Thursday, 27 August 2020
Treasury Laws Amendment (More Flexible Superannuation) Bill 2020; Second Reading
I rise to speak on the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020. Superannuation is one of the reforms that have made our country's social security system the envy of the entire world. Universal superannuation, created by Labor, is a national achievement which sits alongside Medicare and the NDIS. It's made our nation stronger and our society fairer, and super is critical to creating jobs and growth in the recovery. The $3 trillion pool of super savings not only creates a retirement nest egg for Australians; it is being invested in infrastructure and businesses which are generating wealth and creating jobs. Labor are proud of our superannuation system and we will fight to defend it. Our superannuation system needs to be strengthened and protected at this time, not undermined.
Now, more than ever, Australians are relying on the government to do the right thing and keep their promise to raise Australian super payments, not cut them. But, if Australians listened to the histrionics in this very chamber from government members this week, they could be forgiven for thinking that super is an ideological weapon serving the nefarious ends of 'reds under the bed', trying to destroy Australian values and society from within.
I'm not specifically referring to the member for Goldstein's spirited denunciation of socialism whilst he was speaking on this bill, though it was another excellent demonstration of the lather into which the government typically whips itself over superannuation. But for the record—and I've always said this—I do believe that he is still the undisputed greatest thespian in this House of Representatives! Apologies, Madam Deputy Speaker; I digress a little bit, but I think it's worth pointing out that he is the greatest thespian. The government are big on theatre, but I think, instead of giving us drooling ideological meltdowns to cover up backflipping on a promise to the Australian people, they should honour their promise to grow the super on which Australians rely in retirement.
The government's instinctive reaction to attack super is just as irrational as their ideological fixation on cutting the ABC or privatising the Public Service. It has become an article of faith, and a bad one, rather than a considered policy in the national interest. Surely, I would have thought, we could all agree in this place on the general principle that no-one deserves to be left behind in retirement. But too many Australians will retire without enough. No-one should be forced to work into their 70s. Is that such a threatening proposition for the members opposite? Is that idea really worth the government's coordinated attacks to undermine super—to force 2.5 million Australians to raid their retirement savings just to get through this COVID crisis?
Those opposite are using COVID-19 as an excuse to cut Australian super. If they do that, there will be fewer funds to make the investments needed to create jobs and drive growth to boost the economic recovery. As the shadow Assistant Treasurer, Stephen Jones, has rightly pointed out:
So much of the noise going on about superannuation at the moment comes from politicians who get 15% super themselves, but don't support superannuation for others and want to knock it off.
What we've seen in the crisis is the government use super to subsidise its own package—making Australians pay with their own savings for the stimulus measures the government announced to the sound of trumpets and relentless press releases—without even blushing.
I don't pretend to know or even understand why the government and the members opposite make super such an ideological obsession. I don't think I'll ever grasp the world view that sees security and comfort in retirement for all Australians as a threat to the Liberal Party. But what I do know is how successful super has been and how at risk it is from a government which, having robbed the proverbial Peter to pay Paul, now comes back not with thanks and praise but with inexplicable vengeance in mind. This is after super has basically underwritten the government's privatised stimulus package, after we've seen an aggregate loss of savings for Australians under the age of 35 of more than $44 billion and after a loss of savings in all age groups of over $100 billion. You'd think the government would celebrate super at a time like this, rather than demonising and cutting it. And now the PM and Senator Jane Hume close in with scalpel in hand to cut super. Just like Tony Abbott, the former Prime Minister, and the current Prime Minister, they're promising this will improve wages for workers. It wasn't true last time and it won't be true this time. Cutting super is a pay cut, pure and simple.
I'd like to introduce some basic figures about the national and local scale of the challenge we're facing. This is important because, without a factual basis to our debate, this august House would risk becoming nothing but an echo chamber of contending ideological trims and narrow political self-interest. The size and scale of super is easily seen in these 10 key facts. One: there are over 15 million members of Australia's super system. Two: over 80 per cent of Australians aged 25 to 54 hold a super account. Three: the superannuation system collectively manages over $2.8 trillion in assets. Four: this is more than 140 per cent of our GDP. Five: this will grow to around $10 trillion in assets by 2040. Six: 60 per cent of all Australians have a super account, compared to 25 per cent who watch the grand final, 44 per cent who read a book each year and 49 per cent who are in the labour force; 60 per cent of all Australians have a superannuation account. Seven: super has helped Australia to invest in its own infrastructure, agriculture, resources and companies, without which foreign investment would have shipped even more profits overseas. Eight: the current average balance at retirement is $157,000 for women—and we must do better—and $270,000 for men. Nine: the median balance at retirement will be more than $300,000 for women and $600,000 for men. Ten: cutting super will make things worse for women in our nation. Twenty-three per cent of women in the 60 to 64 age group have no superannuation. Forty per cent of older, single, retired women live in poverty and experience economic insecurity in retirement, and this is a national shame.
This is what we risk losing. We need to take action. This is a super system we have built up over decades, ransacked by an ungrateful government to pay for its own stimulus with Australians' savings. Then there's another cut, breaking an election promise. Where I am from, in the Northern Territory, the role of super is shoring up the government's stimulus, once again relying on people's saving. And it's very large and likely to be long lasting. As of 2 August, 48,000 Territorians, or one in every four NT workers, had taken a combined $347 million out of their super funds as part of the government's early access scheme. Official government data found the NT had one of the highest rates of early super access in the country. According to the NT News, an estimated 6,773 Territorians completely emptied their accounts, while 48,284 people applied to draw up to $20,000 across two rounds.
APRA figures released this week show that for the first time since compulsory superannuation was introduced three decades ago quarterly net contributions to super accounts were negative. This new record makes the long-promised, legislated and overdue superannuation guarantee increase more important, not less. Instead, the government wants to renege on a promise and revert to standard Liberal form of cut, cut, cut, even though it was the Morrison government's own lack of a plan for jobs in the recovery that forced millions of anxious Australians to raid billions of dollars in their retirement savings, even though it was the same irresponsible government that used the cover of the COVID-19 crisis to try to achieve a longstanding Liberal ideological fixation on gutting our superannuation and even though superannuation injected more money into the economy than any single one of the government's stimulus responses. Still, they now want to cut super, which, when they're not cutting the ABC or the Public Service, is red meat for the base. This is just business as usual for the Liberals, who have opposed every single dollar that has been put into a super account since 1993. Superannuation is going to be critical to the economic recovery, with its $3 trillion pool of funds key to investing in infrastructure and business, providing much-needed stimulus and jobs for the Australian economy. It's going to be essential. So now more than ever Australians need the legislated increase in the super guarantee to help build their retirement balances.
In its own words, the government has described itself as ambivalent on superannuation and retirement outcomes, but ambivalence isn't leadership. Labor is not ambivalent on super. We are committed to helping every Australian enjoy a dignified retirement, by sticking to the legislated super increase. Labor created our world-class super system and will always fight to protect it.
I have been speaking with many people in my electorate. As they made the decision to raid their super they were fairly anxious about it, but they saw it as their only hope. They like many other Territorians fell outside the federal government stimulus measures. They were left behind, to a great extent. The fact that people like international students and foreign temporary workers weren't included initially was a disgrace. We tax them heavily as they go to leave the country, letting them use those funds to support themselves was absolutely the right thing to do. It is unfortunate that so many Australians have felt the need to raid their retirement incomes. I feel for them, and we on this side will always fight for them to help them rebuild their superannuation accounts so that they can have those funds in their retirement, as they should have.
It's the first time I've spoken in the parliament from here in my office in Clayton. It's quite serendipitous, I think, that part of the title of the bill that I'm contributing to is the word 'flexible'. I will use this opportunity, through you, Deputy Speaker Bird, to thank the Speaker's office for the role that was played by that office in making sure that we've got this opportunity to contribute to the remote parliament. The rules that the ACT government put in place for us to be able to attend Canberra really counted out a lot of people who represent communities and also have significant caring responsibilities, but it is so important to me that I be able to continue to speak for the people I represent in Hotham, so it's great to have this opportunity to make a contribution remotely.
I am also really glad to have the chance to speak a little bit about superannuation in the debate today. The bill that is before the House, the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020, is a fairly straightforward piece of legislation. It essentially aligns the super system with the increase to the pension age that was made several years ago. So it is a fairly straightforward piece of legislation, and Labor is going to support its passage through the parliament.
There is not a lot to debate in the bill before the House, but I do want to spend a little bit of time speaking to the second reading amendment that was moved by the member for Whitlam. We are here today passing a bill that will make it more possible for people who are nearing their retirement age to make concessional contributions into their superannuation. What we should be doing is having a much bigger and much broader debate about the dangerous attacks that are underway at the moment on our superannuation—in particular, by a group of Liberals who are sitting on the back bench at the moment. It is not just a debate here about superannuation, because when we look at all of the things that are critical to Australians as they come into those later years of their lives, whether it is our aged-care system, our pension system or our superannuation system, we see that these three pillars of our retirement system are under significant attack at the moment by the Liberals, and that really needs to be called out by the parliament today.
Superannuation is one of the most practical, innovative, beneficial policies that I believe has ever been passed by this parliament. It's certainly up there with Medicare and the National Disability Insurance Scheme in terms of Australian policies that are looked at with great envy, I have to say, by public policymakers around the world.
I think all Australians who are listening today would be well aware that we face a very quickly ageing population. Between 2013, when I joined the parliament, and 2040, the number of Australians over the age of 65 is going to double and the number of Australians over the age of 85 is going to treble. It is very clear that, if all of these people end up on the age pension, it is going to be a responsibility that can't be effectively paid for by the share of people who are in work, which gets smaller as the share of people who are in retirement gets larger.
We in the parliament get criticised a lot for many things, and I am, of course, very supportive of the democratic system that facilitates that. But one of the things we get criticised a lot for is that the parliament doesn't make enough decisions that are for the really long term in thinking about the problems that are in the decades ahead. We also get criticised a lot because there is not enough collaboration on public policy. Superannuation is probably the best recent example we have of a government doing exactly those things. It saw a problem many decades ahead and it brought together unions, employees and employers, and the government as the representative of all of these groups, and it actually solved the problem. It said that we want to make sure that Australians have dignity in retirement, that they are able to live a good-quality life in their later years, and we are going to create a new system that enables them to do that. This is something we should be really proud of. It is one of those special exceptions.
What have been the impacts of this policy so far? I think they have been pretty outstanding. One of the first things to say is that literally millions of Australians have retired in greater comfort than they otherwise would have, because of the superannuation system, and millions more will follow. We are here, literally, to improve the quality of life of the people that we represent, and superannuation is one of the main ways that we are doing that today as a parliament.
