Brendan O'Connor (Gorton, Australian Labor Party, Shadow Parliamentary Secretary for Industrial Relations) Share this | Hansard source

Can I firstly correct the comments made by the member for Moncrieff with respect to his reference to the previous speaker, the member for Prospect. The member for Prospect is the shadow Assistant Treasurer. I am sure he will want to take that up with the member for Moncrieff at a later date.

I also indicate to the member for Moncrieff and the House that Labor’s concerns about the policy being retrospective rather than prospective is an issue. You cannot suggest, as the government is suggesting, that there is an incentive to encourage younger people to invest in superannuation if the amount is paid after the investment has already been made. Therefore, it is wrong to say that the one-off payments made already in 2005-06 will encourage young people to save. It would make more sense to say to young people, ‘If you make a voluntary contribution from a certain date then we will match this.’ This would then be classified as an incentive, as you would be encouraging bonuses for extra contributions made in the future. But the government has chosen to give the bonus payment for contributions already made. There were a number of concerns I had with the contribution by the member for Moncrieff. The two I have already mentioned are axiomatic, wrong statements, and I thought I would correct them for his benefit.

I also say to the House that we support the Superannuation Laws Amendment (2007 Budget Co-contribution Measure) Bill 2007. It is a bill that provides a one-off additional government co-contribution into the superannuation accounts of those people who made eligible contributions in 2005-06. We support, in principle, the co-contribution. The legislation will effectively double the government’s co-contribution for those who have already made voluntary contributions in the 2005-06 year.

I will just reiterate the co-contribution scheme. The scheme grants a $1.50 government contribution for a $1 employee voluntary contribution, capped at a maximum government payment of $1,500. The current scheme allows a maximum government co-contribution of $1,500 to be paid up to the income threshold of $28,000, phasing down at a rate of 5c for every dollar of income above the threshold and completely phasing out at $58,000 per annum.

The original policy of co-contribution was announced by the then Keating Labor government in 1995. It was to be a compulsory three per cent government scheme for all employees, phased in between 1996 and 2002, delivering an extra $4.6 billion per year—in 1996-dollar values—when fully implemented. It was to build on Labor’s compulsory nine per cent superannuation guarantee, initially introduced at three per cent in 1987. Twenty years ago, almost to the day, a Labor government introduced compulsory superannuation into this country and was opposed by the coalition. We understand that the coalition parties supported the principle of super, but they did not support the legislation that was proposed by the then government to ensure that lower- and middle-income families had proper retirement savings. Indeed, there has been resistance by government with respect to superannuation for many a year. Indeed, the Prime Minister, when he was Treasurer in the 1970s and 1980s, did not support a scheme that would provide superannuation to employees. There was no suggestion by any coalition government preceding the Hawke-Keating government that there would be superannuation, and there was resistance by those parties, in opposition, to Keating’s proposal to introduce superannuation.

If we are going to consider the superannuation scheme and some of the add-ons that the government suggests—and which Labor supports—we should put the superannuation debate in context and remind the government and the people of Australia that it was a Labor government that introduced the super scheme, with resistance from coalition parties. Indeed, it is such good public policy to ensure that low- and middle-income families are able to secure their retirement that it is difficult, even for a government that opposes such policies, to change. So it is not surprising that, along with Medicare, the compulsory superannuation scheme introduced by Labor governments preceding the Howard government’s election in 1996, have not been altered adversely to affect low- and middle-income families. But there is no doubt that that government has failed to continue providing a contribution that will ensure the security of low-and middle-income families in Australia. There has been no support for the initial scheme to have a 15 per cent contribution that would provide the security for low- and middle-income families in Australia. That is a personal disappointment; I supported the scheme that was put together.

I think people should remember how that came about. I think people are quite ready to forget, if they are not reminded, how superannuation came about in this country. It certainly was not initiated by the mob on the other side. Indeed, there was resistance by the coalition parties at the time. Let us remember that the first compulsory contribution component was introduced in 1987 by the Keating government in consultation with industry and unions. As the government likes to remind us, there were occasions in which wages were suspended or suppressed to ensure that other benefits would flow on to working families and the nation as a whole.

