Senate debates

Wednesday, 6 February 2013

Questions without Notice: Take Note of Answers

Obeid, Mr Eddie, Superannuation

3:34 pm

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | | Hansard source

I move:

That the Senate take note of the answers given by the Minister for Broadband, Communications and the Digital Economy (Senator Conroy) to questions without notice asked by the Leader of the Opposition in the Senate (Senator Abetz) and Senator Cormann today relating to ministerial code of conduct and to superannuation.

It is interesting when we hear Senator Conroy struggle at times. Today he was using the singular and the plural, talking about 'Mr Abbott themselves', that they were distracted. It seems that maybe Senator Conroy is a little distracted of late. Maybe he has a few things on his mind. Sometimes Senator Conroy forgets things. Sometimes he forgets which chamber he is in. For a while he thought he was a member of the House of Representatives, whereas he is a senator. The members' interests registrar was the wrong one to send it to and he reminded himself that he was a senator. Sometimes he forgets to fill in a senators' interests form; sometimes he forgets which chamber he is in; sometimes Mr Obeid forgets his name.

Sometimes the government are a little bit unclear about what they should be doing with people's savings, and this is what is really pressing. Superannuation is going to be a big issue at this election because people have always believed that when they put money into super it will be there when they retire. It was an old-fashioned belief. Superannuation was set up, supported by Hawke and Keating—I see Mr Hawke is here today—with the belief that we do not have the money to support people with pensions, so we will get them to provide for themselves. More importantly, their employer would provide for them by putting money aside. In that way, when they retired the money would be there.

Now we find that a government that has got itself $262 billion in gross debt, that has been through a $75 billion debt limit, a $200 billion debt limit, a quarter-of-a-trillion dollar debt limit and is heading towards a $300 billion debt limit, is trying to work out how to pay it back. So it devised the mining tax. The trouble is that the people who came to help them out with that were the major mining companies. They devised a mining tax whereby they did not actually pay any tax. The government said, 'We will have a mining tax,' and Marius Kloppers said, 'You certainly will,' and then he whipped out a pen and paper and gave them one. It is working very well for BHP; it is working very well for Xstrata—and good luck to them. If a fool invites you to their office and opens a cheque book, well you just start writing out your own cheques. The carbon tax is another tax that is not making any money. It is actually costing money at the moment.

So they have come to this conclusion that they have no money, so they have to go and find money. The first thing they do when they try to look for money is set up a class war. All things have to start with a moral prerogative: we must find evil people—evil, wicked people—and who is evil and wicked? Well, they are not people who are before ICAC. They are actually rich people; rich people are evil people and need to be dealt with. So we have the Prime Minister saying, 'Who will pursue proper Labor values?' Well, these must be proper Labor values. They are obviously going to go and just flog the money out of people's super. It is as simple as that.

Of course, all of this works so well! They had the metaphor at the start of the mining tax. They were saying, 'Oh, well, the mining tax will pay for the superannuation increase.' The inference there is that small businesses—miners, farmers, butchers, bakers—will not have to worry about paying the increment from nine per cent to 12 per cent; the government will pay it. But of course, the government are not paying it. The employer is paying it. The government are just booking the tax deduction as they are saving. But now the government—it is so sneaky—are saying, 'Well, you guys pay an extra three per cent on top of your nine per cent to get to 12 per cent and what we will do is rip it out of them on the way out!' If you follow the path of the Labor government ripping the money out of the superannuation on the way out and the small business employer having to put more in on the front end, all they are really doing is taxing small business. It is just another way to rip money out of business. And, of course, if everybody puts their money into super, they are going to say, 'Watch this crowd; they are running out of money.' This is step 1.

Who are the rich people? Apparently they are people with $1 million in super—how evil! You live off about nine per cent of it, so $90,000 per year is what you would be retiring on.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

Five per cent.

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | | Hansard source

Five per cent? Fifty thousand dollars! Evil, wicked people—wealthy people—on $50,000 per year! They must be punished, and the Labor Party are coming out to punish them!

3:39 pm

Photo of Mark BishopMark Bishop (WA, Australian Labor Party) Share this | | Hansard source

I just want to make three observations in the few minutes that are allocated to me in this debate: firstly, the long and proud record that the labour movement and the government have in the whole field of superannuation; secondly, how we are improving the superannuation system going forward over the next few years; and then, if time remains, just a few pertinent observations as to what is the real policy of the opposition, as expressed by the Leader of the Opposition consistently over a period of some 25 to 35 years—almost his entire time in public life.

