House debates

Wednesday, 28 February 2024


Superannuation (Objective) Bill 2023; Second Reading

6:32 pm

Photo of Angus TaylorAngus Taylor (Hume, Liberal Party, Shadow Treasurer) Share this | | Hansard source

I move:

That all words after "That" be omitted with a view to substituting the following words:

"whilst not declining to give the bill a second reading, the House:

(1) notes:

(a) the former Government delivered major reforms to superannuation that supported better member outcomes, better performance, and transparent governance, and that were driven by the clear understanding that superannuation is Australians' money;

(b) the Prime Minister and the Treasurer promised no changes to superannuation prior to the election and the Prime Minister promised 'no major changes' to superannuation in February 2023, but have since broken that promise by introducing a new superannuation tax on unrealised capital gains, which is a world first wealth tax that will hurt farmers and family businesses and force Australians to pay tax on money they have not earned; and

(c) that the Government's failure to index their new superannuation tax means up to two million young Australians earning average wages today will face a wealth tax, according to analysis of Treasury modelling published in The Australian; and

(2) calls on the Government to abandon its broken promise on taxing superannuation".

I rise to talk on the Superannuation (Objective) Bill 2023. Australia's ageing population and lower rates of homeownership sharpen the importance of our retirement income system to all Australians. Indeed, those of us on this side of this place are absolutely convinced of the huge importance of our retirement income system, a system that delivers to Australians throughout their retirement.

Right now we have $3½ trillion in funds under management—within the superannuation part of that system, at least. That's more than Australia's total GDP. Our superannuation system is embedded as a key institution, not just in our retirement system but right across our economy. With that enormous institutional weight comes an enormous responsibility, a responsibility to every single Australian who has invested in superannuation over time. Let's be clear: it is Australians who have invested in superannuation, not the government, not employers; it's Australians who have done this.

In his 1991-92 budget speech, John Kerin stressed that the super guarantee's purpose was 'to ensure that all Australians have a secure income in retirement'. When the legislation was introduced in April 1992, John Dawkins called the superannuation guarantee 'the foundation for income security and higher standards of living in retirement for future generations of retirees'. Dawkins stressed that the purpose of super was to build Australia's pool of savings and to take pressure off the budget, not supplement it. It was never envisaged that superannuation be used to plug revenue gaps, to extend fiscal policy or to deliver on other government policies, other than ensuring that people have access to a good retirement. I think it's fascinating to go back to those debates—debates that I remember looking at at the time. But, going back to those, we observe Labor backbenchers breaking from the government of the day and arguing that the super guarantee should be complemented by investment controls for national projects, investments and secure employment for union members.

Above all, this is interesting because it's clear from the contribution of those backbenchers that this was not the intended purpose of super at the time. It was very clear from the senior ministers who spoke on the issue that all of those purposes were not the intended purpose. It's also interesting to observe the likes of Kim Beazley crediting Robert Menzies for the idea of superannuation from his national insurance policy from 1950, just a year or so after he was elected as the first Liberal Prime Minister after the war.

This positions Australia's super regime in the scheme of its welfare debates. Superannuation contributions are the closest thing Australians have to a social security tax, but Australia made a conscious decision across the Fraser and Hawke governments to abolish specific social security taxes through the gradual dismantling of the National Welfare Fund.

The arrival at a compulsory contribution scheme came after 70 years of debate, started by the Cook Liberal government in 1913 and pursued unsuccessfully by the Lyons and Menzies governments. Menzies preferred a contributory scheme because it preserved self-respect, remained liquid and removed the need for means testing that forced Australians to 'prove their poverty'. He didn't want Australians to have to prove their poverty, and so a contributory scheme was a natural consequence of that. This historical context is important because it reminds us that the trade-off to compulsion must always be choice. If you're going to have compulsion—and we do in our contributory scheme—you must have choice. These are private savings, not public savings. Fundamentally, super is Australians' money, not the government's. This is essential to understanding the original purpose of super and the purpose it still has.

