Thursday, 25 February 2021
Treasury Laws Amendment (Reuniting More Superannuation) Bill 2020; Second Reading
That was extraordinary. I wouldn't believe it if I hadn't been sitting in here: we have someone from the government benches saying, 'We don't want everyone in a job because who's going to man our tuck shops?' For goodness sake!
I rise to speak on the Treasury Laws Amendment (Reuniting More Superannuation) Bill 2020. This bill contains a single schedule that amends the Superannuation Industry (Supervision) Act, the Retirement Savings Accounts Act and the Superannuation (Unclaimed Money and Lost Members) Act 1999 to facilitate the closure of eligible rollover funds by 30 June 2021. ERFs were designed to look after unclaimed super. Balances are typically low and accounts are inactive. This measure addresses recommendation 5 of the 2019 Productivity Commission inquiry into superannuation, which recommended that the ATO be responsible for holding lost superannuation accounts and that APRA oversee the wind-up of eligible rollover funds. It will allow the ATO commissioner to reunite superannuation accounts they receive from eligible rollover funds with a member's active account.
These changes build on the Protecting Your Superannuation 2019 legislation which saw low-balance and inactive accounts transferred by trustees to the ATO, not ERFs. Fund trustees transferring inactive or low-balance accounts to the ATO have made ERFs redundant, and this legislation provides that timetable to wrap up those remaining ERFs by 30 June 2021. The ATO have successfully reunited more than 2.1 million lost or forgotten superannuation accounts. This is a greater success rate than AUSfund over a 10-year period.
Labor will be supporting this bill. It is sensible and logical that lost super should be reunited with its rightful owner as quickly and as simply as possible without establishing any additional funds and additional accounts. Labor continues to support measures that target duplicate accounts with a stronger, fairer superannuation system. It is clear that the ATO matching has been more successful than AUSfund and it's in the members' best interests.
Let me be very clear: this bill, if it passes this chamber today, represents just one flicker of light of logic in the murky ideological darkness that is the Morrison government's attitude to superannuation and ensuring that Australians have dignity in retirement. We just heard a snippet of that from the senator in his speech prior to me. The best thing that this government could do to ensure that dignity and to work in the best interests of Australians is to move our country towards 12 per cent superannuation as legislated. That move, already delayed by this government twice and costing workers retiring today between $60,000 and $100,000 in their superannuation balance, is vital to ensure that all working Australians achieve a dignified standard of living in retirement. Australians are living longer in retirement. The changing nature of work, rising aged-care and health costs, and declining home ownership rates in retirement are key reasons why ordinary working Australians will need 12 per cent super to retire with dignity. Yet we see the Morrison government quibbling and prevaricating.
When Australia's compulsory superannuation system was first established more than 25 years ago it was done with a simple clear objective in mind, and that was to provide working Australians with some savings at retirement. Before that, most people had no nest egg at all, other than their home. Superannuation was largely the domain of higher income earners and the Public Service. Millions of Australians had nothing in super and could only look forward to the aged pension—if that's anything to look forward to.
As the cornerstone of Australia's retirement income system, compulsory superannuation is now one of our greatest success stories. The miracle of compound interest has created a significant pool of capital that is now benefiting our economy and financial system. It is a key mitigating factor against wealth inequality and it is enabling people to have a better life in retirement. But something fundamental is shifting in our country. In 2017 the Australian Institute of Superannuation Trustees report No place like home: the impact of declining home ownership on retirementnoted the impact of Australia's falling home ownership rates on the retirement wellbeing of future generations. The report found that more people were retiring with mortgage debt or having to rely on private rental housing, with twice as many retired households paying more than 30 per cent of their income for housing. Older retirees are forced to rent, many of them single women. They deserve both housing security and a decent income. This is further argument for the superannuation guarantee to rise as legislated.
The guarantee is legislated to increase from 9.5 to 10 per cent on 1 July this year. It will then increase in 0.5 per cent increments to 12 per cent by July 2025. But the federal government is yet to officially commit to this year's increase, with Mr Frydenberg saying in recent months that a decision will be made in the May 2021 budget. He has announced that the legislated increase of superannuation to 10 per cent in 2021 will be reconsidered following the public release of the retirement income review, along with the economic impacts of the COVID-19 pandemic. A group of coalition backbenchers have publicly expressed opposition to a rise in the super guarantee. We heard some of that just a moment ago.
The Morrison government has let it be known that it is mulling over a proposal that would allow Australians to substitute future increases in the superannuation guarantee for higher take-home pay. The Prime Minister, Mr Morrison, and the Treasurer, Mr Frydenberg, should stop using this pandemic as an excuse to come after wages and super. They should stop pretending that they want workers to choose between higher super or higher wages, when the truth is that the government wants neither. Workers have already lost $40 billion from their retirement savings through the government's COVID early superannuation release measures. This will translate to $100 billion over their full working lives. So we need measures to build up super savings to assist Australians who have accessed their super due to financial pressures—measures to rebuild superannuation savings, not to cut them further.
The Industry Super Australia deputy CEO, Matt Linden, has crunched the numbers and they don't look good for ordinary working Australians. This idea that the government is floating of making future superannuation guarantee rises optional not only would reduce workers' super savings but also would increase the amount of tax that they pay. This is because superannuation contributions are taxed at 15 per cent, while the average worker has a marginal tax rate of 32.5 per cent. As a result, an average family today consisting of two 30-year-old parents would pay $20,000 more in taxation over their working lives if they opted out of the superannuation guarantee rises and would have up to $200,000 less in their superannuation by retirement. Removing the 'guarantee' in the super guarantee and making it optional is a recipe for higher taxes, lower lifetime incomes, less dignity in retirement and a red-tape nightmare for business.
It is very clear that this government is exploring as many underhanded ways to renege on the superannuation guarantee as it can. In the May budget, Mr Frydenberg will reveal how far he has succumbed to the ideologues in his party, those who seek to cut workers' wages through the current IR bill, those who seek to undermine the guarantee that is designed purely to give ordinary working people security and dignity in retirement. A rate of 9½ per cent simply isn't going to get this country to a place where hardworking Australians can accumulate sufficient funds in their super accounts to have a secure, dignified retirement, and the government knows it. Leaving super at 9.5 per cent would consign low-income workers as well as millions of women and men with broken work patterns to financial hardship in retirement. It would also lead to more Australians needing to rely on the age pension. Let us all acknowledge that everyone, each elected representative in this chamber today, is receiving much more than that; we're all receiving 15.4 per cent. To deny the rest of the country a rise in their super would be the absolute height of hypocrisy. The Morrison government should acknowledge that we have a first-class retirement system and allow the superannuation guarantee to rise to 12 per cent as legislated. The Minister for Superannuation, Financial Services and the Digital Economy, Senator Hume, sits in this chamber, and she's sitting here today. She should commit to doing that today. I call on her to do so.