I don't want the important economic benefits that superannuation has brought to our country to get lost in this debate. We are now the 14th largest economy in the world. We have the 55th largest population of all the countries in the world. But because of superannuation we have the fourth largest reserve of capital in retirement savings that can be used to promote growth in our economy. An enormous amount of money has been amassed—$3 trillion so far. I think it is set to be $10 trillion by the end of this decade. This is an extraordinary amount of money, which is being used to do good across all of our country.
One of the best things about our superannuation system is that, in other countries in the world, it is rich people who own shares and it is rich people who get to participate in investing in things like ports, railways and important pieces of infrastructure—but not in Australia. Because of superannuation, we have created a situation where almost every Australian who is an adult actually owns shares. This is something that is very much the domain of the privileged in other parts of the world.
So this is a policy that's delivered enormous benefits already to our system. That's pretty obvious, I think, to most of the people that I represent, who are genuinely non-partisan watchers of public policy, except if you are an ideology filled Liberal who, instead of all of the benefits that I've talked about, sees some weird communist threat. I genuinely do not understand where this kind of weird suspicion and paranoia has come from. I'm sure there's a Reddit thread out there with a list of all the ways that superannuation is apparently doing damage to our country, but I genuinely don't understand it when there are so many benefits that are pretty clear.
For ideological reasons, the Liberals have opposed superannuation as a concept from its very beginning. They have opposed every single increase that has gone into superannuation, and this attempt that we believe will come to delay the superannuation increases that are due to Australians starting next year is quite consistent with the history of how the Liberals have approached this subject. For the rest of Australia, COVID is an opportunity for us to bring the country together and to really deliver on some core national goals, but not so for this group of Liberal backbenchers, who instead see essentially a political opportunity to trash a system that they have long had under the gun.
So let's just have a look at some of the things that have happened so far. First, there was the early-drawdown scheme. There is no question in the minds of any Labor politician that superannuation belongs to the account holder—no question about that. We have existing hardship provisions that are built into the system to enable people who are in severe financial distress to draw down on their superannuation, as they should be allowed to do. Everyone supports that system. But what the government did instead was to throw out the rulebook when it comes to who can draw down on super. This was basically a scheme that faced no probity whatsoever, and they created a situation where for many Australians that was their only choice. They created a set of policies—JobKeeper and JobSeeker. We were supportive of the big pieces of those policies, but they left a lot of people behind. Think about casual workers, who are probably the biggest example here. We have a higher share of casuals in our workforce than we've ever had in Australian history, yet many, many casuals were left out of having any financial support. So what were these people meant to do? Basically, a situation was created where we had a completely unforeseeable crisis, there was a set of policies in which they didn't have any way to get financial help when they needed it, and then the government created an easy pathway for them to access savings that have been put there and stored away for their retirement. So of course what we've seen is a situation where low-income Australians have had to ransack their retirement savings in order to stay afloat during this difficult period.
I was elected to this parliament with an obligation to try to improve the quality of life for the people that I represent. If I were a Liberal, today I would be hanging my head in shame, because what they have facilitated is a reduced standard of living for many, many Australians in the decades to come. We know that, if a young person drew down the full $20,000 from their retirement savings, they might be $100,000 worse off in their retirement than they would otherwise be. That is a disgrace. It is a disgrace that the government created a situation where that was the only opportunity that people had to keep their heads above water. But we know why they did it. They did it because they don't believe in superannuation. They don't believe that we should create a system that assists people to have a good quality of life in their retirement. So that is the early-drawdown scheme.
Now we're hearing this steady drumbeat from the other side of the House about how we should forgo a scheduled superannuation increase. I want to talk about some of the arguments for this. Just to back up a little bit, 9.5 per cent of people's earnings is put aside as superannuation for them to keep for their savings. We've always had an aspiration to get to 12 per cent, which is just going to make sure that more people have enough superannuation to live off or that, if they don't have enough superannuation to live off and are going to use part of the pension, they have a better standard of living in retirement, because that is what we're here for: to improve the wellbeing of the people that we represent. What the Liberals are going to argue is that there's a trade-off, essentially, between the increase that you might be able to negotiate at work for wages and the increase that you'll get through superannuation.
I just want to address this argument today, because if we were to believe that then we should be able to look back and see that the superannuation increase was deferred by Tony Abbott, so we should have seen a period of great wages growth, therefore, because essentially the Liberals would argue that you've forgone a pay increase in your super and you should see it in your salary packet. What we have just been through is a period of horrifically stagnant wages growth in our country. That is to say: just because people didn't get an increase in their superannuation, it did not lead to any benefit in their pay packet.
So, when Liberal politicians come to Australians over the next coming months and say, 'Don't worry, we're going to defer the pay increase you'd get through super, but you'll make up for it in your wages,' I really want people to call them out on this argument, because on what planet would you have to live to think that Australian wage-earners are going to be in a great position to argue for a wage rise over the coming years? We're going to have unemployment in Australia higher than it has probably ever been in our whole history as a country. We are going to have a situation where underemployment is going to be profoundly difficult for many, many Australians. And, yet, the Liberals are going to say to people, 'Don't worry—you're going to be in a great position to argue for a wage rise.' Come on! They are just dreaming if they think that argument makes any sense at all. The truth is that, for many Australians, the legislated super increase is the best chance they are going to have to get a significant pay rise over the coming years, and Labor will fight every day to make sure that that increase goes to Australians.
The other argument I want to briefly address will be the one that comes from the other side of the chamber that says, 'Don't worry—you're going to not get your pay rise through superannuation, but that's going to lead to fantastic jobs growth, because businesses will suddenly be able to afford to take on more employees.' That has got to be absolute hogwash, and I tell you why I know that: we have just had a dry run of this argument through the discussion that's happened about penalty rates. Australians who are listening in will remember that, a few years ago, the Australian government—under Tony Abbott, under Malcolm Turnbull, under Scott Morrison—stepped back while penalty rates were cut for literally hundreds of thousands of Australians. So, one week, a bunch of Australians went to work on a Saturday or a Sunday, and then they went back the next week, did exactly the same work and got paid less for it. The government allowed that to happen. The reason they allowed that to happen, so they argued, was that jobs growth would result from it.
We've had the opportunity now to see penalty rates cut through, for a few cycles, and I'd encourage Australians that are interested in this to go and look at the labour force data and see that not a single job was created from that. So the federal government stood back and watched hundreds of thousands of Australians get a pay cut, for not a single job to be created from it. All that happened there was a bunch of people got less money in their pockets than they otherwise would have. And that is exactly what we are going to see if we allow this superannuation increase be delayed further for Australians.
There are many other fanciful arguments being put forward. One of the particularly silly ones is that, for some reason, housing affordability will be improved by cutting the superannuation increase going forward—complete hogwash. I'll address that at another time because I am running out of time here, but I just want to leave the parliament with one thought. I come here to the parliament representing 130,000 people who have put their trust in me to make sure that I protect their living standards and, where possible, I improve their living standards into the future. The superannuation increase will do just that, and that is why Labor will consistently argue over the coming months that we need to protect Australians' quality of life in retirement and protect them against a weird ideological crusade from the Liberals that has no foundation in reality.
I speak to you from the land of the Wurundjeri people of the Kulin nations, and I pay my respects to elders past, present and emerging. I congratulate the member for Hotham on a very fine summary of the situation that working Australians are facing right now and particularly with respect to the Liberal government's handling of superannuation.
As has been indicated, Labor supports the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020. It makes changes to the bring-forward rule for non-concessional superannuation contributions, to allow those at ages 65 and 66 to make up three years of concessional superannuation contributions. This is actually a sensible move by the government, which, to be honest, I struggled to say in all sincerity. It's a rare occasion that we can say this government is doing anything positive with respect to superannuation and, in particular, industry superannuation.
This government has spent hours and hours of this House's valuable time chasing rabbits down holes, trying to attack industry superannuation. I actually half expect the member for Goldstein to rush in here at any minute and say, 'Wait, no! It's all a bad mistake.' He'll say, 'Superannuation has connections to workers' wellbeing, to workers' savings.' My God, we're giving workers the chance to save and manage capital! That can't be good. Industry super, of course, has connections to—horror of horrors—workers' representatives, trade unions.
I'm going to take the opportunity here to say that trade unions represent around two million workers in this country. They are larger than any membership based organisation in Australia. Their hard-won enterprise bargain agreements, along with the awards system, cover over 60 per cent of workers in this country, protecting wages and conditions. That's a far bigger reach than the member for Goldstein's precious little IPA can claim. It's a piddling little dark evil corner of the country that produces mean-spirited men in suits trying to drag workers' conditions back to pre-industrial days of serfdom and slavery.
But, in all seriousness, my point is that superannuation is a Labor legacy. It has done a power of good for this nation. It is the envy of the world with respect to retirement savings schemes—and those opposite hate it—particularly industry superannuation funds, the most trusted and highly performing financial institutions in Australia.
As long as I can remember those in the Liberal Party have tried to destroy this institution. Just last week, I was watching a YouTube video of Paul Keating in this very House stand at that despatch box and speak to the legislation that set up nine per cent superannuation guarantee contributions. If you can, you should Google it. It's a fine example of Keating mastery. He had a vision for this country, one that we share—a vision for working people: one where workers could retire with twice the pension value. He spoke of how proud he was of our superannuation scheme and how it was way in advance of other countries. He spoke of it as the great reform it really was and he compared that with the coalition's mean-spirited need to—and I quote Paul Keating—'Kick working and poorer people in the teeth whenever they get the chance.'
Back then, when it became apparent that the Libs couldn't stop the superannuation guarantee being legislated, they tried to tax it out of existence, trying to whack an effective tax rate of 40 per cent on super savings, making it so unattractive as to turn people away from it. How stupid do they look now. Keating described how it was one of the most important large-scale mechanisms for the redistribution of wealth between generations. In fact, can you believe it, he quoted Michael Stutchbury, when Michael was a more progressive type, who said it would remove the 'demographic tug-of-war by setting up a funded scheme'. Mr Stutchbury seems to have been seduced by the dark side of economics since then but, nevertheless, Keating went on to say that it smoothed the onus of caring for our elderly across the generations, rather than leaving it to the younger generations coming behind, especially with respect to the baby boomer generation which has resulted in a growing ageing population who will rely on a smaller, younger income-earning cohort of taxpayers.
This government talk about intergenerational debt a lot and yet they want to dismantle the one institution that ensures the fairness of funding retirement costs by constantly attacking industry super. Time and time again, they come after the super funds, despite industry super being shown year after year to be the best place for workers' money to grow for retirement. Returns are the best. Just look up the top quartile funds and you'll see that most retail funds don't even put in a show. Yet, that is where this government wants workers' moneys to go, to their mates in the big banks who no-one trusts, whose practices were so bad that we needed a royal commission into their behaviour and who have hurt so many hard-working Australians living, and sadly dead, and, as we know, going after deceased person's money is not beyond them. No such behaviour was found to come from the industry funds, who sailed through the royal commission with flying colours.
