Darren Cheeseman (Corangamite, Australian Labor Party) Share this | Link to this | Hansard source

I would also like to express my regard for Petro Georgiou for the contribution that he has made to this place. I certainly enjoyed the tribute that the member for McMillan paid to his friend.

I would like to take this opportunity to say a few words about the current predicament of self-funded retirees. I do this on behalf of the many self-funded retirees who have contacted my office about their situation. We have a large number of self-funded retirees in Corangamite, as do many other parts of Australia. Obviously, many self-funded retirees are over 65. That means that the vast bulk of them were born before the Second World War, and many were born well and truly before that. They are a generation that grew up in very different times to these. Either they or their parents fought in the Second World War. They are a generation that had to rebuild our economy at the conclusion of that war. In short, this is a generation of Australians that made Australia what it is today.

I want to say something about the values of this group of people, from my experience and observations. Self-funded retirees are people who usually worked hard all of their lives. They have grown up believing in the value of hard work, believing in a work ethic. They have grown up on the values of hard work, planning ahead and being prudent. Most self-funded retirees I know are not preoccupied with having all of the little knick-knacks, but they plan for a quality of life that revolves around values, being able to support their families and spending time in their retirement around Australia. Today, the plans of most self-funded retirees have been turned on their head. Most self-funded retirees have seen their savings and income decrease due to the collapse of the share market in this global economic crisis. This has happened through no fault of their own.

I want to address two issues here: why has this happened and what are the consequences for self-funded retirees in Australia? So why has this happened? How could it happen? An opportunistic opposition has tried to blame the Labor government. The argument is that Labor’s bank guarantee scheme has caused the problem. Some in the opposition say we should not have given that sort of blanket guarantee. Others in the opposition seem to suggest we should not guarantee banks at all but leave it to the free market. Others seem to suggest we should guarantee all shares and stocks, a promise they know no government can give. Those arguments are a lot of nonsense. What a lot of opportunistic nonsense.

Self-funded retirees know exactly why this has happened. They know there is one reason for this, and that reason is greed. Self-funded retirees know their incomes have been cut because of a system that encouraged greed; a system that meant higher profits had to be made to make up for the salary expectations of directors and executives; a system of greedy executives working in unregulated, non-transparent markets where high risks were often not disclosed to investors; a system with exorbitant salaries and incentives in place to encourage ridiculous risks; a system that encouraged higher and higher risks so executives could make more and more money; an insurance and reinsurance system with further derivatives; a house of cards system that has collapsed, leaving thousands of self-funded retirees out of pocket.

I am someone who does support a market based system but who makes no bones about the need for proper regulation and disclosure that will serve to protect people’s investments. I make no bones about the fact that I think directors’ and executives’ salaries are often out of control. It is a system that is repugnant to many self-funded retirees, who believe in modesty and prudence. I think every self-funded retiree would agree with me that the system and the salaries paid to executives and directors are totally out of control. Most people I meet are just appalled by the greed of it all—the inflated sense of the people who took those people’s money. I think most self-funded retirees agree that there was not sufficient disclosure of the risks of their investments.

What are the impacts of this? Of course, this has put enormous hardship on many people in this group. Many self-funded retirees are having their worlds turned upside down through no fault of their own. Many self-funded retirees have to make very substantial adjustments to their daily lives as a consequence. Some have existing financial commitments that now put them in a very difficult financial position, and of course there will be a very significant impact on the taxpayer. The great benefit of self-funded retirees is that they lighten the weight on the public purse. Today, a higher proportion of formerly self-funded retirees are signing up for the pension. The government is always there to help retirees when they need that support.

On top of providing the pension for those formerly self-funded retirees who now need it, the Rudd government has also provided a one-off $1,400 payment to single pensioners and a $2,100 payment to pensioner couples. This payment is also being made to self-funded retirees who are holders of a Commonwealth health care card. That is of help and it is in recognition of the existing pensioners and those self-funded retirees in these very challenging economic times. Despite these payments, there is no doubt that many self-funded retirees have lost a lot, with many undergoing a lot of stress and hardship.

What are the solutions for self-funded retirees? Firstly, as I have said, we have to be there with the pension, which is a safety net. We are currently going through a major review of pensions to look at the adequacy of them. But there are also some critical things we must do for self-funded retirees for the long-term health of their savings. First is restoring confidence in the market. I have to say that the opposition’s opportunistic comments are no help here. One day they say that they will take a bipartisan approach and support the government’s economic security initiatives; the next day, or often later that afternoon, they are busy backtracking and undermining confidence. I say to every opposition member, and this is very important: every time you undermine confidence in the system, you undermine the savings of self-funded retirees. The opposition need to think before they try to score a cheap political point on the economic security crisis. Every time you make cheap, opportunistic comments that undermine the government’s confidence-building work in our economy, you are undermining the incomes of self-funded retirees.

We have to restore confidence, but just as important is the work that the Prime Minister is doing in trying to bring reform to the regulation of world markets. We need better regulation, particularly of derivative and insurance and re-insurance markets, more transparency and better accountability. That, in the end, is what will bring about confidence. I applaud the leadership that the Prime Minister is showing through the G20 and APEC initiatives. I certainly would not underestimate the task. We owe it to self-funded retirees to fight to put in place reforms that will restore confidence to our financial system, to put in place regulations that make our international financial system more secure and to restore the value of the market and their hard-earned savings.

As I indicated at the commencement of my presentation, self-funded retirees have worked hard all their lives. They have worked hard for their families. Their contribution and commitment to building a modern Australian community has been very significant and underlies the place that we now call Australia. I certainly look forward to working with self-funded retirees in ensuring that they can continue to enjoy healthy and safe lives.