With the economic challenges here now, and I've outlined them many times in this place, it is more essential than ever that our superannuation scheme remains focused on the end user—the consumer, the members. I should point out that we've seen a collapse in disposable incomes for Australians in the last 18 months—8.6 per cent in 18 months. That's $8,000 that's disappeared from every Australian's standard of living. They're responding to this in a number of ways. They are responding by cutting back on both discretionary expenditure and, sadly, in some cases, essential expenditure. We see that in the people turning up at food banks who would have never had to turn up at food banks 18 months ago. We see it in them taking on extra work—extra hours. But we also see them digging into their savings. In fact, savings from disposable income have almost entirely disappeared. They are down to one per cent. It is completely unsustainable. Australians are essentially not saving any more. Finding a way to make sure that everyone in this place is doing everything they can to ensure that the investments Australians make are delivering the best possible returns—and are being managed for those investors, not for the government—is more crucial than it has ever been. Additional mandates, targets or missions for superannuation over and above the purposes of the investor, the individual, the Australian, miss the fundamental point of super spelt out in the Hansard by members of the Keating government: 'The basic principles of superannuation are very simple. They are about providing for people, for Australians, in their retirement.' When the Treasurer argues that superannuation should be used for nation building, he doesn't just misunderstand that it's not his money; he fundamentally misunderstands how the economy works.

Arguments that super is not doing enough by delivering returns to members are Trojan horses for directing funding to areas that the government of the day determines are priorities. But it's a Trojan horse that we should not adhere to. This Treasurer, in his long, 6,000-word essay that he spent his first Christmas as Treasurer writing, decided that superannuation wasn't Australians' money; it was his money to be spent as he saw fit on the nation-building projects that he prioritised—no doubt, in consultation with his mates amongst the union officials. It was going to be his pick about where that money was to go. But it's Australians' money; it's not a piggy bank to be spent or a tax to fill budget holes. Labor does not have a mandate to tax and spend Australians' super.

Alongside that, we do see Labor taking the view that one way they can get at Australians' superannuation money is not just by directing how it's spent but by taxing it more. Labor's new superannuation tax is an absolute shocker. It's a doubling of taxation on many Australians' retirement savings. It's a regime that proposes a different approach for a farmer or small-business owner than for a public servant, judge or politician. It's extraordinary that we could be at a point where a public servant, judge and politician get different treatment for their superannuation than a farmer or small-business person would get, but that is exactly what this government has chosen to do. We know who they don't like; we know who they can't unionise—it's the small-business person or the farmer.

Those lucky enough to have a defined benefit scheme—and, of course, that includes the Prime Minister—will enjoy deferred payments and rates of tax set entirely by regulation, by the government. The government will be deciding how much the Prime Minister will be paying in tax. It won't be done by legislation. That's what is so extraordinary about the legislation proposed by this government. The Prime Minister will have a guaranteed income stream. I certainly hope the Prime Minister will exclude himself from the discussion about that regulation, but his income over the course of his life will be determined by that regulation to be decided by the government.

Everyone else faces an unindexed annual tax on unrealised capital gains. Now, unrealised capital gains are unrealised. It would seem, to me, to be self-evident that an unrealised capital gain is unrealised, but it is. The problem with having to pay tax on something that's unrealised is that you've got to realise it! If you're a small-business person or a farmer—and, let's face it, that's a very big proportion of the people who are in self-managed super funds—the asset that you've got to realise will often be a fundamental part of your business. I see what this government is saying: you're going to have to sell up part of your business to pay tax. But those opposite simply don't understand how small-business people and farmers work. Perhaps, even if they do understand, they don't like what these people do and they don't care.

What we have under Labor's division 296 tax is an unindexed wealth tax—it is a wealth tax. We're going down this pathway in this country, as far as Labor is concerned, and, according to Treasury's own case studies, this policy will double the taxes on the retirement savings of an average 21-year-old today. An average 21-year-old today is going to be subjected to this tax at exactly the time when we need Australians to be saving more. Of course, it's probably unreasonable to expect that, having seen their standard of living smashed so hard in the last 18 months, they will be able to save anything. But we desperately need Australians to be able to save.

This tax is also a tax on aspiration. It's the first of many policies that weren't taken to an election that are now standing as broken promises on taxation, flaunting well-established principles of tax reform that, when bundled across the economy, will make Australians worse off. We know it will primarily hurt people who utilise, as I say, self-managed super fund structures. Combined with other changes like those to the NALI provisions and with the response to the Quality of advice review, it's clear that it's part of a broader attack on self-managed superannuation. It's a regulatory approach that favours one form of superannuation fund, particularly—let's face it—industry funds run by the unions, over another. I have no problem with industry funds. I think they're an important part of the retirement income system. But what matters is that all the savings in these funds are treated without discrimination. Of course, that's not what we're seeing in what Labor is proposing.

As I said, superannuation is compulsory, but with that option should come choice. Australians can't opt out, even if it means they face lower take-home pay and higher non-compulsory payments than the OECD average. The trade-off must be choice about whether they use an industry fund or establish their own fund. There must be choice about the risk profile of their investment mix and whether they use their savings for a first home or for investment in bonds and equities. It's an extraordinary situation right now. In your superannuation fund, you can invest in anybody's home except your own. How did we get to that? We know the single best indicator of whether someone is going to have a great retirement is whether or not they own their own home. It's the single most important indicator.