So why do the government want to squander workers' money and condemn them to underfunded retirements? Well, other than helping their mates at the banks, it's because unions are involved in industry funds' governance structures. I reckon that's it, really—quite pathetic. Let's look at the facts. The boards of industry super funds do have union representatives on them. I myself had the honour of being a board member of HESTA and then Cbus. It's a great honour and responsibility to be one of the custodians of members' money, because I saw every member of those funds as my members. I was head of the nurses union when I was at HESTA. A huge proportion of nurses are members of HESTA. I still am. I took every decision that I had to make knowing that I had to answer to and was accountable to my members. When I was at Cbus, I was the President of the Australian Council of Trade Unions, so every union member was my member. That weighs heavily on one's shoulders—knowing that people have put their retirement savings in your hands. It's an extra level of accountability that for-profit directors don't have. The retail funds have to worry about shareholders first and retirees second.
But what those on the other side never mention to anyone is that employers also sit at those board tables. There is equal representation of workers and employers. You never hear that, do you? They on that side want to make it sound like it's all about unions. As a union rep, I'd have loved to have actually taken the credit for what is one of the most successful superannuation sectors in the world, but I can't take all of it, because employers—like MBA, the Victorian Chamber of Commerce and Industry, aged-care providers, private hospital associations, private building contractors and others—sit on the HESTA and Cbus boards. They are also making decisions about investments and governance of the funds. If the industry funds are as heinous as the Libs would have us believe, then so are their buddies on all those employer bodies.
Deputy Speaker, did you know that APRA monitor compliance of industry super with a fine-tooth comb, checking everything twice, like Santa? Nothing gets away from them. The level of scrutiny is beyond compare. It seems the compliance bodies could have done a better job with the banks' superannuation businesses, I might say, as we saw from the royal commission into the banks. The industry funds do well—far better than the retail for-profit funds. Trillions of dollars are now invested into industry super—workers' capital that is used for workers' and the community's benefit. And still the government come after the sector, trying to force them out of business, trying to break down governance arrangements or trying to stop the all-important insurance arrangements. Do you know that an average worker in the construction sector would not be able to afford insurance if it weren't for the buying power provided by the collective of Cbus? That means thousands of workers in an industry where they are more likely to be injured at work would be at risk of having no insurance at all if it weren't for their industry super fund. Those opposite might hate that. I'm proud of it, proud to say their livelihoods are protected by their fund. Like Paul Keating, I am proud of what we have created, what Labor and the trade union movement have created.
The coalition have delayed the SG increases needed to get the contribution up to 12 per cent, the amount of superannuation guarantee that is generally agreed will be needed for decent retirements. They don't support women accruing super when on paid maternity leave, a vital component of closing the gender pay gap. They're trying to stop workers bargaining for their own default fund. They tried to dismantle the default system, aiding and abetting the for-profit retail super funds in securing workers' retirement savings—to the workers' detriment, I might add—all while maintaining the very generous superannuation tax breaks for the wealthy. This means that the wealthiest one per cent of Australians, who already receive twice as much taxpayer support for their retirement income as the poorest 10 per cent, will continue to do so. Meanwhile the taxes paid by waiters, childcare workers, truck drivers and shop assistants will be subsidising the superannuation of the wealthy.
Labor has a very proud track record when it comes to superannuation. It came from those visionaries Keating, Hawke and Kelty. We will continue to fight for a fairer superannuation system and a stronger one. We on this side understand its value. To quote the shadow minister, the member for Whitlam, our universal superannuation, which is like a sovereign wealth fund but owned by the people, not the government, 'has $3 trillion in funds invested, and Australian workers have amassed the fourth-largest pool of pension savings in the world, equal to 140 per cent of GDP'. Superannuation has helped transform Australia from a country that borrowed from the rest of the world to one with substantial savings of its own. Make no mistake, if the opponents of universal super win, the consequence will be the destruction of jobs, the crippling of economic growth, and increasing taxes and a less secure future.
The Prime Minister's inability to subdue the wreckers in his own ranks puts us all at risk. The economic woes and challenges we faced before the pandemic crisis have not gone away; they've simply become worse and we've had to face a whole lot more. The challenge of funding pensions for an ageing population with a structurally weak budget is still alive; in fact, it's become greater. In a post-COVID environment, now more than ever, we will need to have a huge pool of money available to invest in jobs and growing the economy; to invest in innovation and development for industries like manufacturing, construction, infrastructure and biosciences; and to invest in innovation in health care, aged care and disability services.
If the government had a real plan for superannuation, they would not be tinkering around the edges. They would make it easier for trustees to invest members' contributions for the benefit of the country. We need a strong superannuation system, buttressed by stable and certain policy, with a mandate to invest for the long term in the national interest.
I am speaking on the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 and the second reading amendment moved by the member for Whitlam—and I am doing so virtually, from my electorate office in Sunnybank. Labor supports this bill, which brings forward the rule for non-concessional superannuation contributions to those aged 65 years and 66 years. It is currently allowed only until the age of 64. As a rule, Labor will always support legislation that improves this nation's universal superannuation scheme. What Labor will never support is the slow disintegration of Australia's superannuation system by stealth, neglect and a thousand sly cuts.
Australia's current superannuation arrangements bespeak significant social and financial infrastructure. The Keating government's brave reforms of 1992 introducing the compulsory employer contribution scheme will continue to have life-changing impacts on Australians as they age and enter retirement. There is no doubt that we're an ageing population. In 2019, Australians aged over 65 accounted for almost 16 per cent of the population. However, it's estimated that by 2057 there will be nearly nine million Australians aged over 65, accounting for 22 per cent of the Australian population. That will have an enormous impact on our economy. The foresight of the Hawke-Keating Labor governments will see many more Australians retiring comfortably, funded through their own superannuation, funded by their sweat, with employer co-contributions.
All older Australians deserve a dignified and comfortable retirement. In the coming decades, it will be more important than ever that Australians can, for the most part, fund their own retirement. If they can't do this it will be left to governments to pay unfunded pension liabilities, and, with an ageing population, this burden will continue to grow. It is a challenge that no sensible government can ignore. It is a burden that, in large part, will be borne by our children and grandchildren—and, since Treasurer Frydenberg took the reins, perhaps even by our great-grandchildren.
In two weeks the coalition government will commence their eighth year in office. Australia's gross debt was $280.3 billion when they took office after the election on 7 December 2013. That debt was largely due to stimulus measures put in place by Labor during the global financial crisis—measures that were largely supported by the Liberals. Those measures were integral in cushioning the financial blow for households during that very challenging time. But by January this year, well before Australia had confirmed its first case of coronavirus, gross debt had doubled to $568.1 billion.
Much worse is expected to come in the wake of the COVID-19 pandemic. The independent Parliamentary Budget Office this week provided an update to its medium-term fiscal scenario showing that, even under the most optimistic scenario, a decade of deficits and higher debt is expected. The PBO expects net debt to be $800 billion higher, and receipts to be $400 billion lower, over the coming decade.
Serious budget repair can only begin once the economy starts to recover. The Morrison government can't afford to get this recovery wrong. We know that if Australians don't have enough in their own superannuation funds they will only be living off the age pension in retirement—and that is not something that all people should aspire to. It is incredibly hard to make ends meet living on the age pension; all politicians know this from the phone calls that they receive. I know, from calls to my office, that pensioners are already panicking that there will be no pension increase this year. They're already finding it tough and are worried there will be no increase in the pension for them this year or perhaps for a long time. The pension indexation rules are clear—the pension can't fall, but because CPI did not rise this year there will be no corresponding rise in the pension. CPI has gone backwards under the Morrison government, so the age pension won't increase this year as would normally be the case.
We all know that pensioners are frugal and that they budget around the indexation increase. Pensioners understand this, and they're very worried at the moment. The Morrison government could do something now to alleviate this added burden for pensioners, but so far Prime Minister Morrison hasn't announced anything. He hasn't eased the worry of pensioners in this time of pandemic and he hasn't committed to easing the financial burden for pensioners either. If the government is finding it difficult to properly fund age pensions today, it will find it much more difficult with the debt burden that will be a fixture of federal budgets for decades ahead.
Universal superannuation is more important now than it has ever been. Over 80 per cent of Australians aged between 25 and 54 hold a superannuation account. That's a great thing—a great Labor legacy. The superannuation system collectively manages nearly $3 trillion in assets; that's worth more than 140 per cent of Australian GDP. That $3 trillion, owned collectively by working Australians, grows our economy and ensures that Australian workers own more of the wealth our country produces. By 2040 it is estimated that the superannuation system will collectively manage $10 trillion in assets. Superannuation contributes twice as much to retirement income as the age pension. It is a system that we need to foster and protect. So why is the Morrison government—and some of the backbenchers, in particular—hell-bent on destroying it?
So far, the financial heavy lifting in COVID-19 stimulus recovery has been borne by young Australians, not the federal government. The government hasn't turned to the Treasury coffers during the pandemic. Instead the Morrison government's early access super scheme will leave young Australians more than $44 billion worse off when they retire. Worse, it has exposed their retirement savings to frauds and scams and shonky operators. The amount withdrawn from super funds through the early access scheme has already outstripped the stimulus measures provided by the Morrison government. Income support in response to the COVID-19 economic crisis is being propped up in large part by the most vulnerable and lowest paid workers in the country. That is short-sighted and unfair.
So far, more than 606,000 Australians and counting have emptied their superannuation accounts. Of those people, 494,000 are under 35 years of age. That means those funds will miss out on 35 years of compound interest—that is, until they retire at 70. Collectively, people under 35 will be at least $51 billion worse off by the time of their retirement. Instead of receiving timely government support, young Australians have borne the brunt of this crisis and will be forced to continue to pay the costs for many years to come.
The funds in a person's superannuation account, although held by their trustees, are their money; we understand it's their money. The very design of the universal superannuation scheme is that every working Australian will have their own nest egg put away for their own retirement. Mr Morrison and others in the Liberal Party keep bleating on about 'their money', as if somebody is trying to take it. Beware the wolf in thief's clothing. Stealing from yourself can still leave you much worse off in the long run, if you miss out on compound interest.
Superannuation contributions are invested by funds into a range of assets. Some funds allow you to choose the types of assets you invest in so that you have more control over the risk and how your superannuation is building the economy—going to infrastructure, for example. The most advantageous part of the superannuation scheme is that contributions by young people today will enjoy compound interest for the life of their investment in the fund. Money invested in superannuation funds is, obviously, taxed lightly.
I know how tempted I would have been if, at 25 years of age, I was told I could take 20 grand out of a fund that I wasn't normally able to access. I would have grabbed it with both hands and probably bought a Monaro or something sensible like that! What I wouldn't have realised when I was 25, if I had bought a Monaro with that $20,000, is that it would be the most expensive Monaro I would ever purchase in my lifetime. That $20,000 car would ultimately have cost me about $120,000.
