One thing that I agree with Senator Bragg on is that the superannuation system is not working as well as it could and isn't delivering the retirement balances needed to deliver the dignified retirement we on this side of the House are committed to pursuing for all workers of this country. Senator Bragg's diagnosis is to get rid of the super system. Talk about throwing the baby out with the bath water! To me, a much better way would be to improve the system we have, such as by increasing the rate of super to ensure Australians can save a greater amount of money. Lo and behold, this parliament has already legislated exactly that. Each year for the next five years, let's increase the rate by a very conservative 0.5 per cent, until we get to 12 per cent. This is the very least that we should be doing.

It was greatly concerning to see the Liberal Party starting to lay the groundwork last week to peel back plans for increases to the rate of superannuation payable by employers in this country. It all began with the assistant minister for super, Senator Hume, saying she was ambivalent about sticking to the government's promise to increase super to 12 per cent by 1 July 2025. The assistant minister said that we need to reconsider the increase in light of the pandemic and because it will likely suppress wage growth. But we know that this is not the case. The last time we forwent a super increase in favour of wage growth, guess what happened? According to research by Per Capita, when this government took the decision to freeze the rate of super, on the promise that doing so would increase wages, workers lost net income.

The research from Per Capita also found that workers should anticipate this to happen again if the government decides to leave super at 9.5 per cent. Per Capita has found that, as a result of the freeze on the superannuation guarantee in 2014 by this government, the average worker has lost over $4,300 in super over the intervening five years. However, at the same time their take home pay has declined by over $1,000 in real terms, giving them a net loss of around $5,425. In short, increasing super does not suppress wages.

I think my colleague the member for Lyons hit the nail on the head when he said perhaps what really bothers the Liberals about superannuation is that everyone gets it. It means that even people in low-paid work can look forward to a comfortable and dignified retirement.

In terms of reforming the system, this bill is an example of a way that the parliament can enable Australians to increase their super balances. By extending the bring-forward rule for non-concessional super contributions, the government will assist people about to retire to get as much into their account as possible. However, I would say to the government: we need you to be more ambitious. This bill does nothing to embrace the wealth-creating power of compound interest, which is fundamental to the superannuation system.

Increasing super to 12 per cent must continue. It is a slow and incremental policy change that enables businesses to plan for the increase. Despite the pandemic and the economic impact, this slow and incremental change allows businesses to recover while also doing the right thing for their workers. For too long we have known that current levels of super will not provide sufficiently for Australians in retirement. Almost 50 per cent of Australians expect to retire with less than $200,000 in super and just 19 per cent expect to be able to retire with enough to live comfortably.

To make matters more challenging, both for the individual and the country, the ratio of taxpayers to pensioners is decreasing as our population ages. Right now we have about 3.6 workers to every pensioner. By 2040 this will drop to about 2.6 workers to every pensioner. As I said, this is in part why Labor designed super, to ensure that this challenge was mitigated—good long-term economic planning to set the country and its citizens up for the future.

But this government wants to undo this planning. Despite taking home a 15.4 per cent taxpayer funded super himself, the Prime Minister has indicated he is considering the delay of the already legislated increase to superannuation. The Prime Minister claims that any decision on this front will be made in the best interests of Australians. If that is the metric, clearly, keeping the legislated increases is in the best interests of all Australians.

Instead of going backwards on super, we actually need to go further. We need to think carefully about how we improver the super balances of Australian women, in particular. We need to think about how we can mitigate the effect on super balances when women go on maternity leave, when women take time off to care for children and other relatives and when women work part time in order to balance these caring responsibilities. We need to figure out how to change the fact that the median superannuation balances for women at retirement are 20.5 per cent lower than they are for men. No-one deserves to be left behind in their retirement, but too many Australians are continuing to retire without enough.

The government's attacks on the superannuation system as part of this pandemic—allowing young people to raid their super, to raid their own retirement savings—are an example of what the member for Fenner, speaking before me, was talking about: the ideological lack of support for superannuation from this government. Without Labor, we would not have this superannuation system, enabling all Australians to look forward to a comfortable and dignified retirement. Now, more than ever, Australians are relying on the government to do the right thing and keep their promise to raise your super payments, not cut them.

Labor are proud of our superannuation system and we will fight to defend it. Universal superannuation created by Labor is a national achievement which sits alongside Medicare. It has made our nation stronger and our society fairer. That's why our superannuation system needs to be strengthened and protected, not undermined. It is critical to creating jobs and growth in the economic recovery. The $3 trillion pool of super savings not only creates a retirement nest egg for Australians; it is being invested in infrastructure and businesses which are generating wealth and creating jobs. If the Liberals cut super, there will be fewer funds to make the investment needed to create jobs and drive growth to boost the economic recovery.