Thursday, 30 November 2023
Senator Tyrrell, I am pleased that you brought this proposition here. I enjoyed listening to your contribution. It is a very welcome discussion in this chamber about the future of superannuation. It matters for individual workers and their families, it matters for the future of our economic system and it matters for—as you indicated—for fiscal stability and for meeting the government's economic objectives more broadly. So even though there will be disagreement in terms of content of the proposition, it is very welcome to have members of the crossbench contributing to these big economic questions about the future of the superannuation system.
Despite its central role in the retirement income system in Australia, there is no agreed objective of superannuation—legislated or elsewhere—that serves as a guide for policymakers, governments, regulators, the superannuation industry and the wider community and that is something that this government is determined to set about doing. These kinds of discussions occurring here are in a broad way helping inform that discussion.
There are jurisdictions all around the world that look at the Australian superannuation example with admiration and envy. It is seen as a shining lodestar for economic reform around the world. It was reported recently in the United Kingdom, where some workers have access to these kinds of pension fund arrangements and some workers don't. It's really interesting: what does this mean?
In Australia, as somebody who began in the Labor movement in the early 1990s—I am very, very old; I feel very old this week!—at the time when superannuation became a legislated right for all workers, I'm very conscious of the role that the accord process played. The Labor movement and then Labor government; Bob Hawke and Paul Keating; and the ACTU, led by Bill Kelty, Laurie Carmichael and some of these other people changed our economic fabric and made the deep economic reforms that really positioned Australia well for the 21st century. I saw building workers who had access to a growing superannuation account. I saw manufacturing workers and workers in civil construction—not just tradespeople and supervisors but process workers and labourers—who began the process of starting superannuation accounts. And people in the building industry—the building unions and building industry employers—started the old CBUS fund, which is still a very big fund now.
There were workers then, in the 1990s, who could retire with a nest egg that meant they could pay off their homes and set themselves up for their retirement. Some of them were able to self-fund their retirement and some had a mix of entitlements from the pension and their superannuation. They had choices about how they would spend their retirement years. That contrasted with so many other people I knew who didn't have that same dignity and didn't have that same choice. So I'm deeply conscious, not only of the proud tradition that the Labor movement and the Labor Party have in founding and building superannuation in this country but also of our unique responsibility not just to defend that legacy but also to think carefully about the future of the system. We need to consider, as Mr Jones, Mr Chalmers and others in the government are considering, how we refine and develop that legislated purpose. How do we set it out in a way that provides clarity?
It is a unique system. It is, as Senator Smith has said, in many respects, the superannuation account holders' money; it is their entitlement for when they retire. It is also a unique national asset: $3 trillion is in our superannuation system, last time I looked, and $2 trillion of that is in the industry super funds. That money must be protected and defended at all costs to secure a decent retirement for the account holders. But there are unique investment objectives to ensure that there's a rate of return appropriate for ensuring retirement in the long term for individuals. Those investment objectives match some of our potential; we must make sure that where there's an opportunity for superannuation to invest in the infrastructure of the future, in the industrial capability of the future around the country and in the kinds of projects that we need to make Australia the most productive it can be, that the right approach to risk and return is taken in all of those questions.
This is an enormous national asset that our country has and that very few other countries have. It's something that we should defend and protect all costs, and think about in an intelligent way. As I said, this debate is indeed very welcome. I understand that there has been a strain of thinking about this on the other side of politics that is reductive and offended by the very idea of trade unions and industry associations playing a role at an industry level in these questions. I think that misses the point of the system. The hostility to the trade union movement that sits behind a lot of this opposition and positioning around the future of superannuation is ultimately destructive. Ultimately, it undermines democratic institutions and the way that this system needs to be set up. What we want is Australians and Australian institutions working together in a meaningful way to make the kinds of decisions that these funds can make.
When we look at the history and the growth trajectory of what these funds are delivering for Australian workers and their families, there's a lot to be proud of. The size, scope, scale and growth of individual accounts over time are unparalleled. There are a few financial institutions, certainly private financial institutions, that can offer these kinds of benefits, this kind of scale and this kind of management. From where it started, it's building investment capability. Many of the funds would go to the investment experts, the private outfits at the big end of town, but many of these funds have built their own investment capability and they're some of the best people in the world. They're building the capability to make smart investment decisions. They're not flashy, with the greatest respect to the private investment houses—which have a very different culture—but they invest with an ethos to invest workers' money in a really careful way, and in a way that, over time, has delivered enormous benefits.
The government has introduced a bill that would establish 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. That objective will serve as a reminder that achieving better living standards for Australians in retirement is at the heart of the superannuation system, and future policy changes should be compatible with that legislated objective. In line with that objective, the Assistant Treasurer introduced legislation that would reduce the tax concessions on total superannuation balances exceeding $3 million. I understand that was opposed by the opposition, and I won't argue with them about that today. I understand that they object to that proposition, but I just don't think that many ordinary Australians would object to the idea that tax concessions would not still be available for people who have superannuation accounts with more than $3 million in them, but think that it's a modest and responsible change that better targets tax concessions and doesn't interrupt the stability of the system.
If you're a school cleaner and you have a superannuation account, you wouldn't think it reasonable that the very small number of Australians who can stick $3 million into a superannuation account get an overly generous tax concession arrangement. If you're a welfare recipient in regional Queensland, the future of welfare payments depends on a sound fiscal position, you would not think that superannuation accounts with more than $3 million in them should have an overly generous tax treatment, but they will continue to have some tax concessions. The concessional tax rate applying to future earnings of superannuation balances above $3 million will be a headline rate of 30 per cent. Earnings corresponding to amounts below $3 million will continue to be taxed at 15 per cent. That is an entirely reasonable proposition.
I understand that there is an ambition to go further. I welcome the discussion about all that, but that is the government's position. It is a reform that was opposed by some parts of this parliament. We believe that is a reasonable, effective position. We think there is strong support for it in the community, and it will mean a better targeting of amounts that deliver income for a dignified retirement. Members must also have confidence that every dollar that's spent by their superannuation fund is done so in their best financial interest, so we've strengthened transparency requirements in the superannuation system.
We passed legislation that would align reporting requirements for superannuation funds to be the same as the reporting requirements for public companies. And there is a lot of misinformation that is out there, particularly about the industry super funds and the payments they make. Those enhanced reporting requirements will make it very clear there is very strong governance and there are very strong boards. Some of the most capable people in Australia are serving on those boards. I've been lucky to sit on some of them over the course of my professional life, and I have nothing but admiration for those funds. It doesn't mean, like any corporate board or any board or any governance structure, that mistakes aren't made from time to time. They will be.
We're also going to make sure that payments are made on time, that there is effective compliance out there to make sure that every dollar, particularly for low-income workers, is deposited in their superannuation accounts at the right time.
I have just become conscious that there may be another senator who wants to contribute to this. I realise I've taken all my time and I really regret that I did.