To make matters worse, from the time the early access scheme was introduced in March, the scheme was under attack from fraudsters, drawn to the honey pot of Australian money. The AFP uncovered evidence that sophisticated criminals were using the scheme to steal superannuation balances from unsuspecting Australians. It's unclear how many Australians have been the victims of this fraudulent behaviour, and it wasn't the ATO that detected the fraud but an employee of a super fund. The government has not yet revealed how many fraudulent claims have been made or if victims will be compensated. All this occurred on their watch.
Young people today deserve to have the opportunity of a dignified retirement. Their hard-earned super funds should not have been put at risk by Morrison government decisions. It's not only young people forced to make very difficult choices; in particular, women fleeing family violence have also been granted early access to their superannuation funds. Obviously, it's very important to support women fleeing from family violence, but it should never be a choice between personal safety now and poverty in retirement later, or staying in a dangerous situation and retiring with dignity. Women are already well behind when it comes to superannuation. We know the average superannuation balance is 72 per cent higher for men upon retirement than for women. We know that 23 per cent of women in the 60 to 64 age group have no superannuation at all—that's nearly one in four. We know four in 10 older, single retired women live in poverty and experience economic insecurity in retirement. We need to provide women fleeing family violence with the support they need, not force them to raid their meagre retirement savings.
Although our superannuation system is working for many, it is sadly also leaving some behind. The superannuation guarantee is currently legislated to increase to 12 per cent by 2025. For median workers the balance on retirement will rise by 20 per cent for men and 19 per cent for women. The poorest workers, those in the bottom 10 per cent of the income distribution, will retire with an additional 30 per cent in accumulated superannuation. For those workers, that will make a substantial difference to their comfort and health upon retirement.
The Liberals created the Retirement Income Review to create further delays to the legislative increase in the superannuation guarantee up to 12 per cent. The government received that review over a month ago and should release it right now. A long-promised, already legislated and overdue superannuation guarantee increase is now even more important. Unfortunately, whether it's young people or women, the Liberals' and the Nationals' plan for superannuation is basically to leave most people behind. They're using the COVID-19 crisis as cover to destroy that universal superannuation scheme. They've opposed every single cent that's gone into super. They want to make Australians work until they're beyond 70 years old. They've frozen the pension and now they want to cut super and wages. We learnt yesterday that, for the first time since compulsory superannuation was introduced three decades ago, quarterly net contributions to super accounts were actually negative.
The Morrison government's lack of a plan for jobs and recovery has already forced millions of anxious Australians to raid their hard-earned retirement savings. It's now more important than ever for Australians to rebuild their superannuation balances. Whether their superannuation funds are held in a not-for-profit fund, like an industry super fund, or in a for-profit fund or in a self-managed fund—whatever—the money Australians put in now will determine whether they retire into poverty or with dignity. It will also help the economic recovery after COVID-19.
Industry super funds account for 27 per cent of superannuation funds. Those funds alone will invest tens of billions into Australia's economic recovery after COVID-19, and they aim to create or support many thousands of sustainable jobs in the coming years. Industry super funds already collectively own $80 billion in Australian infrastructure, property and other assets, and that number's increasing—Australian assets, owned by Australian workers. Australia's universal superannuation scheme is something that Australians should be proud of. It's a scheme we should all be supporting, not trying to undermine.
I compliment the previous speaker, the member for Moreton, on his fine contribution on the bill and also on his outstanding use of Hansards in the video background—a fine choice indeed!
Today we're here to speak on the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020, and, like so many bills that are presented in this place by this government, it is a fairly innocuous bill—one that doesn't get to the heart of the issue that we should be getting to. Obviously Labor have already said that we support this bill, but today my remarks are going to focus on some of the issues that are raised within the member for Whitlam's second reading amendment, which I will come to throughout my contribution. But, like so many bills that are presented in this parliament, the issues that the bill seeks to address don't go to the substance of the things that actually need to be fixed in this country. There are serious issues in superannuation in this nation. There are serious issues of inequities in superannuation in this country. It is a real waste that the government doesn't seek to address some of the issues of superannuation that we need to address as a society.
Superannuation inequities in this country affect young Australians; they affect older Australians; they especially affect women and women over 55. So today I am going to go through some of those inequities, some of the issues that we need to address in superannuation, as well as some of the history that has led us to this place, and of course some of the ideologues in the coalition and government backbenchers that are driving the superannuation agenda, or the lack of superannuation agenda, in this country.
Superannuation is a great Labor reform. It is a reform that the Labor Prime Minister Paul Keating introduced in this country, and it has helped bring security and financial security to literally millions of Australians. It is through this scheme, where Australians have been able to acquire capital and savings, that many Australians have been able to achieve financial security and prosperity in this country. Yet this government and the coalition parties have consistently sought to undermine the superannuation scheme that we are so proud of in this country.
But if you really want to see how the Prime Minister cares about older Australians you only have to look at the last months, where the Prime Minister was caught out on the pension. The pension was going to be frozen, for the first time in a quarter of a century. In this pandemic, the pension for older Australians was going to be frozen. And it's only after being caught out that they have been shamed into actually looking at that issue.
Young people in this country are raiding their superannuation, when they can least afford it, in this pandemic. I think one of the things that we need to look at, as to why the government is making young people raid their superannuation, is that it followed the largest economic miscalculation in the Treasury department's history in this country. Seventy billion dollars was overestimated in the JobKeeper scheme. Originally we were told that the JobKeeper program was going to cost around $120 billion, and, instead of it costing that, the Prime Minister and the Treasurer announced that they had miscalculated by about $60 billion to $70 billion. And, instead of actually making sure that the JobKeeper scheme supported people throughout this pandemic, the Prime Minister's and the Treasurer's response was to make young people raid the superannuation accounts that they should not be touching in this time. What does that actually mean? In the middle of a blunder by this government worth $60 billion or $70 billion, young people are taking out $10,000 and $20,000. The Prime Minister said, 'Well, it's just a small amount of the total superannuation funds that are available'—spin, spin, spin—but for a young person in this country, who isn't on the Prime Minister's 15 per cent superannuation and isn't on the Treasurer's 15 per cent superannuation, taking out $10,000 or $20,000 will cost them potentially hundreds of thousands of dollars in their retirement. Hundreds of thousands of dollars taken out of a young Australian's retirement—that's typical of this government. They're happy to push through the media story of the day, happy to spin around and spin all of the policies that they present to our country, but the reality is that they don't have a vision for our country and they don't want to support young Australians setting up their own financial security. The Prime Minister and the Treasurer don't want to make sure young Australians can retire with enough. Instead, they're saying: 'Just do a little bit. Just take a little bit out of your superannuation. It's not a big deal. It's only a small fraction of the total pool of superannuation in this country.' But the reality is that it's going to make a big difference to the retirement of young Australians. It's also going to make a big difference to debt and the amount of government commitment that is going to be required to support pensioners who don't have enough in retirement.
So on one hand the government are happy for young Australians to rob their future of serious financial security, and on the other hand, instead of actually addressing our society's serious and structural inequities on superannuation, their response is to break their own election commitment. Yes, of course Labor supports a rise in superannuation, but it was the government's own election commitment—Scott Morrison's own election commitment—to make the superannuation guarantee rise up until 2025. They're breaking their own election commitment, but, worse, the structural inequalities within superannuation that exist now adversely affect women. Women in this country are retiring with much less superannuation than men. One in three women in Australia are retiring without any superannuation at all.
At the last election, I can admit, Labor didn't get everything right. We didn't, and that's pretty soul searching and pretty devastating. But one of the things that we did take to the last election was a policy to help support women to access and receive superannuation in the times in which they are out of the workforce. Women in this country do more than their fair share of work at home. They do more than their fair share of work without pay. They shouldn't be penalised as a result of it. We need population growth in this country. We need Australians to be having more Australians, but at the time in which women in this country are taking the responsibility home they are being penalised and they are retiring with less. What's that resulting in? It's resulting in women over 55 being the fastest growing cohort of people facing homelessness in this country. To think about me, as a young man, and about my family members and my friends and women who are in that age bracket potentially facing homelessness is gut wrenching. It's un-Australian for people to be without a home. This pandemic has shown how important our homes are for keeping us safe. It has shown us how important it is that we all need to stay in our homes in order to keep others safe. Yet in Australia the systemic structures within our economy are leading to women over the age of 55 being the fastest cohort of homeless Australians. That is what we should be addressing in a superannuation bill. That is what we should be addressing as part of our country's vision to make Australians more financially secure, to make Australians more prosperous. Instead we have a government that is looking to break its own election commitment, not so that it can increase superannuation for Australians but so that it can reduce superannuation for Australians.
The architect of the Australian superannuation system, the great PJ Keating, legislated in 1992 to increase super gradually from three per cent to 12 per cent. It was going to get to 12 per cent in 2001 but, of course, the Howard government froze it. The Gillard government relegislated an increase in 2011, back up to the 12 per cent that was originally planned by Paul Keating. But it only got to 9½ per cent in 2014 before the Abbott government froze it again. We thought, 'Maybe there's going to be a change in the superannuation commitment,' when Scott Morrison and the government committed to a staggered increase of 12 per cent by 2025, prior to the last election.
In recent weeks and months the Treasurer was asked 'Are you going to scrap your commitment?' It's not Labor's commitment and it's not Centre Alliance's—or what's left of the party—commitment. It's the government's commitment. He was asked: 'Are you going to scrap your commitment to increase superannuation to 12 per cent?' The Treasurer replied: 'We have no plans to change that legislated increase. It goes to 12 per cent'.
The Prime Minister said, 'There's no change to the government's policy' on July 22. Senator Cormann, in the other place that we don't talk about, was asked, 'Can you rule out any changes to the timetable for the legislated increase to the superannuation guarantee?' and Senator Cormann, who I wish well in his retirement, said yes. But, of course, there is a growing movement of disgruntled young IPA operatives in the coalition backbench, born into a suit, who are furious about that commitment. They have been badgering and prodding and making sure their voices are heard to scrap the government's own commitment to superannuation.
It's hardly surprising that these young IPA backbenchers in the government, who are becoming more bolshie by the day, are allowed to run their agenda of scrapping superannuation when this minister for superannuation said she's 'ambivalent to the issue, to tell you the truth'. She's ambivalent to Australians retiring with a fair share of retirement savings. She's ambivalent to women having their fair share of superannuation. The assistant minister for superannuation is ambivalent to equity in retirement in this country. That says a lot about the agenda and the sense of fairness that governs this country, and it's hardly surprising.
