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Good evening everyone, it’s a great pleasure to be here.
About three weeks ago, I was looking through my diary and I thought I’d accepted your invitation on the same night as my wedding anniversary.
And despite our great respect and affection for your work - I don’t think that was quite what Chloe had in mind.
Luckily our anniversary was last Monday – and I remembered.
Speaking of anniversaries, on Wednesday it will be 9 years since I was elected to the Federal Parliament.
In that time , I’ve had the privilege of serving as an Assistant Minister for Disabilities and Bushfire Reconstruction: two jobs in which I was a humble witness to the courage of ordinary Australians.
And I also had the opportunity to work with so many of you as the Minister for Financial Services in the previous government.
Now I have the honour of leading the party that created universal superannuation.
Compulsory superannuation is rightly regarded as one Labor’s greatest achievements in the history of our party.
Very few economic reforms are more important and even more relevant 25 years after they were introduced.
It is a special industry you work in.
Of course, super is a success story with many authors.
The union movement, under in particular the leadership of Bill Kelty, Gary Weaven and others, had the wisdom and the foresight to understand what a universal retirement scheme would mean for working people: security, dignity, a just reward for their contribution.
I think people forget that before that push in the mid-1980s, a lot of people would work their whole lives and retire with nothing.
Now people look at the size of their superannuation balance, and obviously wish for more, but 9 in every 10 Australians does have an account.
It was a remarkable achievement.
Employees agreed to forgo increases in take-home pay, in exchange for employers making an agreed contribution to their superannuation funds.
And Australia got a national superannuation scheme that provides a massive liquid national capital base.
A pool of savings that permanently relieves pressure on demand for pensions and other support.
I like it because it’s retirement income that individuals control – not governments.
It is interesting when we look at the American elections, you realise the choices this country made 30 years ago which have taken us on a different path.
If the United States, under successive administrations, had moved from zero to three per cent, three per cent to nine per cent, nine – we got to twelve, but now it’s been frozen at nine and a half, but nonetheless, if the United States had followed that path. It would have in excess of $10 trillion extra in savings.
Imagine the difference that would have made. Imagine the difference it would make to employees who don’t have a 401K in the United States.
Superannuation is a reform that is felt right across our society.
Today we are approaching an important tipping point.
An Australian who retires tomorrow, has spent about half their working life in a system with universal superannuation.
Within 5 years, new retirees will have spent more time in the super system than out of it.
When our system reaches full maturity, with workers who have spent their entire careers making compulsory contributions - the average balance will be more than double what people currently retire with.
This has always been the true purpose and the promise of superannuation:
Superannuation was not created to be an estate-planning tool for the very wealthy.
Nor a tax haven for high net-worth individuals.
It’s something more fundamental, a pact, a social contract between government and citizens.
A promise that if you work hard all your life, you won’t retire poor.
I think it is a vital part of the reason Australia is a distinctly different and more equal society than so many other nations.
Respect for superannuation should be a bipartisan idea, it should be something where decision-making is co-operative and informed.
But I put to you that our opponents still view superannuation with suspicion.
What other sector of the Australian economy, which represents hundreds of billions of dollars – I’m talking about industry funds – what other sector of the Australian economy goes through the ordeal by fire that industry funds regularly endure under conservative governments.
The recurring theme of Australian political history tells the story:
Keating increased the superannuation guarantee – Howard froze it.
We moved legislation to take super to 12 per cent – the Liberals have frozen it.
Labor governments work to make the system stronger and fairer, targeting people who need extra assistance – like working women on low incomes – and the Liberals focus on creating new loopholes for the very wealthy.
My concern with the Liberals is that superannuation policy is always a last-minute political fix, a fudge, a compromise – not a big picture view.
It’s time to change that.
Instead of basing policy purely on how much a specific measure is worth to the bottom line – the priority, surely, should be boosting the health of the system as a whole, keeping faith with the true purpose of superannuation.
Every decision we make and any change we contemplate should be governed first and foremost by the interests of the 14 million Australians who go to work every day.
That’s true for governments, for legislators – and for everyone here.
We must always remember that each and every Australian owns a stake in the superannuation system.
Each and every individual puts their faith in the system, in financial planners, in fund managers and fiduciaries like you – trusting you will act in their best interests.
As stewards of Australia’s $2 trillion and growing savings pool, we trust you to take account of – and act on – the full range of environmental, social and corporate governance factors, as is your responsibility as fiduciaries.
As fiduciaries, we trust you to vote your shares, to interact with companies, to let them know your views on important issues.
And as fiduciaries, we trust you to govern your funds with a total focus on the best outcomes for your members
That trust, that certainty is so important.
Which is why retrospective changes – no matter how small the cohort affected - are such an affront.
When trust in the system is undermined, when uncertainty reigns, when account-holders go day-to-day unable to guess what the government will do next – then everyone is affected, everyone is at risk.
That’s why I spoke out against the Liberals’ retrospective changes in my Budget Reply speech this year, during the election campaign and after it.
I understood the vast majority of the people affected weren’t traditional Labor voters.
I knew they didn’t live in marginal electorates, I understood they were never going to decide the election result.
But the principle mattered a lot more than any of that.
The principle is when Australians invest in good faith, under a clear set of rules – it is wrong to change the rules afterwards.
In fact, the Howard-Costello Government had gone out of its way to change the rules to encourage their investment.