I vividly recall the creation of the modern superannuation system in this place. I was an official of a trade union working in Western Australia at the time, and the trade union movement agreed to forgo a wage rise of three per cent that was about to be awarded by the then Conciliation and Arbitration Commission. We determined that it would be more appropriate if the pension system, which was then breaking down, were altered and superannuation, over time, were funded by the workforce so that, when people came to retire, they did not have to benefit only from a relatively miserable pension contribution but rather had a full and adequate retirement funded by themselves through the superannuation system over their working life of 25 to 40 years.

For the period of the mid-eighties through until 1996 or thereabouts, superannuation contributions were greatly increased, from zero to three to up to nine per cent, and that was a halfway house, if you like, in terms of finding sufficient funds to eventually fund retirement for all workers in this country. In the period after the demise of the Hawke and Keating governments, from 1996 through to 2007, there was no change and some of the great gains that had been made—the accumulation of savings, the vesting of savings and the creation of a worthwhile system that would last hundreds of years—did not go into free fall but remained steady.

With the current government we introduced additional changes to the superannuation guarantee levy to increase it from nine per cent to 12 per cent over the next six or seven years. The effect of that will be to boost the retirement savings of 8.4 million Australian—to increase superannuation savings by $85 billion over the period of the next 10 years and by $500 billion by 2035—and, for all of those who are currently in the workforce or starting out in the workforce, to add $108,000 in net present value terms to the retirement superannuation balance of an average 30-year old worker.

One step yet remains to be taken, but 12 per cent funded by employers going forward will essentially fund the retirement benefits of all Australians for the remainder of this century. We say without shame that it is a remarkable achievement, and there is no other effort that the labour movement, the trade union movement and the government have made in this last generation—the last 25 to 30 years—that has been as well received and as beneficial as to cement in a properly and fully funded retirement system, paid in cash upon retirement to every worker in this country when he or she comes to retire. There is no equivocation, no downside—the money goes in every month out of a worker's pay packet. It goes into a registered fund, it accumulates interest paid on market rates from year to year and when everyone in this room comes to retire at the age of 55, 60 or 65—whatever it is—they will have a retirement system that is paid for and funded and allows them not to live in 'frugal comfort'—to refer to another wages system—but to live a full and adequate life with a decent, well-paid, well-funded retirement benefit built from the mid-eighties through the nineties and, right now, up to 2020. It is nothing to be ashamed of; we should all be greatly proud of that development, because not only does it protect individual— (Time expired)

3:44 pm

Photo of Michael RonaldsonMichael Ronaldson (Victoria, Liberal Party, Shadow Minister for Veterans' Affairs) Share this | | Hansard source

I am indebted to my colleague Senator Cormann for providing me with a copy of a press release from the former Prime Minister, Kevin Rudd, and the Treasurer, Mr Wayne Swan, on 2 May 2010. That document said:

The Government also reaffirms that it will never—

and I emphasise the word 'never'—

remove tax-free superannuation payments for the over 60s.

That of course prompted the question from Senator Cormann, which I will repeat:

Does the government intend to keep its solemn promise made to Australians saving for their retirement through superannuation before the 2010 election that it would 'never remove tax-free superannuation payments for the over-60s'?

This question was asked of the third most senior person in the parliamentary system in this country and Senator Conroy, despite having significant L-plates on, is still obliged to give an open, frank and honest answer to this quite direct question from Senator Cormann. That answer was not given and on that basis those over 60 can assume that this government will indeed break a solemn promise.

It is not the only solemn promise of course that they have broken in relation to superannuation, and I refer to the indexation of military superannuation. Before the 2007 election there was a commitment for a review and a commitment to a review which would address the indexation issue. That is not me making that claim today. Indeed, I will read from a letter dated 14 September 2009, signed by Senator Kate Lundy, who was still in this place and is now Minister Lundy, and signed by Mike Kelly, member for Eden-Monaro, who is now of course a minister. In that letter to the former finance minister, Lindsay Tanner, they made it quite clear that the Australian Labor Party had broken a promise to military superannuants before the last election that they would address the indexation issue. Here is some of what they said in that letter. It said:

Significantly, many people genuinely believed that prior to the 2007 election, the ALP had committed to determining a 'fairer' method of indexation, and 'a review' would provide the direction, so the immediate acceptance of the recommendations of no change in the Government response—

that is to the Matthews review—

is being seen as a reversal of the pre-election position espoused by the ALP in campaign material.

Their words, not mine—'in campaign material'! They went on and talked about other aspects of the Matthews review. They said there were two questions that they wanted clarified. On page 2, at (b) they said:

The Government, despite honouring the election commitment to conduct a review per se, has abandoned the spirit of the election commitment to a review that would address the inadequacy and inequity of the indexation method which has not kept up with the cost of living for Australian Government civilian and defence force pensions.