Recalling the 1987 legislation, we should be reminded that people forwent a wage increase to commence the first stages of what has become one of the most amazing national retirement schemes in the world. In December last year the amount of money that Australians invested in superannuation passed the $1 trillion mark. That is $1,000 billion under super funds management, or $50,000 for every man, woman and child in this country. Whilst we support the add-on that has occurred today, it is important to place this debate in the context of the fact that, without some bold initiatives by a forward-thinking government, this scheme would not be there to add on to. If we had had to wait for the Prime Minister when he was Treasurer in the eighties or if we had listened to the opposition during the Hawke-Keating period there would not be this national retirement scheme.

It is also important to note that this scheme has ensured more security for low- and middle-income families in this nation as a result of the benefits of the funds. Looking at why there has been 15 years of consecutive economic growth, the trillion dollars amassed by super funds has underpinned such economic prosperity. We should note that it fuels the stock market, it encourages business investment and it builds on an unprecedented bank of national savings. Along the way it has potentially transformed retirement for cashed-up baby boomers, shifting reliance away from the age pension and providing higher living standards. Those things should be remembered when we debate this bill. This bill is just a brick that has been put on top of the Empire State Building. It is not a major reform, but we do support it. It will actually provide some benefit to young people and people who have already placed money into superannuation funds, but I think it is important to place the debate in the context of why we have such a good national retirement scheme.

I also want to place on the record what Australia was like in the late eighties, when we did not have this scheme to reform. As the member for Prospect indicated, the majority of workers did not receive superannuation. My parents and many of their friends were not in a superannuation scheme. They did not work in the public sector; they were not managers or working in senior positions. Whilst in the factories in which they worked their senior managers would have been in receipt of superannuation, in that period my parents and others like them were not in receipt of any superannuation benefit. It is such a critical issue for low- and middle-income families because they do not always have the capacity to save in the way in which higher income families do; they do not have the wherewithal to put away a lot of money because they are expending it on goods and services required for their families. They are not in the position that higher income earners are. People in the eighties were looking for schemes that would provide them future assistance. Unfortunately for my parents and people of that age, they probably did not benefit as much as those who have come after them. Those people born in the late forties, the fifties and the sixties have been greater beneficiaries of the reforms of the superannuation scheme in the Hawke-Keating period. I am glad to see that this government has realised it is a scheme worth amending, reforming and improving wherever it can.

But I am concerned, and I am sure Labor is concerned, that we did not go further with the nine per cent. Whilst these one-off payments can, if the money is given after the investment is made, create an incentive for people to invest in their retirement savings, whilst these one-off payments are okay and whilst these co-contribution efforts have increased the likelihood of people saving, which I think is a good thing, it is a shame we have not gone beyond the nine per cent since it was promised in 1995. It was something that we should have proceeded with as a nation, but we failed to do so. Having said that, it is a remarkable thing that we now find ourselves with more than $1,000 billion dollars in our national retirement savings scheme.

It is important to note that the effort today is a rather meagre one in the context of the entire area of superannuation, but it is supported by Labor. It will benefit a significant number of people, but I think the government could have gone further in tackling it since its election to its first term in 1996. I do not think the government was ideologically predisposed to support a compulsory superannuation scheme. That is unfortunate, because we would have found many more millions of Australians better off  had the government chosen to continue on with the good work of the Hawke and Keating governments, which created this scheme in the first place.

I would also like to reinforce the concerns that were expressed by the Chief Executive Officer of the Association of Superannuation Funds of Australia, Ms Philippa Smith, who stated, ‘There was disappointment because it was only a one-off for past contributions’—as I have already indicated, the concern that it was not really creating a genuine incentive. Indeed, she went on to say that ‘the budget had missed an opportunity to change savings behaviour’. I think those comments are apt. It is a bill that we can support, but it is not bold. It does not deliver what it really should be delivering. In the end, it is something that Labor will support, but Labor just thinks it falls short of the mark of what is required for our superannuation scheme in this country.

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