One of my electorate neighbours, the member for Goldstein—busy doing Instagram videos in his lockdown—has been prodding and pushing for the super guarantee to be removed. I barely hear Senator Andrew Bragg, in the other place, speak without calling for a reduction of superannuation in this country. He is infatuated with it. This is an agenda that many in the government are seeking to pursue, to break their own commitment around superannuation—that is, to break their own commitment to help Australians retire with more. This is an agenda that is being pursued by people who are going to receive 15 per cent superannuation, who are getting paid their fair share. They're happy for Australians, especially women in this country, to retire with less. People in this parliament, who are receiving 15 per cent superannuation, are happy for young people in this country to withdraw thousands of dollars, potentially costing them hundreds of thousands of dollars in retirement. It says a lot about the priorities; it says a lot about the ability for members in this place to put themselves in the shoes of the people that they seek to represent.
We can do better. We can address the issues that are systemic in the superannuation industry. We need to make superannuation fairer for Australians. We need to make superannuation fairer for women in this country. We need to make sure women aren't retiring with less than men in this country. We need to make sure that young people have a prospect of financial security in this country. We need to make sure that people can save and can achieve capital savings in their lifetime so that they can rely less on the government and more on their own hard work. Yes, it should be hard, but it should be fair. At the moment the government's plan to roll back the superannuation guarantee isn't fair. It is going to hurt young people and it is going to hurt Australian women as well.
Every time the government put up a bill to do with superannuation, such as the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020, they'd better understand that Labor members will get up and speak out against their plan to cut superannuation, to cut wages and to cut pay. Australians should be under no illusions. They should make no mistake about what the government is up to. The member for McNamara called it out well. There's a double game going on here. We have the Prime Minister and the Treasurer crab-walking away from their election promise that they're not going to cut superannuation or wages. We have this whole crop of backbenchers—the disaffected, the nutty, the deranged and the whole spectrum of them; most of those who are pushing this line hail from the IPA, I think—who are egging the government on to break their election promise and cut superannuation. They're laying the groundwork, in effect, to trash Australia's decades-old system of compulsory superannuation.
In effect, this is another little false dichotomy they're trying here—that somehow if we cut super you're going to get a wage rise. It's nonsense. Superannuation in this country is part of your pay. Your pay packet consists of the cash you take home in your superannuation, so, if you cut superannuation, in effect you're cutting the take-home pay, including the retirement savings, of Australians and you're condemning people to a poorer retirement. A cut to super is a cut to pay.
Super is part of your pay in this country. It is no longer something that just the elite have. Decades ago, it was really only the Public Service, perhaps the military and the higher end of corporate Australia that were lucky enough to have superannuation for a dignified retirement. Everyone else was condemned, from the time they retired until they died, to the age pension and the few bucks they'd managed to squirrel away, and they didn't live that long; that's the truth of it. But it was a visionary reform by the Hawke and Keating Labor governments in the mid-1980s for a range of reasons. First and foremost, it was to give working Australians a more dignified retirement, but it was also for really important fiscal reasons that should be recognised by those opposite, the people who tell us that they're the economically responsible brigade—the party of debt and deficit and all that stuff.
For very sensible reasons, the superannuation system was introduced. Back then, in the mid-1980s, there were about six or seven workers for every retiree. In the intervening decades, we've now come down to about four workers in Australia for every retiree. Within 15 years, the projections are that we'll be down to three workers for every retiree, as we've smoothed that curve with migration. But the projections, I think, are wrong when you look at the cuts to migration which we're now seeing. What's going to happen is that we're going to bring forward that date when we'll have only three workers for every retiree in the country.
What that means, of course, is more pressure on the pension system if we don't make people provide for their retirement. It's just a fact. It is a privilege, not a right, and it's also built up an incredible national savings pool of $2.8 trillion under management in this country, projected to rise to $10 trillion by 2040—an incredible national asset which I'll touch on in a moment. For individuals, it means that they will have a better retirement and that they own more of the national wealth and what Australia produces.
In a political sense, the battlelines on behalf of Australia are drawn. They're very clear. Labor created superannuation. Labor defends the superannuation system as being both good for workers and for everyday Australians in their retirement and good for the nation, with that incredible savings pool that we can invest in productive businesses and infrastructure and also overseas. We champion an increase in workers' pay through the legislated increase in superannuation. Contrast that with the Liberal Party and the government. The political history of superannuation in this country is that at every stage since 1974, when Gough Whitlam first launched the inquiry into a universal superannuation system, those opposite and their predecessors have opposed superannuation. They've opposed workers providing for their own retirement and building this national savings pool.
The same dance continued. Hawke and Keating introduced it. John Howard refused to continue the system and froze the superannuation guarantee. Rudd and Gillard legislated for the increase which we've now been progressing with. This Prime Minister—to his credit, you'd think for a moment—was the first Liberal Prime Minister to actually say: 'Yeah, okay, we'll keep the system. We promise we will not cut your superannuation. We won't cut your wages'. He said that before the election, but now he's under growing pressure from his backbench, and it looks like he's going to cave to it in the budget, and the budget's going to have a cut to wages and a cut to superannuation.
They're using the cover of COVID, of course, as an excuse for this. It's one of the big, fat lies which are being promulgated by those outside the parliament and many in it, I'm sorry to say: that somehow, if you cut superannuation, people are going to get higher wages. The fact is that, for most Australians in this recession, the superannuation rise of 0.5 per cent next year may be the only wage rise they get, and the government's lining up to cut it. It's a cut to pay. There's no guarantee, even if you say to an employer, 'You don't have to pay that 0.5 per cent into superannuation'—just a few dollars more into your superannuation fund—that that's going to go into wage rises. There's no guarantee for that at all. In fact, it's very likely that it won't happen if you look at the current labour market and economic settings.
The other big lie, of course, that's promulgated by those opposite—they pop up on Sky TV, they pop up in the House and they keep repeating it—is that somehow it's a choice between, on one hand, superannuation and having a dignified retirement and, on the other, pushing the money into housing now. That's just nonsense. It's trashing the retirement income savings of the income system if that's the way you go. Also, pouring those buckets of cash into the housing market, as anyone knows, is just going to push up house prices. It's economic nonsense to say it's going to make houses more affordable and people will be better off if you take people's retirement savings and push up house prices now. They'll end up with a house, sure, but they'll have no retirement savings.
Superannuation, as I said, is good for our economy. It boosts our national savings by $2.8 trillion. That means we do own more of our national wealth, and it reduces Australia's reliance on foreign sources of finance. As of 2013, we've achieved an amazing milestone in this country where, for the first time in our history, Australians, mainly through superannuation funds, actually own more equity overseas—we own more stuff in other countries around the world—than other countries and foreigners own in us. For the first time in our history, as a capital-intensive country that's always needed and welcomed foreign investment and capital, we own more stuff elsewhere than they own in us, and that's because of our superannuation system. That gives us enormous ability to diversify our investments, bring profits home from around the world, enrich Australians and grow our national wealth and also hedge against economic shocks. It reduces Australia's reliance on foreign sources of finance because we've got this incredible national savings pool that we can apply to productive assets. As I said earlier, it also offsets the impact of an ageing population.
There's another argument that I haven't heard from those opposite, the party who love to talk about debt and deficit. I remember my first 3½ years in this place. The member for Bendigo has been here an extra few years; she would have heard this. Every question time you'd get up and you'd get a lecture about debt and deficit. I haven't heard that since March. I haven't heard anything about debt and deficit from the party of debt and deficit over there, presiding over the biggest debt and deficits in Australia's history.
But superannuation actually has a positive long-term fiscal effect on the federal budget. This is well documented. It's an important point—although it's boring and nerdy—in terms of our international fiscal credibility. When international rating agencies, the bond market and our international partners size up countries—these are facts; I know those opposite don't like hearing facts—one of the big things they take into account when deciding what your credit rating is and how much they're going to charge you to lend money is whether you've provided for your ageing population in your pension system. That's one of the reasons that European countries have got themselves into all sorts of trouble in a fiscal sense: because they haven't put away superannuation. They've got pension entitlement systems, many of which are unfunded. The reason they do that is that they rightly conclude that countries, particularly democratic countries, with an ageing population and without the kind of super system that Australia's built are a worse risk to lend money to. That's because democratic governments ultimately, with an ageing population, will never be able to resist the political pressure to jack up pensions, health care and so on. So, with an ageing population and fewer taxpayers to support every retiree, it's a fiscally toxic combination brewing of higher debt and bigger deficits. Ratings agencies look at these things. Quite simply, without Australia's superannuation pool, we would be far less likely to have and hold a AAA credit rating, and we'd be paying more for our debt.
The debt outlook's already looking shaky under this government. They try and blame us for it, but the fact is the vast majority of the debt's been accrued by them since they took office. They don't like being reminded of that. But, thanks to Labor governments and the reforms in the 1980s and 1990s, that ability to hold a AAA credit rating and to pay much less for our debt than other countries goes right back to the fact that we've had the foresight to provide for retirement incomes and provide for our superannuation. It's not a point which we should give away lightly. It's a fundamental structural part of our retirement income system.
Despite all of these benefits—the benefits to the individual and the fact that people can retire and have a longer and more dignified retirement—the superannuation system at the moment still means that most Australians won't be able to retire fully on their super. However, they will have a better retirement with a part pension or a full pension plus their superannuation because of the national savings pool, the decreased reliance on foreign investment, the ability to invest in other countries and the positive fiscal debt and deficit impacts. All of these things are good things.
Despite all of these benefits, the Liberals hate superannuation. For four decades, they've opposed every single cent that's gone into super. They've opposed the system from the start. They've opposed every piece of legislation that has ever come before this parliament for workers to provide for their retirement. I think, because I've thought about this, that the more you look at it, if you actually read the economic policy stuff—and there are numerous studies on this—the more it seems a no-brainer for a country to provide for an ageing population and a retirement income system in this way.
So why have the government, the Liberal Party, got it in their DNA that they cannot bring themselves to ever vote for a piece of legislation that supports superannuation? I think they don't actually care about the retirement incomes of ordinary Australians—that's one of the key aspects. I really don't think they do. It runs counter to what I've always seen as the core purpose for the Liberal Party, which boils down to two things. One is to protect the people in our society who already have wealth. They can dress it up with all the language they like about aspiration, but when it boils down to it the thing that they screech most about and that you see the most outrage about from the government benches and those opposite is when the people who have the most wealth and privilege in this country may have that threatened. The core purpose of the Liberal Party is to protect those people who already have the most wealth and capital, and the other core purpose is to fight tooth and nail to stop any changes that ever require businesses to share more of their profits with workers through wages and superannuation.
There's a secret report the Treasurer is sitting on at the moment, his handpicked little Retirement Income Review, and the parliament looks forward to no doubt hearing what's in that review. He should release it for public debate. I don't know why he doesn't or what's in that is so secret, but we'll find out.