The idea that you can consider what's right for the retirement system without thinking about the implications for homeownership is just plain wrong. We need to be able to make sure that Australians can have that balanced retirement system, which includes homeownership. That's why Peter Dutton is—and a Peter Dutton government would be—committed to allowing Australians to access their superannuation to secure a housing deposit. Under our policy, first-home owners and women over 55 will be eligible to draw down on their superannuation for a deposit while preserving the value on the sale of the home back into their superannuation funds. It's not sufficient for a compulsory retirement system to stay silent on an institution as iconic in Australia as homeownership. It's such an iconic institution for our retirement system.

It's certainly one of many policies that we're committed to that will improve outcomes for Australians from our retirement system. The policies also include implementing in full the Quality of advice review in a timely manner. We are waiting for the Assistant Treasurer to do that. He's getting started, but, I've got to say, he is certainly dragging the chain on implementing it in full in a timely manner. We are supporting sensible deregulation of our financial system to reduce complexity and red tape and improve customer outcomes, and we are driving a revitalisation of our financial advice industry to ensure that Australians can access the finance and also the advice they need. That advice is fundamental to them being able to make the right choices for their circumstances.

As we develop further policy, the first principles we will apply throughout are that superannuation is Australians' money—not the government's, Prime Minister's or Treasurer's money. As research has pointed out this week, when it comes to super, Australians trust themselves first, funds second and the government last. I'll repeat that, because it's incredibly important. Australians trust themselves first, funds second and the government last. That's why our superannuation system must put the individual, their choices and their control at the heart of the entire system. The government doesn't seem to get this yet, and certainly the Treasurer doesn't, as we saw in his 6,000-word essay. As I pointed out, the government should not only be cautious about raising taxes on Australians' super but also be cautious about watering down consumer protections on APRA regulated funds or trying to direct Australians' retirement savings to meet political goals rather than the goals of individuals.

Everything I'm saying here is part of a broader economic plan to be focused on Australians' aspirations, boosting productivity and growing the economy so that every Australian can benefit from a bigger pie. The way we deliver prosperity and aspiration to every Australian is not by dividing up the pie in new and different ways; it's by growing it. It's by having small-business people, farmers and others right throughout the economy making investments, taking risks and making choices that can realise their aspirations. But, in the process, when an Australian has a go—when they build a business, when they make investments and when they take risks—they don't just benefit their own families; they benefit others. They employ others, they support the community, they grow country towns and they grow the suburbs they live in. All of that flows from empowering people to make their own choices, to make their own investments, to take risks and to do the things they want to do in their lives. That means supporting small-business aspiration and entrepreneurship.

That's why we've said that we will bring back accelerated depreciation to the levels and thresholds it was at prior to COVID. Labor has scaled it back. As I've said, they're not big supporters of small business, but we will bring that back to those levels that we know had big impacts in our suburbs and regions. I know the member for Forrest saw it in her part of the world, and I certainly saw it in my part of the world. We will deliver an incentive-based tax system that returns bracket creep and supports lower, simpler, fairer taxes. We will focus on rewarding work, not welfare. That's why we've said that we'll support Australians who are on the pension to take on extra hours of work without being penalised. We will focus on containing the growth of government spending and overreach, not committing to the failed referendum we saw last year—$450 million.

We will not waste money on spin units. This doctor of spin we have as the Treasurer is not a doctor of economics. It's very important that everyone understands that he's a doctor of spin. His thesis was on Paul Keating. This Treasurer has decided that he's spending $40 million on a spin unit. He's setting it up. He could do with a few economists, I'd say, because his economics is very dodgy—voodoo economics most of the time. I think he would benefit greatly from having a stronger backbone in the economy. We're not seeing that. Instead, he's decided to spend $40 million on a spin unit.

Containing the growth of government and waste is enormously important, but getting the basics right is too: affordable, reliable energy; high-quality education; and well-targeted critical infrastructure. We'll continue to announce policies, as we have been, in those all-important areas.

As I said, Australians are facing a real challenge right now. Our retirement system is crucial to realising their longer term aspirations and dreams for their own retirements. The first port of call for this government should be realising that it is a system committed to the interests of the individual investor, the individual Australian who has invested in that system. That's where it should start, and that's where it should end. We will continue to hold the government to account on that all-important issue.

Photo of Ross VastaRoss Vasta (Bonner, Liberal Party) Share this | | Hansard source

Is the amendment seconded?

