ACTU INVESTMENT FORUM
MELBOURNE, 10 MAY 2013
Ladies and gentlemen, I stand before you today a confessed superannuation nerd.
I am utterly excited by superannuation.
In my quieter moments, I often stop and think about the sheer size of our system.
It has occurred to me, if we amassed the entirety of Australia’s $1.5 trillion superannuation savings…
…you could build 12 stacks of $1 coins all the way to the moon
…those stacks would weigh the same as 135 of the US Navy’s largest aircraft carriers.
Our superannuation system is all around us.
It’s invested in the buildings we work in, the roads we drive on, the airports we travel from.
It’s in the wisdom of parents counselling children to save, to think long-term, as they wished they had done at their age.
Superannuation is something which is vitally important to each of us and all of us.
It makes possible the enjoyment of the best Australia can provide.
Our prosperity as a nation depends upon the personal financial prosperity of each of us as individuals.
Our success is the result of our own abilities and efforts.
And proper preparation is the key to that success.
I believe I find myself in the good company of fellow superannuation nerds this afternoon.
You know, as I know, just how remarkable our superannuation system is, and how it will become more remarkable in the future.
So I want to talk to you today about what I believe is an important reform the Gillard Government is pursuing to safeguard superannuation, and inject greater confidence, certainty and transparency in the system.
At every step of the way – from its creation, and its growth - it’s been Labor and the union movement making progress.
It’s a matter of record and a matter of fact that superannuation, from its birth and throughout its life, has been opposed every step of the way by the Liberal Party.
Indeed it’s an oft forgotten fact that John Howard went to the 1996 election promising to match Keating’s promise to increase superannuation to 15 per cent – only to break this promise in government.
A full 6 per cent of national income lost forever to capital markets, to the savings pool, and to millions of retirees.
With superannuation, as with every issue the Conservatives approach, it’s the ideological cart leading the policy horse.
The idea of ordinary working people having a shared stake in a pool of national wealth the size of our economy is an anathema to them.
Indeed only the Labor Party could have ever convinced working people to forgo 3, then 9 and now 12 per cent of their income for retirement.
So it was Labor and the union movement which built and nurtured superannuation – against sometimes fierce, often ideologically driven resistance.
And the resistance from the Conservatives to superannuation is still with us today.
They are campaigning on a promise to re-introduce a 15 per cent tax on the contributions of 3.6 million part-time and low-paid Australian workers earning less than $37,000. 2.2 million of these workers are women.
The Leader of the Opposition has indicated his opposition to the package of measured reforms the Government announced recently, including lifting concessional caps for people 60 and over this year and 50 and over from next year.
The same package includes making some common sense changes to the Costello Excess Contributions tax arrangements.
And it will forever be recorded in Hansard that Tony Abbott and every single one of his colleagues voted against increasing universal superannuation to 12 per cent.
I make these points to remind you that in the quarter century of superannuation in Australia, only the Labor Party and the labour movement have been in its corner.
25 years ago, Paul Keating and Bill Kelty were looking generations ahead.
I can assure you that this Government, led by Prime Minister Gillard, is doing the same today.
Yesterday I released a discussion paper seeking views from industry and the community more broadly about the eventual establishment of a Council of Superannuation Custodians whose task will be to advise on whether any proposed changes to Australia’s superannuation system are consistent with an agreed Charter of Superannuation Adequacy and Sustainability.
The Council itself would be an impartial, expert and apolitical body that is able to act as the stewards of the superannuation system, reporting to Parliament on its sustainability and its prospects for attaining the vision the nation has for it.
The proposal does not take decisions about superannuation from the Parliament, in the way the Reserve Bank now does over interest rates.
But the broad principle of protecting the collective wealth of the Australian people from short-term political considerations, by putting it under the stewardship of a neutral Council that people can trust, is similar.
That’s why I think of the Council and its Charter broadly as a ‘reserve bank for super’—helping the parliament make decisions about super calmly and apolitically in the way that the Reserve Bank makes decisions about interest rates calmly and apolitically.
These reforms will create a greater burden of proof for changes to superannuation; will make the impact of any changes more transparent.
To get the right answers, the discussion paper asks not just industry players but every Australian with an interest in the subject to give us their carefully considered views about what the exact powers of the Custodians should be, and what the exact principles of the Charter should be.
It asks, for instance:
- Which objectives are the most important in setting retirement incomes policy, and how can they best be pursued?
- Which restrictions can be placed on change to promote certainty?
- What are the right benchmarks for measuring the success of the superannuation system?
- What principles would best support fairness in the distribution of government assistance for retirement incomes?
- And what limits on the costs of government assistance might this lead to?
- How important is minimising the complexity of legislation and regulation compared to these other objectives?
The discussion paper also asks people about what the powers, independence and legislative standing of the Council of Superannuation Custodians should be.
Obviously not all of these questions will be of immediate interest to everyday Australians. But others will be—like what standard of retirement they think is adequate and how much money they think they will need.
The Custodians and the Charter were part of the package of reforms that the Treasurer and I announced recently.
And criticisms were raised at the time that this had more to do with circling the wagons around superannuation – that it was about the upcoming Budget; that it was about opinion polls.
Of course it is concerning that the Liberal Party have failed to accept that superannuation is now a foundation stone of our lives and our economy
I think people are right to be worried given the Liberal Party’s record on superannuation; opposed its creation, opposed every increase and now want to rip away $4 billion from the super accounts of low income earners.
But when I think about superannuation, I’m not thinking about the next Budget, the 24-news cycle, next week’s Newspoll, or the September election.
I’m thinking about the next 20, 30 or 40 years.
I’m thinking about my kids, and their working lives, and their retirement.
I’m thinking about the fact that in 25 years Australia’s superannuation pool will grow to $6 trillion, which will be almost twice the size of our GDP.
That’s why the Charter and the Custodians are important – because they require all future governments, Labor or Liberal, to implement superannuation policies which are in the long-term national interest.
Not solving short-term political problems or chasing ideology.
I believe proper preparation of ideas is always the key to their success.
The Charter and Custodians are policies which require a long-run up, they can’t be rushed, but by the same token I would like to have these ideas well progressed before the election in September.
I encourage views from my fellow superannuation nerds in this room.
I also encourage your advocacy to make the ideas of the Charter and Council inevitable and bi-partisan.
I thank you.
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