Tony Smith (Casey, Liberal Party, Deputy Chairman , Coalition Policy Development Committee) Share this | Hansard source

by leave—Thank you Madam Acting Deputy Speaker. The minister’s statement today was interesting for what it said and for what it did not say. He made a number of points about Australia’s superannuation system. He said, amongst other things, that it was important to boost national savings and I must begin this contribution by pointing out that of course the coalition agrees that boosting savings is a critical economic objective. He managed to mention that in his speech without any reference whatsoever to this government’s dismal record on national savings with respect to its continued debt-fuelled and wasteful spending.

He also said that the period between 1 July 1992 and 30 June 2003 was a very good period for the economy. In fact he read out a number of key statistics and at the end said that this is a strong record. We welcome the fact that he acknowledges the performance of the Howard-Costello government in delivering economic reforms. We do not remember—I can be forgetful but the shadow finance minister will correct me—any great consensus on tax reform through 1998, but we do thank the minister for acknowledging that the tough and difficult economic decisions taken between 1996 and 2003 did play a huge role in delivering the outcomes that he mentions, and he rightly points out the strong economic record of that period.

The minister spoke almost in homily terms about his approach to super in the future. Lets us go back and see the value of Labor’s words. Twelve days before the 2007 election—the Assistant Treasurer would remember these words—the then Prime Minister, Mr Rudd, said there would be no change to superannuation laws, ‘not one jot, not one tittle’. From that period on, in nearly three years Labor has halved the concessional contribution caps, penalising thousands of Australians who inadvertently exceeded them, and undermined Australians’ incentive to save. Labor cut back co-contribution payments, discouraging low-income earners from saving, and it mandated that industry funds be the default superannuation fund for the bulk of modern awards, curtailing competition amongst funds; it promised to tender the role of the Superannuation Clearing House to the private sector but instead gave the contract to Medicare.

It is crystal clear that Labor’s track record from the moment of time it broke its promise not to alter superannuation and the changes that have followed, its chaotic approach since 2007 has damaged confidence in the system. Voluntary contributions have slowed to a trickle. They are not moving forward. Voluntary contributions have dried up because of the damage the government has done over the last three years.

A key aspect of the minister’s speech and the government’s policy now is to lift the SGC levy from nine per cent to 12 per cent. He would agree—we do agree on some things—that was the bulk of his speech. That is what we would agree on. He talked about the great consensus that he wanted to build. He said that so far we on this side of the House have disappointed him because we have not joined his great consensus.

As I said at the outset, his speech was interesting both for what it said and what it did not say. Whilst he talked at length on this subject, he did not mention the recommendation of the Henry review. He did not even mention Ken Henry. The word ‘Henry’ was not mentioned in 9½ minutes—not one mention. The poetic bit at the end would have been added, we know, by someone in the minister’s office. Whilst the Treasury have great skills, we do not suspect that was from them. But I bet the draft had something in it about Henry.

Let us go to the facts of the matter. The Henry review, unlike the minister and unlike the Labor government, looked at this issue, amongst others, for 18 months. After 18 months of modelling and careful consideration, here is what they said:

The retirement income report recommended that the superannuation guarantee rate remain at 9 per cent. In coming to this recommendation the Review took into the account the effect that the superannuation guarantee has on the pre-retirement income of low-income earners. Although employers are required to make superannuation guarantee contributions, employees bear the cost of these contributions through lower wage growth. This means the increase in the employee’s retirement income is achieved by reducing their standard of living before retirement.

That was the considered view of Ken Henry after 18 months of consideration of modelling and information. We can see why this government will not release the key documents and the modelling associated with the Henry review. That is the first point.

The second point, Madam Acting Deputy Speaker, is that, whilst the government received this review, considered it and announced a totally opposite position, they have not explained why they think Ken Henry is wrong—why they think those on the Henry review, in their view, have got this so wrong. At no point have they put forward information to demonstrate that the policy they have come up with will damage low-income earners, but that is precisely what the Henry review points out in great detail.

In the time remaining, let me also point out on behalf of my colleague in the other place—Senator Cormann, the shadow Assistant Treasurer—that another key area the minister has shied away from is the important area of competition amongst superannuation funds that are identified as default funds under modern awards. Throughout 2008-09, the AIRC and now Fair Work Australia have selected default funds in modern awards and have done so without any criteria or transparency or capacity for review. There is a significant bias towards industry. No retail funds are prescribed in the most widely applied modern awards. They are biased towards industry union superannuation funds. When this process began—and the minister might groan—the minister’s predecessor, Senator Nick Sherry, to whom the minister paid tribute, wrote to the AIRC asking the commission to implement objective criteria. They declined the request and this government has simply sat back and weakly accepted it.

Madam Acting Deputy Speaker, with respect to the Cooper review, we have said in our election policy and since that we recognise there is merit in many of the recommendations. There will be much that we will be able to support. Interestingly, the minister’s statement was silent on how the government will fix conflicts of interest and the issues in super caused by poor governance, for example reforms on mandatory disclosure and the like. He did point out that he was going to respond to the Cooper review before the end of the year. That brings back memories for the shadow finance minister and me, because the Henry review was going to be released before the end of the year and it was going to be responded to by February—and then nothing happened until a few days before the budget. We have no faith in this government. With respect to My Super, we have previously outlined our views. Low-fee products do exist and we are very concerned that My Super encourages a pay in, leave and forget attitude to superannuation. (Time expired)

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