6:54 pm

Photo of Keith WolahanKeith Wolahan (Menzies, Liberal Party) Share this | | Hansard source

I second the motion and reserve my right to speak.

Photo of Carina GarlandCarina Garland (Chisholm, Australian Labor Party) Share this | | Hansard source

I'm really pleased to support the Superannuation (Objective) Bill 2023, enshrining an objective of superannuation into legislation. This legislation defines the objective as:

… to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.

Our government is moving to enshrine an objective of superannuation in legislation as part of our agenda to strengthen and maximise the benefits of the nation's superannuation system, a system that is a proud Labor legacy.

As the Treasurer has already indicated to the House, this simple and straightforward objective will serve as a guide for future governments, regulators, industry and the wider community. These changes will instil greater confidence in Australia's superannuation system.

With approximately 16 million Australians holding a superannuation account, and the total value of funds under management now $3.6 trillion, it represents the fourth-largest pool of retirement savings in the world. Currently 1.6 million people aged 65 or over receive income from a superannuation product. This will more than double over the next decade, as a further 2.5 million people are expected to retire with a superannuation account.

Our world-class superannuation system, introduced by a Labor government to give dignity and retirement to working people, is not surprisingly the envy of the world. The Superannuation (Objective) Bill will require members of parliament who introduced bills which propose changes to the superannuation system to provide a statement of compatibility. This statement will need to explain how the bill is compatible with the legislated objective of superannuation. It will also require makers of regulations related to superannuation publish a statement of compatibility which explains how the regulations are compatible with the legislated objective.

We know that, for the last decade, superannuation policy has, unfortunately, been costly, confused and chaotic, with the system being undermined by previous governments. Those opposite raided the superannuation system for their own purposes, with a devastating impact on the retirement savings of millions of Australians. Of particular concern are young adults in the 20 to 25 age bracket, who stand to have the equivalent of $75,000 to about $90,000 less in retirement than they otherwise would have had. And that is shameful.

Those opposite allowed for the draining of $36 billion in retirement savings across a matter of months—that money, gone. The short-sightedness of those opposite means that this will result in tens of billions of lost retirement income and earnings when we consider lost interest. These were savings that were meant to be preserved and invested so that they lasted a lifetime and provided for dignity retirement. Legislating an objective of superannuation will help prevent this sort of shortsightedness ever happening again. Subsequently, making sure the focus of superannuation is on the best interest of members, not those interested in ideological battles, is the intent of this legislation.

The objective will help ensure superannuation delivers on its foundational promise of providing a dignified retirement for more Australians. It will secure the future of superannuation by embedding its purpose into law and result in any further changes to superannuation in the future to be in accordance with the objective, not to undermine it. The requirement for ministers to produce a statement to parliament explaining how any proposed changes to superannuation are compatible with its legislated purpose form part of these important changes. Policymakers will be held to account when considering changes that affect Australians retirement savings.

It's important to highlight that this legislation also does not change the ability of members to gain early access to their superannuation on certain grounds or in cases of genuine financial hardship. There are over five million Australians at or approaching retirement age, and that is more than at any time in our nation's history. Delivering better retirement incomes has therefore never been more important. This bill is an important step towards a stronger superannuation system for a stronger economy, and it has been met with support from the superannuation industry.

Australia's retirement income system has traditionally been viewed as having three pillars: the social security means tested age pension, the compulsory superannuation contributions made under the superannuation guarantee regime and additional private savings. We also know that superannuation is a significant source of capital, contributing to the strength of our financial markets. There are also opportunities to leverage superannuation investment in areas of national economic priority where it aligns with the best financial interests of members. Having a clear, legislated objective of superannuation will help ensure these broader benefits of super can be maximised.

The superannuation guarantee was introduced in 1992. That Australia's superannuation balances are $3.6 trillion and the fourth-largest pool of retirement funds in the world is quite remarkable. Whilst at the time the legislation did not include a statement about the objective, the then Treasurer stated that:

… by the beginning of the next century, virtually all employees will be accumulating substantial superannuation savings to help fund their retirement income.

He added that this:

… will also enable future Commonwealth governments to improve the retirement conditions for those Australians who were unable to fund adequately their own retirement incomes.

This is an important point because there is in this the seen and the unseen.