There's also a mad ideological crusade going on, as the member for Macnamara said, by the little IPA Daleks that seem to populate the other side. You can see this by examining their rhetoric regarding the different types of super funds and the levels of screechy outrage that you get. Of course there are three types of super funds. There are the for-profit ones, largely owned by big banks. They take management fees and dividends, and make profits. The government doesn't mind those funds, it seems. They like the big banks' funds and they're always there to defend the funds run by big banks for profit. Funnily enough, those funds tend to make less money for their members and provide for a poorer standard of retirement, but the government's happy to defend them because their big bank mates make profits. Then there are the SMSFs, the self-managed funds, where the trustees are the fund members. They're always very, very happy to defend tax breaks, whatever the arguments are for them.
But then you get the not-for-profit funds, the industry super funds, the public sector and corporate funds. They're the funds that don't take profits. They don't have shareholders that take profits. They have members and they distribute the surplus to their members. Funnily enough, it's those funds in this country that have the best returns for their members. They're actually a better bet. If you want to provide for your own retirement, you'd do better to put your money into an industry super fund than into a big retail fund where the bank makes profits. But the nuttiest and most sustained government attacks, including in question time when this topic comes up, are when the Prime Minister screeches about union industry funds--'It's terrible.' The nuttiest attacks are on the not-for-profit funds that give their profits or surplus to members. There's absolute silence when bank funds are caught ripping off members and providing lower returns. It gives an insight into what they're really on about.
From listening to the debate of those opposite whenever this topic comes up, they just don't get the economics of super. Whichever muppet gets sent in from time to time reads out their talking points and tells us that it's Australians' money and they know best. Of course it's our money; it's in our super fund. That's the whole point of the super system. It's put there for retirement. It's not put there so that we can spend it in the short term and spend it now. It's put there for our retirement so that we can have a dignified retirement as we're living longer with an ageing population, but also so that we have a more sustainable economy and fiscal settings. They just don't get the economics of super. If it weren't for super, more of Australia's infrastructure, agriculture, resources and companies would be owned by foreigners, with the profits flowing overseas. That's a fact. But, because of super, Australian funds now invest abroad to bring income back to Australia and boost our wealth. It's good for Australians, good for the economy and good for our fiscal outlook. I urge the government to reconsider their unconscionable plan to cut superannuation and cut wages for workers in this coming budget.
It gives me great pleasure to stand here in defence of superannuation, a great Labor legacy and Labor initiative. I too wish to address both the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 and the second reading amendment:
That … the House calls on the Government to ensure that all Australians can enjoy a dignified retirement, including by committing to:
(1) the scheduled and legislated increases to the superannuation guarantee; and
(2) adequate funding for the aged pension".
It beggars belief that those opposite, the paragons of the private market and private industry, are against superannuation. Superannuation gives workers a decent retirement, from the share market. You'd think the loudest champions should be on that side of the House. This is not some sort of socialist utopia. This is the private market providing a dignified retirement for millions of Australian workers. The proof is in the pudding. We've had 30 years of proof—seven per cent average returns. You go to a bank, or go anywhere in this country at the moment, and try and get a seven per cent return. But that's what superannuation has been yielding for workers, and those opposite are intent on tearing it down, driven by the nutter faction in the Liberals. We're told all the time that the Liberals don't have factions. Well, we saw the truth of that on 60 Minutes on the weekend. The nutter faction over there is driving this push to drive down and dismantle Australia's world-renowned superannuation system.
Those opposite were almost rabid in their enthusiasm for encouraging Australians to dip into their superannuation as a response to the economic crisis accelerated by COVID-19. The Prime Minister's response to soaring unemployment and economic uncertainty was to tell Australians who are doing it tough that they're on their own, that their only option is to raid their own retirement savings. Essentially the government have privatised the pandemic. They've outsourced the pandemic. This, after all, is a shared, global pandemic. It's a shared disaster. You would think that we were all in this together. But the government has told workers, particularly young workers and women workers: 'If you need support during this time of crisis, you can raid your own superannuation accounts. We'll let you do that.' And three million Australians have said, 'If that's the only choice available to us, that's what we'll do.' As a result, 600,000 Australians have completely emptied their superannuation accounts. They've gone from a $10,000 or $20,000 balance to zero dollars. They've got to start again.
We all know in this place that superannuation works by the magic of compound interest. The more you put in early in life, the more it accumulates, like a snowball gathering snow. It accumulates more and more and more over your working life. But, if you don't have it early, if you wait till your 30s and your 40s, you're not going to accumulate the compounded interest to have a decent retirement at the end of your working life. Those opposite have told Australians: 'You're on your own. Access your own retirement savings to get through this pandemic.' It is an absolute disgrace. They've privatised the pandemic. They've outsourced it. They've put the economic burden of this pandemic onto the shoulders of working Australians and their families.
In my electorate of Lyons, more than $1 million of retirement savings has been withdrawn from some 14,000 super accounts, with more than 1,500 emptied entirely. The vast majority accessing their super are under the age of 35. It's a cohort that has been significantly affected by the pandemic and the recession, and they're now going to be even further impacted in the future because they will miss out on the benefits of compound interest on their super savings.
Industry analysis has estimated that a 20-year-old who withdraws $20,000 under the government's scheme could lose more than $120,000 from their retirement balance, a 30-year-old who accesses $20,000 could lose about $100,000 in their retirement and a 40-year-old could lose more than $63,000. It's devastating for retirement incomes. What's more, it's the most expensive $20,000 that these workers will ever spend. If a young worker takes out a loan of $20,000 at four per cent for 30 years, she would pay back less than $15,000 in interest and it would cost her $22 a week in repayments. But, if she empties out her superannuation account by withdrawing $20,000, she is robbing herself of the ability of that $20,000 to attract compound interest over her working life, which, at the present rate of return, would see it go to $100,000. So, instead of paying four per cent interest to get that $20,000 and paying just $15,000 in interest repayments, she is effectively paying 16 per cent interest for 30 years; she is paying out $80,000 in order to access $20,000. That's the legacy of this government: robbing Australian workers and their families.
I understand that people have been doing it tough. Wage growth has stalled, jobs have been lost and families are struggling to make ends meet. So it's no wonder that so many felt that they had no option but to access their accounts when the government made them available. But there is inherent unfairness in a situation where a government encourages its own citizens to raid their own retirement savings in order to ease the financial pressures brought on by a global recession and, in the process, disadvantages those same citizens in the long term. They have effectively asked their own citizens to rob themselves of a decent retirement.
This will have an enormous cost to so many Australians. In particular, young people will bear the burden of it. They've had to fund their own pandemic response after being so seriously neglected by the government in other areas. This is a cohort of Australians who have suffered two financial crises already in their young lives—the 2008 GFC and now the pandemic. Due to good governance and good management Australia avoided a recession, unlike the rest of the world, during the GFC. Thank you, Wayne Swan. Young people are having to deal with high HECS and HELP debts; a horrific job market, which is only going to get worse; poor wages growth; expensive housing; and fractured health care. They are being governed by a government that simply does not care about their future beyond slogans and employing Scott Cam to do a few TV ads.
Superannuation is what guarantees older Australians a retirement of comfort and dignity. It is an innovative initiative that has benefited countless Australians for many decades, allowing them to enjoy their retirement after year upon year of hard work and economic contribution. It's incredibly disappointing, and shameful, that the Morrison government is chipping away at a program that has the runs on the board. After 30 years, the evidence is there that it works. For purely ideological reasons, members of this government are campaigning against universal superannuation for workers. It beggars belief. I remember a cartoon that was in the British press some years ago in which a Tory government minister is visiting a hospital. He says to a nurse, 'What do you do here?' The nurse says, 'We help sick people.' The minister says, 'Who makes the money?' The nurse says: 'Nobody makes money. We help sick people.' The minister says: 'I think we're speaking a different language. I don't quite understand. Who gets the dough?' The nurse says, 'No, we help sick people.' The minister says: 'Listen to me. Who makes the money?'
I can't help but think that's what's going on here, because, as the member for Bruce pointed out, industry superannuation funds are the ones that make the most money for their members.
If you belong to an industry super fund you will have a better retirement than if you belong to a retail super fund, which tend to take out more management fees. The retail super funds, the big banks—they make the money. And the government has no problem with them, even though retirees have a worse retirement belonging to those funds. The funds that this government has a problem with are the industry funds, which generate a better return for members but which, of course, don't make money for the friends of the government. I do go back to that cartoon, and I can't help but think it's the same thing that applies here. The friends of the government are not making the money from superannuation, from universal superannuation, and that's why they are so ideologically opposed to it.
It really does say something when a national government is ruled by its 'nutters faction'. In the chamber the other day, I followed the member for Goldstein during one of his more dramatic appearances railing against super—I think he called it 'money laundering'. That's how he referred to superannuation: 'money laundering'. Even though the returns to members are seven per cent, they retire with dignity and they retire in comfort, he refers to it as 'money laundering' because the unions are involved. That's where we're at. The government is just ideologically opposed to superannuation because unions are involved. Even though workers are getting good retirements out of superannuation, they're retiring with dignity and retiring in comfort, those opposite want to cut back on it because of their ideological opposition to union involvement. It really does beggar belief.
Australia's superannuation system was endorsed by the World Bank in the early 1990s. They recognised the benefit of our three-pillar system, where we benefit from a system of compulsory superannuation and the age pension, and both are enhanced by voluntary retirement savings. The endorsement we received was to say that our system was the world's best for retirement income—the world's best. That's what those opposite are so keen to dismantle. That declaration was made less than 30 years ago, and yet here we are in this chamber looking at a government that is trying to wind back and destroy this system—not weaken it, destroy it.
Women have long been left out of our superannuation system, and we need to strengthen their involvement, not weaken it. There is a substantial gender gap, with the balance of superannuation accounts being, on average, around $15,000 less than for men. There are a range of reasons for it. Another issue is the increasing rate of workforce casualisation, which will see hundreds of thousands of Australians miss out on superannuation payments as a result of the nature of their work. We should be addressing these issues as a matter of urgency. We should be creating a better, more even superannuation playing field, not making changes that disrupt, dismantle and eventually destroy the foundations of a superannuation system that has been inarguably good for the country.
I remind the House that, in 2015, Australia's superannuation pool was $2 trillion. By 2025, it will be $4 trillion. By 2035—$10 trillion. That's a massive savings pool, a massive investment pool for the nation, for long-term investments. Superannuation accounts are not just like banks accounts; they're not short-term bank accounts. It's a long-term investment strategy. It's a nation-building program. It's good for workers in their retirement, but it's fantastic for the country. If those opposite continue on their path to dismantle Australia's superannuation system, it will be bad for the country. It will be bad for the economics of the country and bad for the workers involved. I just don't see who wins.
Other speakers have mentioned that, when superannuation was first proposed, there were six to seven workers for every single retiree. Those workers were contributing to taxes and the pension. Now we're down to four workers for every retiree, and by 2030 that will drop to three to one. So we have an ageing population and we have fewer workers able to contribute to the tax pool which will fund pensions. We need a self-reliant retirement plan. I come back to the comment I started with: you would think those opposite would be all for the Australian superannuation system. It's about self-reliance, built on workers owning shares in private companies. You would think it would be nirvana for those opposite, yet here they are trying to dismantle it. It's a great shame. I stand here with great pride in supporting Australia's world-best universal superannuation system.
