House debates

Monday, 18 March 2024


Superannuation (Objective) Bill 2023; Second Reading

2:31 pm

Photo of Cassandra FernandoCassandra Fernando (Holt, Australian Labor Party) Share this | Hansard source

I rise to support the passage of the Superannuation (Objective) Bill 2023, a crucial piece of legislation aimed at enshrining the fundamental purpose of superannuation into law. As we meet here today, it is important to acknowledge the role of the Labor party in championing superannuation as a fundamental right for every Australian worker.

The history of superannuation in Australia is deeply entwined with the Labor movement's tireless advocacy for the working class. For decades prior to the establishment of a formal superannuation scheme, the welfare of retirees often depended on negotiated agreements between labour unions and employers. However, it was the vision and determination of the Labor party that led to the creation of a comprehensive superannuation system designed to provide security and dignity in retirement for all Australians. The pivotal moment came in 1983, with the Prices and Incomes Accord, a historic agreement between the government, businesses and trade unions. This marked the beginning of employer contribution to superannuation funds, a groundbreaking initiative aimed at promoting self-funded retirement savings and reducing reliance on publicly funded pension systems. Despite initial resistance from small-business groups, the introduction of compulsory superannuation was a triumph for working Australians, ensuring that all employees had access to secure retirement savings.

The Hawke-Keating government had a vision for a three-pillar approach to retirement income—comprising compulsory employer contribution, additional voluntary contribution and a means-tested government-funded age pension—that would lay the foundation for a robust and sustainable retirement income system. In 1992 this scheme was complemented with the superannuation guarantee, ensuring that all employers had to contribute a set amount on top of their employee's salaries. When former Treasurer Dawkins introduced the Superannuation Guarantee (Administration) Bill 1992, he noted that one of the objectives of the superannuation guarantee was to extend coverage to those who did not have it. He stated:

Superannuation was the preserve of a few, mainly the wealthy …

The reform of superannuation has been one of the great achievements of the Government. Over its term of office, the Government has greatly expanded access to superannuation savings. In particular, award superannuation has fostered the spread of superannuation to large areas of the work force which previously had no cover.

This scheme has been a huge success, placing wealth in the hands of working Australians on a scale not seen around the world, reaching an estimated $3.5 trillion in 2023.

Subsequent governments have contributed to the evolution of the superannuation system, gradually increasing the superannuation guarantee rate and introducing reforms to improve portability and performance. Superannuation moves people off the age pension, lowering future government payments and ensuring that as the population ages the government can still afford to provide vital services. In the UK, spending on the pension accounts for 5.1 per cent of GDP. In Australia, because of our superannuation system, spending on the age pension is only 2.3 per cent of GDP and is expected to fall even as the average Australian gets older.

Australia boasts a world-class superannuation system which has been admired by countries around the globe. However, over the past decade superannuation policy has been marred by confusion, costliness and chaos. We have witnessed the detrimental impact of short-sighted decision-making, including the raiding of superannuation funds for purposes unrelated to retirement savings, resulting in significant losses for millions of Australians. Because of the choices of the previous Liberal government, around $36 billion in savings were drained out of super accounts in a matter of months. A 35-year-old who withdrew $10,000 under the COVID early-release scheme—a third of average savings for someone that age—will be over $150,000 worse off in retirement. And 600,000 young people under the age of 35 who made this decision now have no super at all.

At every opportunity, the coalition chooses to use workers superannuation to bail itself out of difficult and important policy decisions. Underscoring this is that while opposing paid family and domestic violence leave the Liberals were in the process of drafting legislation that would have forced women fleeing violent relationships to access their superannuation to fund their escape. Now the Liberal Party wants to raid your retirement savings again so that you can afford a home. These decisions, once again, align with the Liberal Party's policies to bury their heads in the sand and rob from the next generation.

That is why I stand today to support this bill. Rather than thinking of the short term, we are here to outline a long-term vision for our great nation. Despite its central role in the retirement income system, there is no agreed objective of superannuation to serve as a guide for policymakers. The primary object of this bill is to define the purpose of superannuation so there is long-term assurance to the system. We have set forward a simple objective for the system to preserve savings to deliver income for a dignified retirement alongside government support in an equitable and sustainable way. This clear and concise objective will serve as a guiding principle for all stakeholders, fostering greater confidence in our superannuation system. By legislating an objective for superannuation, we aim to prevent mismanagement and ensure that the focus remains squarely on the long-term interests of members. This objective will safeguard the integrity of the superannuation system, reaffirming its commitment to providing a dignified retirement for all Australians. It will ensure that snap decisions of a government will not lead to a generation of Australians missing out.

This bill will secure the future of superannuation by embedding its purpose into law, thereby ensuring that any future changes to the system are aligned with this overarching objective. Ministers will be required to justify proposed changes to superannuation to parliament, considering this legislated purpose. This will ensure accountability and transparency in decision-making processes that impact Australians' retirement savings. Importantly, the objective outlined in this legislation does not absolve superannuation trustees from their existing obligations. Trustees will continue to be bound by their duty to make investment decisions in the best financial interests of their members. Additionally, members will retain the ability to access their superannuation on compassionate grounds or in cases of genuine financial hardship. As more Australians than ever before approach retirement age, the imperative of enhanced retirement incomes has never been more pressing. This bill represents a crucial step towards strengthening our superannuation system for the next generation, ensuring its resilience and effectiveness in supporting retirees.

I am pleased to note the strong support for this bill from industrial stakeholders, whose engagement has been invaluable throughout the legislative process. The ACTU wrote in its submission that it 'is pleased that the government has considered the objective of superannuation from first principles' and proposed an objective which would go closer to the originating purpose of superannuation.

It is predicted that by 2035 the superannuation system, currently worth $3.5 trillion, will outstrip the Australian banking sector. This will see superannuation playing a significant role in contributing to the strength of our financial markets. There are opportunities to leverage its national economic priorities while aligning them with the best interests of members.

Already, the superannuation sector invests in vital long-term assets such as toll roads, electricity grids, airports, hospitals, housing and ports. Just this week, former federal Treasurer, Wayne Swan, chair of Cbus, made a commitment for super funds to have a substantial role in building 40,000 affordable homes to help fix the nation's housing crisis. He stated:

… We are confident that investment in the social housing sector has the potential to be a win-win for our members—by providing stable long-term returns for their super balances, as well as construction industry jobs …

This is the long-term vision we need for super: to provide a dignified retirement for Australians, to support working-class Australians to build wealth and to invest in our country's future.

This bill marks a pivotal moment in the ongoing evolution of Australia's superannuation system. As custodians of this pivotal pillar of our social and economic infrastructure, it is upon us to protect and enhance it for the benefit of current and future generations. I am proud to stand before you as a member of the Labor Party, which plays a pivotal role in building and safeguarding Australia's super system.

In conclusion, superannuation stands as a testament to the Labor Party's commitment to advancing the interests of the working class and promoting economic fairness and social justice. As we reflect on the history of superannuation in Australia, we must recognise it as one of the great achievements of the Labor Party movement, ensuring that all Australians can retire with dignity and security. Let us continue to work together to ensure that it remains a cornerstone of retirement security for all Australians.

I extend my gratitude to the Prime Minister and the Treasurer for their work on this bill. I commend this bill to the House.


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