When those opposite allowed superannuation accounts to be raided to the tune of $36 billion, there was a significant cost that could be seen in the medium term with respect to lower retirement savings, particularly for those aged 20 to 25. What's not seen and not as easily measured goes the statement that the Treasurer of 1992 made about the Commonwealth's ability to improve the retirement conditions for those Australians unable to adequately fund their own retirement. That's namely the poor and the vulnerable, including people living with disability as well as those coming from entrenched disadvantage. Time will show that there will be an invisible cord that directly links the decisions of those opposite with the marginalised and vulnerable who are unable to fund their retirements adequately in the years to come because of the opportunities, investment and interest lost. That invisible cord was created when those opposite chose to raid the superannuation system due to their own ideology and to their own benefit. Rather than take responsibility for being good economic managers, they abdicated responsibility and allowed the previously quarantined retirement savings of Australians to be their de facto stimulus package, a package that we are still reaping the effects of through persistent and high inflation. That's precisely why they have their fingerprints all over the cost-of-living challenges we are continuing to navigate through now.

Opposition Members:

Opposition members interjecting

Photo of Carina GarlandCarina Garland (Chisholm, Australian Labor Party) Share this | | Hansard source

I really do wish that those opposite took more seriously the gift of government they had for a decade and the contributions that they made to the situation we find ourselves in now instead of laughing in the chamber.

On this side of the House, we are not afraid to make the right decisions and ensure that the marginalised in our community are able to enjoy a dignified retirement. We have not just a short-term vision; we have a medium- and long-term vision. That is what superannuation represents. With this bill we are protecting the objective of superannuation. It was, after all, a Labor government that introduced the superannuation guarantee and it is only a Labor government that will ever care enough about it to protect it.

That's why establishing the Superannuation (Objective) Bill at this time is so important. We know that this will be a defining decade for our nation. This demands defining the role of superannuation to protect the gains that have been made and to pursue its greater potential in the interests of all Australian. The objective will help ensure superannuation delivers on its foundational promise of providing a dignified retirement for more Australians. In the future, any proposed changes to superannuation legislation will be judged against the objective. This will make policymakers more accountable when considering changes that affect Australians' retirement savings. This objective will not alter superannuation trustees' existing obligations or provisions around the early access to superannuation on compassionate grounds.

Superannuation is a significant source of capital. It contributes to the strength of our financial market, and there are opportunities to leverage superannuation investment in areas of national economic policy and priority where it aligns best with the financial interests of members. Having this clear, legislated objective of superannuation will help ensure these broader benefits can be maximised.

Our government is committed to protecting and strengthening the superannuation system that all Australians should be proud of, to ensuring that we continue to deliver a dignified retirement to more Australians and to helping to build a stronger and more resilient economy.

7:05 pm

Photo of James StevensJames Stevens (Sturt, Liberal Party) Share this | | Hansard source

I indeed rise to speak in favour of the amendment moved by the shadow Treasurer, the member for Hume, and commend his contribution to the House as the lead speaker for the coalition on this. As he indicates, we won't be standing in the way of this bill passing through the House but are very much in favour of this going to a Senate inquiry process to look at some issues that were well canvassed by the member for Hume in his contribution.

I take the opportunity that his amendment provides in the question before the House to touch on two matters. The first is that, of course, we in the coalition very much support and are committed to a strong and robust superannuation scheme, and we absolutely want to support and encourage people to provide for their own retirement. They are doing the economy and the taxpayer a great service by providing for their own retirement. Equally, we completely support the proper, comprehensive social safety net that is in place for people who aren't in a position to finance their own retirement through the superannuation system. We thank those that can. Whenever we have legislation that comes through this parliament regarding superannuation, I always thank the great self-funded retirees who have done so much for this country through their careers and have also saved and provisioned for their retirement. They should be thanked for that, and we should support them in every way that we can.

When there are measures that come in here and do the opposite, on this side we bitterly oppose them. When people describe superannuation as a honey pot, lick their lips and start to think about how they can plunder it and get their grubby mitts on it, we in the coalition are very concerned. We will keep an eagle eye on a lot of proposals that come anywhere near the comments that were made by the Assistant Treasurer, describing super as a honey pot. Any proposals to increase the taxation burden on people who can't re-enter the workforce—they can't go back and say, 'Oh, now that I know about these new taxes, I would have saved some more, I would have worked a few more years or I would have made some different decisions,' because they made the mistake of taking the government at their word and, during an election campaign, not expecting that after it, having gone to the 2019 election and proposed all sorts of taxes and then having lost that election and ruling out ever doing anything like that again, they would say, 'We're now going to change the tax treatment on self-funded retirees,' who are completely stuck and stranded in the financial circumstance that they thought was enough to provision for their future.