I rise to speak on the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020. The history of superannuation in Australia is pretty simple: it is introduced by Labor; the Liberals oppose it; people like Bronwyn Bishop speak out against it; John Howard then goes to the 1996 election promising to continue with the scheduled rate of superannuation increase, but he doesn't tell the truth and freezes the superannuation guarantee; Tony Abbott goes to the 2013 election promising to increase the superannuation contribution, but he breaks his promise and doesn't continue with the scheduled increases; and Prime Minister Scott Morrison goes to the 2019 election saying that he has pledged to continue with the legislated pattern of superannuation increases—a promise he now appears to be set to break. His own superannuation minister appears not to mind much either way, whether the government sticks with its promise, sticks with the legislation or does the wrong thing by the Australian working people. It's a bit like Medicare. It's a bit like climate change. These are issues which matter deeply in the hearts of those of us on this side of politics. Those on the other side know that they matter to the Australian people, and so they mouth the platitudes at election time, but when it comes to action, when it comes to doing the right thing, they don't stand up for working people.
The principle behind superannuation is straightforward—it is tax-preferred investments to reduce reliance on the age pension. It means Australia's age pension is among the most sustainable in the world. International analyses of retirement savings systems show Australia's to be among the very best. European nations now struggling with the question of how they will pay retirement benefits can only look to Australia's wisdom in the early 1990s in putting in place universal superannuation.
Those of us in this place elected in recent years are fortunate to have a superannuation contribution of 15.4 per cent. Yet those on the other side say, effectively, that 15.4 per cent is good enough for them and 9.5 per cent is good enough for their constituents. They want to deny low- and middle-income Australians the superannuation contribution that they receive themselves.
Let's be clear: the legislated path is not a rapid one. It is a fairly steady ramp-up, going to 10 per cent and steadily making its way up. This is the way in which superannuation has been increased in the past. We haven't jacked it up all of a sudden; we've steadily increased it. As previous Labor speakers have noted, and as the member for Whitlam, the shadow Assistant Treasurer, has pointed out, it is absolutely clear that any wage rises that come over the course of the next year are only going to be through award increases. We don't have a whole lot of bargaining going on at the moment. Workers are not in the strong position they might be in a tight labour market.
It's very clear that, if the superannuation promise is broken, it is not going to be delivered to workers in the form of higher wages over the course of the next year. It's clear, too, that when Tony Abbott broke his promise to increase universal superannuation it didn't lead to some wonderful wages take-off. In fact, Mr Abbott presided over a government which saw the labour share of national income fall to historic lows. We've seen appalling wage growth over recent years—a period in which, if you believed the coalition, the pause in increases in universal superannuation should have led to rivers of gold in Australian workers' pay packets. It simply hasn't happened.
I sit as deputy chair on the House of Representatives Standing Committee on Economics, and there I have the opportunity to hear frequently from members like the member for Goldstein and the member for Mackellar. Modest members they are not. Not only are they not in the least humble; they don't have the characteristic of Bert Kelly of standing up against their own party. They are doing the bidding of the Treasurer and of the assistant minister for superannuation, Senator Hume. It is very clear that they are running a surrogate campaign against superannuation, and that it has moved on now from just the old coalition attacks on industry superannuation to a full-blown war on superannuation as a whole.
We've had the chair of the committee, the member for Goldstein, snowing the industry funds with questions about matters which are utterly irrelevant to the committee's mandate. The committee has a mandate to inquire into superannuation insofar as it relates to the royal commission, not insofar as it allows the member for Goldstein to pursue personal frolics against industry superannuation. But that's what we've seen in the huge amount of questions on notice that the committee chair has put to industry funds, the answers to which are taking up, in some cases, months of staff time, with the consequence that, at a time of market volatility and at a time when those funds are dealing with the government's early release scheme, they are being forced to instead deal with the ideological frolics of the coalition—all towards one aim: discrediting the system of superannuation which is world's best practice. Countries around the world look to Australia as an example.
It is not the only way in which the government's looking to undermine superannuation. We have had universal superannuation in Australia for around three decades now. Just recently we have seen, for the first time, a fall in overall superannuation balances. In June 2019 there was $2,881 billion in superannuation. In June 2020 there was $2,864 billion in superannuation, according to the APRA superannuation statistics released on 25 August. Why the 0.6 per cent fall? It's because the government decided that, at the time of a global pandemic, at a time in which markets were down, it was overwhelmingly in the interests of Australians to rip money out of superannuation! So the government put in place a superannuation early release scheme which is almost as bad as their HomeBuilder scheme—a scheme that effectively pays affluent homeowners to do renovations they would have done anyway.
Superannuation early release has seen half a million Australians zero out their superannuation. It means that people are taking money out now and losing the returns that they would have received later. Superannuation isn't there as a fund to be dipped into at times of temporary crisis; it is there to protect dignity in retirement. Once upon a time, the coalition even believed this. They talked about a legislated purpose of superannuation, which had to do with removing pressure on the age pension. But, very clearly, they no longer believe in that purpose. They see superannuation as a nest egg. They see in the pandemic an opportunity to undermine superannuation.
As AlphaBeta director Andrew Charlton has pointed out:
If someone used super money to buy a $20 pizza, that pizza might end up costing them $150 at the time of their retirement. It will be the most expensive pizza they've ever bought.
He's not just talking hypothetically. AlphaBeta analysis showed that those that took advantage of the superannuation early release scheme spent an additional $2,855 in the first fortnight. What did they spend it on? No. 1 was debt repayments, $393 on average. No. 2 was gambling. Just behind debt repayments, there was $327 on average spent on gambling. Also, an average of $207 was spent on restaurants and cafes, $157 was spent on alcohol and tobacco and $75 was spent on apps, games and music. So it's very clear that this is money being spent on discretionary items. AlphaBeta also showed that 40 per cent of the recipients didn't in fact suffer a drop in their income.
One of the impacts of the superannuation early release scheme is that Australians are going to have to spend more on the pension because there will be more pension-reliant retirees. What's ironic about this scheme is that it stands in direct contrast to the way in which the government has handled the issue of mandatory draw-down for those in the retirement phase. They've halved the required rate of mandatory draw-down. And, as the Prime Minister has said, the reason for that is so you are not 'forced to pull money out in the middle of a bad market'. That principle should hold true for young Australians. If this government cared about young Australians, it wouldn't be encouraging them to take money out of superannuation—forcing some, by excluding a million casuals from the JobKeeper program.
Another impact of the superannuation early release scheme is investment drag. We know that even those who don't take money out will suffer a hit to their retirement savings because superannuation funds are having to move money out of growth assets into cash in order to be prepared for the possibility of superannuation early release. The funds have acted extraordinarily quickly. They didn't receive any advance notice of this from the government but they've moved swiftly, and indeed industry funds have outperformed retail funds in getting money out to members within the five-day window. But make no mistake: one of the impacts of the superannuation early release scheme is that funds have to keep more money in cash and therefore they're getting lower returns than if they had that money in productive assets.
The brunt of the superannuation early release scheme is on young people. One analysis by the Australian Institute of Superannuation Trustees found that one in five people aged 25 to 34 dipped into super, 15 per cent drained their accounts and 30 per cent had less than $1,000 remaining after their withdrawal. Eva Scheerlinck of the institute said: 'The early release scheme unfortunately forced many people to choose between poverty now or poverty in retirement.'
It has led to fraud. More than 400 account holders withdrawing retirement savings through the early release scheme are now being investigated by the Australian Taxation Office. Why is that? Because the government did no checks. Exactly as we saw during the robodebt scheme, this was just a scheme that was put in place and left on autopilot. There have been no checks to see if people have a need for the money, as would normally be the case for somebody seeking early release of superannuation.
So, in that context, no wonder we've seen people spending money on gambling. No wonder we've seen half a million people zeroing out their accounts. No wonder we have a spate of fraud being investigated by the Australian Taxation Office.
You'd think that these would be critical issues for the House of Representatives Standing Committee on Economics to explore. But, when we sit down on 10 September for a hearing, we won't be following up on the mandate of the Hayne royal commission to look at wrongdoing by superannuation funds. As members will be aware, Commissioner Ken Hayne devoted considerable attention to the wrongdoing of a handful of superannuation funds, including Suncorp, BT, Colonial First State, OnePath and Mercer. Yet none of those funds has been called before the House of Representatives economics committee, and none will be called before the House of Representatives economics committee on 10 September. Instead, the Liberals have chosen to fight their tired old fights against industry superannuation. Instead, they're calling ethical superannuation funds, rather than quizzing the ethics of those who've been found wanting. The fact is the House of Representatives economics committee is being used by the chair and the Liberal members of the committee in order to pursue this government's agenda of attacking superannuation. We're not looking into impropriety uncovered by the Hayne royal commission, as is the mandate of the committee. Instead, the Liberals on this committee are doing the bidding of the Treasurer, who has said 'Let's undermine super.' The Treasurer knows that there is a budgetary cost to increasing universal superannuation—something in the order of $1 billion of forgone revenue per year for every percentage point that universal superannuation is increased. The Treasurer doesn't want to spend that money. The Liberals have always been ideologically against superannuation. If they had their way, we wouldn't have universal superannuation in this country. If coalition governments had been in office since the early 1990s, there would be no universal superannuation and our pension costs would be massive. We would be facing the same issue most advanced countries have today. Superannuation is a Labor invention. We have fought for universal superannuation and we will continue to fight to defend it here and in the Australian community.
I rise to speak on the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020, and particularly in support of the amendment moved by my colleague the member for Whitlam that calls on the government to ensure that all Australians can enjoy a dignified retirement. After all, that is what superannuation is all about—a good retirement, a retirement that enables a person to enjoy themselves after a lifetime of work. This is ultimately why Paul Keating created superannuation. Keating knew that, despite working all their lives, Australians weren't retiring comfortably. Keating knew that Australians were living longer after retirement and that the cost of pensions to the government would only increase. Keating knew that with an ageing population fewer taxpayers would be available to support the cost of that pension. This is the type of long-term responsible policymaking that we could only dream of—compared to the government of Scott Morrison, a Prime Minister who refuses to take responsibility for the challenges of today, let alone the challenges of our nation next year, in a decade or in a generation. A dignified retirement: is that too much to ask? Clearly, many of those opposite, many of those who form part of Australia's elected government, think that it is. From comments made over the last few weeks, clearly a dignified retirement should only be available for the few.