The idea of Australians, no matter their social circumstances, being penalised or punished for a decision that had been actively encouraged – wasn’t just wrong, it was ridiculous.
I’m glad we had a win on that front – but there is more we have to do.
We have to be honest about what the nation’s budget can afford, and honest with each other about how far concessions need to go.
Currently, the top ten percent of income earners, access 38 per cent of superannuation concessions.
Yet at same time, only half of all couples and a little over one in five singles are currently on track to save enough to meet the ASFA standard for a comfortable retirement.
For me, scaling back some of the overly generous concessions that can only be accessed by the very wealthy is about:
- Maintaining the integrity of the superannuation system
- Upholding public confidence in the fairness of the system
- And restoring the Commonwealth Budget to a sustainable footing
For example, the government is now proposing to lower the non-concessional contribution threshold from $180,000 to $100,000.
Our policy is for $75,000.
Because only 0.7 percent of Australian taxpayers make a non-concessional contribution of $100,000 or more.
Almost nine in ten taxpayers make no non-concessional contributions whatsoever each year.
It’s true, there are many Australians who will make a single contribution at some stage in their working life.
They might inherit a lump sum, or sell the family home.
As you know, that’s why the system allows people to bring forward three years’ worth of contributions into a single year
But – again – the average size of these contributions is $135,000.
Reducing the cap to $75,000 means the carry-forward allowance is still well and truly generous enough to accommodate the kind of one-off contributions middle- and low-income taxpayers make.
But it’s not so extravagant as to disproportionately reward a few very wealthy people who are already well-provisioned for retirement.
The same goes for Labor’s proposal to lower the High Income Super Charge threshold to $200,000.
Giving someone in the top income bracket a tax break that is worth double the one available to an average income earner, does not fulfil the goal of helping more Australians into a secure retirement.
That’s why we cannot support the two new loopholes the Liberals are proposing to create.
Concessions which will cost more than $12 billion over the decade.
The $25,000 cap on the new ‘carry-forward’ proposal which has been sold as a catch-up measure for women who take time out of work.
$25,000 is nearly a third of the average full time wage.
How many low and middle income earners can afford to sacrifice one third of their salary in a year?
As it happens, around 5 per cent of people earning between $80,000 and $100,000 - and 0.9 per cent of workers who earn less than $53,000.
So these changes are not equity measures.
The goal of tax concessions in superannuation should be to help all Australians aspire to a comfortable level of income in retirement.
But we can’t afford to use taxpayer-funded tax concessions to help those who are already wealthy become even more wealthy, when many other Australians don’t have the prospect of a comfortable retirement.
I want Australians to have a national conversation about the future of superannuation.
But I don’t want it to be a debate dominated by a handful of very wealthy individuals arguing over how much largesse is too much.
The conversation we ought to be having about super is about how do we prepare the system for an Australia which will soon be home to 5 million people over the age of 65.
The conversation we ought to be having is how do we clear away the blockages, the impediments that prevent superannuation funds from investing in high-quality, productivity-boosting, nation-building infrastructure that creates good jobs.
The recent purchase of Ausgrid by IFM and Australian Super is an example of the power of super to develop much-needed infrastructure – similar to the Port of Melbourne.
Not just investment in infrastructure but greater investment in private equity – to help build the companies and jobs of tomorrow. Real leadership.
And greater investment in affordable housing and other ‘impact investing’ – providing good returns for members and contributing to a fairer society.
The conversation we ought to be having about super is how do we address the massive gender gap in retirement savings.
I think we should extend ourselves a little bit – let’s look beyond the next election and focus on the next generation.
And I know that industry funds will be an important partner in not only individuals’ account balances growing, not only to argue genuine competition to the retail and the banking superannuation funds, but being a partner in the growth of this nation.
It is well and truly overdue that my political opponents stop worrying about the not-for-profit nature, the tripartite nature of the boards of superannuation funds, and instead start treating industry funds not as some potential insurgent or enemy at the gate of capitalism, and instead recognise the role that industry funds play every day.
Industry funds have developed great services for their members. I’ve never met a trustee of an industry fund who is not deeply conscious whose money it is.
Industry funds only serve one master – the member.
And we need industry funds to stand up for themselves as well.
I have no doubt there are challenges within the funds and how they communicate with their members. How do you build up a greater literacy? How do we get beyond the silly award wars, where somehow the Government thinks if you just change access to the default funds in superannuation, we enter a new golden age of superannuation investment?
And industry funds, I think, will need to carry the case even better than they have in the past.
You have a fantastic story to tell. There is no city in this country which doesn’t have the presence of industry super fund money in the buildings and the skyline of those cities.
There is no small country town in Australia that is not either a beneficiary, an account holder, or indeed an agribusiness, where there is opportunities where industry funds have been involved.
You travel around the world and you see the export-driven impact of industry funds.
My party understands that industry funds are only one of different types of superannuation funds. But what you will receive from my party is a recognition that industry funds are not just something to be tolerated, they are something to be treated with the same respect you’d treat other financial institutions in this country.
I know the people who work in industry funds, the people who serve on the boards of funds, I know what you accomplish, I know what you can accomplish.
I look forward to working with you to develop sound and sensible policy. Not just to pacify people in the media or the financial reporting areas, but to serve the members of your funds.
You are the best hope for millions of Australians to have a dignified retirement, and I will work with you for that.
Thank you very much.