As the shadow Treasurer points out, although we obviously bitterly oppose the fundamental position of ratcheting up taxes on superannuation, it is particularly appalling that we have a situation where tax treatment is going to change and not be indexed with inflation. One of the great concerns for us is bracket creep, which we've talked a lot about in this chamber with other legislation that has come through recently and is going to be dramatically affected by bracket creep. Bringing in a new tax rate on super and not having it indexed to inflation is another awful example of bracket creep that is going to affect a growing percentage of Australians. If you're a young Australian, you have a very high likelihood of ultimately being caught up in this higher taxation regime. As the shadow Treasurer points out in his amendment to the second reading, this is absolutely appalling and not something that anyone was asked to vote for or against. They'll get that opportunity at the next election. We have a very clear policy position in this regard. But we are very concerned about that and, in the process of inquiring into this bill through a Senate process that may or may not transpire, the impact of these things on younger Australians in particular will be an important thing to look at.

The other thing I want to touch on through the amendment to the second reading that the shadow Treasurer has moved is our positive plan to give people access to their own money to help them get into the housing market. That is our policy position that we took to the last election and that we are taking to the next election. We would allow people to access a portion of their superannuation to help them get into the housing market. What's the great dream for people, particularly when they reach retirement age? It's to have a healthy superannuation and to own your home. If you retire, own your home and have healthy superannuation, then you have a high degree of confidence in your economic independence going forward. Using superannuation to help people get into the housing market as early as possible—certainly earlier than they would have been able to if they didn't have access to super to support them doing that—helps provide for people's retirement and their savings for retirement.

We have a potential nightmare scenario as things stand, as people are getting into the housing market later and later, possibly in their 40s or what have you, and are reaching retirement without having paid off the mortgage on their first home. It's a perverse situation where, because we didn't let them access their super to help them get into the housing market, they're using the majority of their super when they retire to pay off the mortgage that they started so much later in life because it took them so long to build a deposit to get into the housing market in the first place. It's complete madness.

Now we even have the crazy situation where the superannuation companies are talking about building homes with our own money to rent to us. I put my money into superannuation, and I can't access it to help me buy my own home, but my super fund will buy a home using my money and rent it to me. In the coalition, we think our money is our money, and we absolutely believe in the importance of having a system where people save and provide for their retirement. Dare I say that some of the strongest supporters of the coalition are those exact people. Self-funded retirees are some of the strongest supporters of coalition governments, and we support super, but the proposal and policy position that we will take to the next election is about helping people leverage their super to get into the housing market earlier.

By getting into the housing market earlier, they will obviously have a much stronger equity position—hopefully a 100 per cent equity position—in their home much sooner. We also know that, through our policy, when you sell that home that you purchase with any support from your super fund, you have to put the money back into your super fund. We also know that the property market—and we hope this is the case fairly consistently into the future—is a very strong, safe, stable investment in Australia. In fact, it's almost too good in some circumstances, and that's part of the problem at the moment. The market is growing very strongly, and that along with high interest rates contributes to making it a much higher challenge for people to get into that market.

We have young people with a lot of money in superannuation, which is excellent, and that's their money. It's coming out of their pay packets and going into a fund to be held in trust for them, to provide for their future. There's absolutely nothing better for providing for your financial future than investing in your own home. We have a situation where people can't access that to help them get into the property market, and they're therefore getting in much later and bearing a much higher burden at one of the most difficult times for them financially. That's probably when they also have high costs around raising a family and meeting all the costs of that. They also, quite reasonably, want to have a degree of quality, enjoyable leisure time with that family. That includes things that might seem like luxuries but which are pretty reasonably part of the Australian dream, like going on nice holidays, spending time with the ones you love and enjoying yourself when you're with the ones you love. We don't think people should have the burden of disproportionate sacrifice because the ideological blinkers say, 'Super, which is our own money, can't be used to do anything like provide for your financial future by helping to get in the housing market sooner.' So I particularly look forward to talking to the young people in my electorate and to the—regrettably ever-growing—cohort of people in my electorate that are not yet in the housing market, about this policy position in the lead-up to the next election.

Housing and housing affordability will be one of the most significant deciding factors of the next election. I'm very proud that already we can say we have announced policies that we can communicate to people and explain how it is going to help them use their own money to get into the housing market. I have to say, it runs at about a 100 per cent success rate, when you talk to young people who say they can't get into the housing market and are struggling to save for a deposit. When you say, 'Wouldn't it be great if you could use part of your superannuation to help you buy a home?' No-one says, 'Are you kidding? I'd hate to do that. I'd rather scrimp and save and pay rent for another 10 years to get to the point where I have a deposit. Then, when I've paid all that dead rent money for 10 years, I'll be getting into the housing market 10 years late and find that, by the time I retire, the super I couldn't use to get into the housing market 10 years earlier I now have to use to pay off the mortgage that I haven't been repaying for the 10 years that I would have been if I'd got in 10 years earlier.' It's a threshold question as to whether we want to back people to make their own money to make their own decisions about their financial future, and provide for their retirement by using their retirement savings to ensure that, by the time they are drawing on those savings, the first thing they are doing with them isn't paying off debts because they got into the housing market so late.