I've seen Senator Bragg, from the other place, pushing some absurd lines as to why we shouldn't pursue already legislated increases to superannuation. 'It's their money, not the government's,' says Senator Bragg. Of course it is, Senator Bragg. It was also their money before the pandemic; nonetheless, it was not available to them until retirement. This is the fundamental basis of superannuation, and people know it when they earn it. 'Young people could buy a house with their super,' says Senator Bragg. I don't know if the senator owns his own house or not, but the average super balance of a first home buyer isn't going to get anywhere close to providing the 20 per cent deposit that is needed for a house in any of our capital cities.
One thing that I agree with Senator Bragg on is that the superannuation system is not working as well as it could and isn't delivering the retirement balances needed to deliver the dignified retirement we on this side of the House are committed to pursuing for all workers of this country. Senator Bragg's diagnosis is to get rid of the super system. Talk about throwing the baby out with the bath water! To me, a much better way would be to improve the system we have, such as by increasing the rate of super to ensure Australians can save a greater amount of money. Lo and behold, this parliament has already legislated exactly that. Each year for the next five years, let's increase the rate by a very conservative 0.5 per cent, until we get to 12 per cent. This is the very least that we should be doing.
It was greatly concerning to see the Liberal Party starting to lay the groundwork last week to peel back plans for increases to the rate of superannuation payable by employers in this country. It all began with the assistant minister for super, Senator Hume, saying she was ambivalent about sticking to the government's promise to increase super to 12 per cent by 1 July 2025. The assistant minister said that we need to reconsider the increase in light of the pandemic and because it will likely suppress wage growth. But we know that this is not the case. The last time we forwent a super increase in favour of wage growth, guess what happened? According to research by Per Capita, when this government took the decision to freeze the rate of super, on the promise that doing so would increase wages, workers lost net income.
The research from Per Capita also found that workers should anticipate this to happen again if the government decides to leave super at 9.5 per cent. Per Capita has found that, as a result of the freeze on the superannuation guarantee in 2014 by this government, the average worker has lost over $4,300 in super over the intervening five years. However, at the same time their take home pay has declined by over $1,000 in real terms, giving them a net loss of around $5,425. In short, increasing super does not suppress wages.
I think my colleague the member for Lyons hit the nail on the head when he said perhaps what really bothers the Liberals about superannuation is that everyone gets it. It means that even people in low-paid work can look forward to a comfortable and dignified retirement.
In terms of reforming the system, this bill is an example of a way that the parliament can enable Australians to increase their super balances. By extending the bring-forward rule for non-concessional super contributions, the government will assist people about to retire to get as much into their account as possible. However, I would say to the government: we need you to be more ambitious. This bill does nothing to embrace the wealth-creating power of compound interest, which is fundamental to the superannuation system.
Increasing super to 12 per cent must continue. It is a slow and incremental policy change that enables businesses to plan for the increase. Despite the pandemic and the economic impact, this slow and incremental change allows businesses to recover while also doing the right thing for their workers. For too long we have known that current levels of super will not provide sufficiently for Australians in retirement. Almost 50 per cent of Australians expect to retire with less than $200,000 in super and just 19 per cent expect to be able to retire with enough to live comfortably.
To make matters more challenging, both for the individual and the country, the ratio of taxpayers to pensioners is decreasing as our population ages. Right now we have about 3.6 workers to every pensioner. By 2040 this will drop to about 2.6 workers to every pensioner. As I said, this is in part why Labor designed super, to ensure that this challenge was mitigated—good long-term economic planning to set the country and its citizens up for the future.
But this government wants to undo this planning. Despite taking home a 15.4 per cent taxpayer funded super himself, the Prime Minister has indicated he is considering the delay of the already legislated increase to superannuation. The Prime Minister claims that any decision on this front will be made in the best interests of Australians. If that is the metric, clearly, keeping the legislated increases is in the best interests of all Australians.
Instead of going backwards on super, we actually need to go further. We need to think carefully about how we improver the super balances of Australian women, in particular. We need to think about how we can mitigate the effect on super balances when women go on maternity leave, when women take time off to care for children and other relatives and when women work part time in order to balance these caring responsibilities. We need to figure out how to change the fact that the median superannuation balances for women at retirement are 20.5 per cent lower than they are for men. No-one deserves to be left behind in their retirement, but too many Australians are continuing to retire without enough.
The government's attacks on the superannuation system as part of this pandemic—allowing young people to raid their super, to raid their own retirement savings—are an example of what the member for Fenner, speaking before me, was talking about: the ideological lack of support for superannuation from this government. Without Labor, we would not have this superannuation system, enabling all Australians to look forward to a comfortable and dignified retirement. Now, more than ever, Australians are relying on the government to do the right thing and keep their promise to raise your super payments, not cut them.
Labor are proud of our superannuation system and we will fight to defend it. Universal superannuation created by Labor is a national achievement which sits alongside Medicare. It has made our nation stronger and our society fairer. That's why our superannuation system needs to be strengthened and protected, not undermined. It is critical to creating jobs and growth in the economic recovery. The $3 trillion pool of super savings not only creates a retirement nest egg for Australians; it is being invested in infrastructure and businesses which are generating wealth and creating jobs. If the Liberals cut super, there will be fewer funds to make the investment needed to create jobs and drive growth to boost the economic recovery.
I rise to support the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020. It gives effect to the 2019-20 budget measures designed to give greater flexibility to Australians over 65 with their superannuation. Concurrently, if you're over 65 years of age, there are caps on the maximum concessional before-income-tax and non-concessional after-income-tax contributions you can make into your super each year. To give effect to more flexibility in the super system, this bill amends the Income Tax Assessment Act 1997 to enable individuals aged 65 and 66 to make up to three non-concessional superannuation contributions under the bring forward rule. The current non-concessional superannuation contributions cap is $100,000.
The associated regulations will increase the cut-off age for spouse contributions from 70 to 75 and they will also increase the age, from 65 to 67, at which the work test starts to apply for voluntary concessional and non-concessional superannuation contributions. The Treasury has done a good job on consultation with the bill and the explanatory memorandum provided to stakeholders. It has been open to the public for comment for some time. I support these measures.
Making additional super contributions is a sensible idea and can lead to a more comfortable retirement. By lifting the age for super contributions for non-concessional and spousal contributions as well as a work test, individuals will have more opportunities to do this. Whilst this bill assists those wanting to put money into their super, there are further considerations for the direction of super, especially in the current economic context, that I would urge the government to consider.
It's been 30 years since the introduction of super. Australians now have some $2.7 trillion tucked away for their retirement. Super is one of the three pillars of retirement income. It works in concert with voluntary savings and property holdings, and it's integral to taking the pressure off the aged pension and the public purse. I've had constituents writing in frequently about the recent, and maybe not always so recent, assaults on the system by coalition members of this parliament, and aligned think tanks, that want to make super voluntary. To quote former Liberal leader John Hewson:
How can it be justified that a decision on compulsory super which is a fundamental element of a long-term national retirement incomes strategy should be made on "current circumstances"?
I would urge caution and restraint.
We only need to look at other OECD countries to see that many people have little saved for retirement and the uncertainty and anxiety that that results in is not a good outcome. According to the Australian Institute of Health and Welfare, in 2017, 15 per cent of Australians, or some 3.8 million, were aged 65 and over. We know that this proportion is growing steadily as life expectancy rises. Over the coming years, young people will shoulder even more of the tax burden to support this ageing population. The Grattan Institute projects that the number of 15 to 64 year olds, for every person aged 65 and over, will be 3.2 by the year 2054-55, falling from 7.4 in the mid-1970s. Without compulsory super, this trend would lead to poor quality of life for a whole generation of young Australians that will be called on to shoulder even more of the aged-pension costs as our population ages. This is already happening with private health. We must do more to support our youth, which means rejecting calls to interfere with the integrity of the system.
We can't talk about superannuation in Australia without talking about where it is not good enough. In relation to women, it is not a good enough policy. It needs to be improved. It's well overdue for this to be the focus of the government.
The statistics are dire. Women currently retire with 47 per cent less superannuation, on average, than men. Once women reach retirement age, approximately 70 per cent of them have less than $150,000 in super. It's not good enough for a country like Australia. Forty per cent of older single retired women live in poverty and experience economic insecurity in retirement. Women over 55 are the fastest-growing demographic of the population for homelessness. The issue starts early in women's working lives. Women take, on average, five years out of the workforce to care for children or family members. According to the Workplace Gender Equality Agency, it's during these years, when many women are balancing paid work with unpaid caring responsibilities at home, that the gender pay and super gap begins to widen considerably.
There are solutions. This problem is persistent and baked into many of our social and economic policies, and it is time in 2020 that the government address these issues. Just like the long-lasting problems, the solutions have been discussed at length and they are there for an ambitious government to take on. By amending the Paid Parental Leave scheme, we can increase female workforce participation and decrease the wage and super gap. Australians are currently able to access up to 20 weeks of parental leave. This is well below the recommended amount, as suggested by the World Health Organization, of 26 weeks and it's well below the OECD average of 55 weeks. We should move to parity with our international peers.
Parental leave itself must be more equitable. One of the big problems is, of course, that 99.74 per cent of parental leave is taken by women. I would be curious to do an analysis of all the male members of this parliament to see how many took parental leave. We need policies that support men who want to take time out to take care of their children.
We have other levers at our disposal. The childcare subsidy works directly to increase female participation in the workforce, reducing the gap, and it is the main way the government can assist families with childcare costs. Many women are finding that the loss of benefits, like family benefit and the Medicare levy, as more hours are worked is a disincentive to further work. Increasing the childcare subsidy would overcome these disincentives and increase workforce participation.
The benefit to the wider economy would be substantial. The Grattan Institute projected that it would boost GDP by $11 billion annually and result in $150,000 in higher lifetime earnings for the typical Australian mother. This should be the priority of the coalition government. According to the Australia Institute, if we took it one step further and emulated the Icelandic free child care and world-leading parental leave scheme of three months for either parent, shared equally and equitably, then Australia's GDP would be $140 billion more, or some 7.5 per cent higher.
I get a lot of feedback on this issue from my constituents in Warringah, and we're coming up with solutions. A local business called Super-Rewards is fusing ecommerce and tech to try and solve the women's super gap. Founded by two women, both mums who are tired of policy inaction, it will allow retailers to top up your super when women shop online. Participants are effectively making voluntary micro-contributions that are a substitute for all the unpaid and part-time work that does not qualify. It's compatible with any super fund, including self-managed super funds, and they already have over 120 retailers on the platform. By combining government policy and private sector ingenuity, we can make sure that women all over Australia have a safe and comfortable retirement.
There is one more issue that I need to raise today in relation to the super system—specifically, compliance. The government earlier this year raised and extended an amnesty to businesses who had not paid, or incorrectly paid, super to their employees. Employers have had a six-month window until 7 September 2020 to disclose, lodge and pay any unpaid super guarantee amount for their employees. Employers can claim deductions and not incur administration charges or penalties during this amnesty. But there's a catch. Paradoxically, the amnesty may lead to many businesses being forced—