This is the party of Robert Menzies, the party that prides itself on homeownership and supporting people to get that economic independence for them and their families of owning a home. This is an issue that is not only vitally important for us to prosecute at the next election; it's also vitally important if you believe in Australia and in the Australian dream that everyone should have a fair and reasonable ambition to own a home. It's heartbreaking that there are so many Australians who are just saying in growing numbers: 'We've essentially given up thinking that we will ever be able to buy a home. And we will be renting, essentially, for life.' We've failed in this place if we just throw our hands up and say, 'Well, so be it. That's just life.' If we're getting excited about super funds building homes to rent to people with their own money, there is something seriously perverse going on with the policy settings in housing and retirement savings.

So I look forward to prosecuting those arguments in the context of this bill and the shadow Treasurer 's second reading, which talks about the objectives of superannuation. There has never been a more important time for this debate. Superannuation is about provisioning for our future and saving for our future. One of the best things that it can be used to support is people saving through homeownership and owning their own home outright by the time they enter retirement. I commend the shadow Treasurer's amendment to the second reading to the House.

7:18 pm

Photo of Brian MitchellBrian Mitchell (Lyons, Australian Labor Party) Share this | | Hansard source

I do hope that, when the honourable member for Sturt is speaking to those young people in his electorate, he remembers to tell them that he has voted against Help to Buy, that he has voted against the Housing Australia Future Fund—indeed, that he's voted against all the housing measures this government is taking to get more young people—more lower and middle income people—into housing, to deal with the 10 years of failure that he and his colleagues left this country with.

God help Australia if the member for Hume was ever to become Treasurer. I had the misfortune of hearing some of the contribution from the member for Hume when he was moving his amendment. I will never get that time back. I'm getting old. The man who was perhaps Australia's worst energy minister—who never landed a cogent energy plan, who hid a wholesale energy price rise during an election—had the cheek to criticise the member the Rankin, the Treasurer in this Labor government. This is the Treasurer who inherited the rising inflation and rising interest rates from those opposite but whose work has seen those twin dragons moderate. This is the Treasurer who has delivered a surplus, something those opposite never delivered. This is the Treasurer who is putting billions of dollars of debt repayment onto a debt mountain that those opposite more than tripled over a decade. This is the Treasurer who is overseeing record employment growth, real wages rising after a decade of deliberate liberal wage suppression. And this is the Treasurer who has delivered tax cuts for every single Australian taxpayer. So we'll take no lectures from the member for Hume. It takes more than a soundbite and a Hollywood glare into the parliamentary cameras to be up to doing the job of being Treasurer of this country.

We're here tonight to talk about the importance of superannuation. It is an absolute fact that the Australian superannuation system is the envy of the world. It's a seductive argument that the member for Sturt puts forward. However, it's so full of economic holes when they talk about accessing super for your mortgage, because if you raid your super at, say, year 5 or year 10 of having super, you're not just taking the money out, you're also killing the power of compound interest for the next 20 or 30 years of your working life. When you take money out early in super, you never recover that lost money and the lost power of the compounding interest, so you will retire with much less, not a little bit less. The more money you take out at the start, the much less you retire with, and you'll never have enough to live comfortably in retirement.

Superannuation is an integral part of Australia's retirement income system, where the three pillars of compulsory superannuation, the aged pension and private savings work together to ensure that Australians have a comfortable income in retirement. Superannuation is now a $3.5 trillion system, representing the fourth largest pool of retirement savings in the world. It's a significant vehicle for economic investment and continuing economic growth. It is the envy of the world. Overseas governments look to this example about how to do it right, yet those opposite always want to dismantle it.

Labor is proud to have built superannuation and we are going to protect it. Previously the preserve of the executive classes, it was the Hawke-Keating Labor government of the early 1990s who extended the benefits of superannuation to every Australian worker, with Treasurer John Dawkins, the then member for Fremantle, announced the superannuation guarantee in 1992. Like all great reforms that Labor has sought to introduce on behalf of everyday Australians, the Liberals opposed superannuation for wage earners—the sky would fall in! Just like with Medicare and everything we do to make life better for working people, the Liberals opposed it. The Liberals were quite comfortable with wealthy Australians—the businesspeople and the highly paid top classes of the public service—enjoying the benefits of tax breaks and compounded interest, but they twitched their nostrils at the idea that it should be extended to the commoners.

The Labor government endured the usual criticism from those opposite and their noisy barrackers, but we persevered. At the time, three per cent of a worker's earnings were set aside for compulsory super, with that percentage always set to grow over time. By now, in 2024, it was meant to be at 15 per cent for all workers. It's already there for Commonwealth public sector workers but it's not there for the rest of the community. Of course, a couple of decades of Liberal government between then and now resulted in the usual go-slows, delays and excuses, which has resulted in billions of dollars less going into the retirement incomes of Australian workers over that period.

The superannuation guarantee rate will increase to 12 per cent in July 2025. Along with voluntary contributions that can be added with tax concessions, encouraging people to save more money, it will ensure that more Australians can enjoy a higher standard of living in their retirement.

We all know why superannuation was created. We talk about it all the time. It's to provide a comfortable retirement income. But, incredibly, there's nothing in the legislation that formally states this objective. Given that those opposite take every opportunity they can to raid superannuation for other purposes—and we've seen from the contributions tonight that that continues—the Albanese Labor government is determined to ensure that the objectives of superannuation are clearly articulated in law.

The 2014 Financial System Inquiry, chaired by David Murray, found:

An efficient superannuation system is critical to help Australia meet the economic and fiscal challenges of an ageing population.

It recommended that the government seek an agreement that it be enshrined in legislation. Murray said the legislation should confirm the objective of superannuation and suggested it should be:

To provide income in retirement to substitute or supplement the Age Pension.

In 2016, in response to the 2014 review, the former government introduced a Superannuation (Objective) Bill that reflected the recommendations. Incredibly—everybody here will grasp in surprise—that bill lapsed in 2019 without ever being acted upon. The Retirement Income Review of 2020 also broadly agreed with the findings of the 2014 Financial System Inquiry, agreeing there should be a policy to help ensure the purpose of the system was understood.

Legislating an objective for superannuation, a Labor commitment at the last election, will give some peace of mind to Australian workers that we will do everything we can to safeguard their savings to deliver income in retirement, and it will give confidence to the superannuation sector. The Albanese government has introduced legislation to define the objective of superannuation as being 'to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way'. The bill will answer three key questions: (1) the purpose of superannuation, to provide clarity on its role to ensure that it is used for its purpose to preserve savings and deliver income at retirement age; (2) how superannuation delivers on its purpose, how it should operate in an equitable and sustainable way to have stability and deliver upon retirement; and (3) the place of superannuation as part of the retirement income system, how super works with the age pension and personal savings, and how it remains fiscally sustainable.

The Liberals opposed the creation of compulsory superannuation. They continue to believe in the destructive idea that taxes and social investment are inherently antibusiness. One could forgive and understand this tired, fundamentalist Thatcher-Reagan ideology, except for the fact that wherever it has been implemented it has caused immense economic and social damage. We've had more than 40 years of lived experience of that ideology in the United States, and there is now a wasteland of the once great American middle class. Promises of more efficient delivery of services from private sector providers have simply never eventuated. Instead, services get cut, quality gets slashed and, when it all falls apart, the providers come running to the government for bailouts, which inevitably happen because the services are so important and essential to provide.

The Liberals attack superannuation, claiming it keeps wages lower—that, if it didn't exist, somehow all the dollars that go into super would instead be going into wages. These are seductive but destructive arguments, because those opposite have never seen a wage rise they want to support. Here they are pretending that the 12 or 15 per cent extra that goes into super would magically just be in people's pay packets if super weren't there. I can guarantee that every wage rise would have been opposed by those opposite because it's unaffordable for business or because it's the wrong time or because wage rises would be nice but not right now. They are the party of deliberate wage suppression. They spent a decade deliberately keeping wages low. It had nothing to do with superannuation.

The fact is that the Liberals' plans, if implemented, will destroy retirement incomes for millions of Australians and remove trillions of dollars from long-term investment pools. The short-term benefits of a one-off wage rise would not last long and would leave workers entirely dependent on the age pension, which as Murray found out would be completely the wrong thing to do when we have an ageing population. We don't have more taxpayers coming into the system to support an ageing population; we have more people ageing and fewer workers to support them. For the Liberals to pretend that they support higher wages when, for 10 years in government, they deliberately kept them low makes me just shake my head. Seeking to tap into Australians' anxiety, the Liberals have also said that superannuation should be used by domestic violence sufferers and by homebuyers. Of little doubt, they'd be just as—

Debate interrupted.