We respectfully request you respond to both of these points and clarify the Government's stance, particularly since correspondence issued during the election enthusiastically pressed the point of finding a fairer method of indexation through the process of review.

Not only have we heard from military superannuants around this country, who are quite rightly appalled at their treatment; we now know that there was another broken promise in relation to superannuation for military superannuants from this Labor government. When we heard today the non-response from Senator Conroy in relation to a quite direct question, a very direct question, from Senator Cormann whether indeed they would keep their commitment as promised by Wayne Swan— (Time expired)

3:49 pm

Photo of Anne UrquhartAnne Urquhart (Tasmania, Australian Labor Party) Share this | | Hansard source

I rise to take note of the answers to questions without notice today on this Labor government's superannuation reforms. It is fantastic that those opposite have actually raised superannuation as it is one of Labor's greatest achievements, but it is an achievement that those opposite only ever want to talk down. As Senator Conroy said earlier in the chamber, we are the champions of superannuation. Those opposite seek to create fear in the community about the superannuation system, a system that they see simply as a burden on business. In fact, it was this vital reform that was implemented in the 1990s that enabled working Australians to have enough money to enjoy a decent retirement, and, as our population gets older, ensuring a fair and proper superannuation system is vital.

That is why this government has implemented a range of reforms to the superannuation system over the past five years. At the centre of these is a commitment to increase the guarantee from nine per cent to 12 per cent over the coming years. Given life expectancy is increasing and retirement is more an experience of decades rather than a few years, as it used to be, we all know that nine per cent superannuation is simply not enough now. This is especially the case for women who have child-raising breaks in their career and have a longer life expectancy than men.

In the early 1990s the very idea of compulsory superannuation was denounced by the opposition and the business lobby as a 'company killer'. They said that unemployment would rise and that the economy would be damaged—all wrong of course. In fact, during those years nine per cent superannuation was introduced, unemployment fell, productivity was higher and more small businesses were started. We now see that further increases to this base guarantee are needed

This will be staggered in over the coming years in small increments that enable businesses to prepare for these increases. One reform from the past few years that I am particularly proud of is Labor's low-income security superannuation contribution. This measure, valued at $1 billion a year, gives each Australian worker who earns up to $37,000 a contribution from the government of up to $500. This benefits 3.6 million Australian workers, of whom 2.1 million are women and many of whom are working part-time. This reform provides a much needed boost to the retirement savings of Australia's lowest paid. And what would those opposite do with this reform? Well, of course they would scrap it, throwing over 3½ million Australians on to the scrap heap. On one hand, we have Labor seeking to make Australia a fairer place by seeking to ensure that Australians have decent retirement savings, and those opposite are more concerned about the big end of town.

We also have our MySuper reforms which we have been moving through this place over the last number of years. These reforms are seeking to make superannuation simpler and fairer for all Australians. MySuper is a new low-cost superannuation product that replaces existing default funds. It will begin to be offered from 1 July this year. Importantly, MySuper has new features that existing default funds do not have such as standardised disclosure of costs, fees, risks and returns, making comparisons easier; a ban on the payment of sales commissions and entry fees; and new standards for the payment of performance fees to fund managers. We have introduced this reform because superannuation funds do not send monthly bills. It does not mean that superannuation funds are not a significant family bill, just like any other. Every dollar that is saved in superannuation fees directly boosts their retirement savings, helping them to enjoy a comfortable retirement.

MySuper will save millions of Australians hundreds of dollars a year in fees by making it easier to compare funds to get the best value; by banning certain fees, such as entry fees and sales commissions; and by increasing the duties on superannuation trustees to make sure that they operate cost effectively. Together, these will exert downward pressure on fees and charges that, over a lifetime, will see an average Australian worker over $40,000 better off. Considering how much an average Australian needs per year to live on in retirement, $40,000 will go a long way to making the retirement of millions of Australians more comfortable.

Labor is incredibly proud of this nation's superannuation system. It is our desire to continually seek to improve it for the benefit of all working Australians. It is something that over the last 30-odd years, Labor has been proud to introduce to Australian workers.

3:54 pm

Photo of Arthur SinodinosArthur Sinodinos (NSW, Liberal Party, Shadow Parliamentary Secretary Assisting the Leader of the Opposition) Share this | | Hansard source

Thank you, Mr Deputy President. You look very much at home in the chair. I take as my text something taken from Senator Cormann's question earlier today about the promise made by this government to Australian super savers before the 2010 election, that it would never remove tax-free superannuation payments for the over 60s. One of the proudest boasts of the Howard government was the fact that we took tax off super for the over 60s in—I think—the 2006 budget. It was a great measure. I particularly liked it because it was very easy to sell, because you are taking a whole tax off. People could understand this very, very clearly. They understood that if they undertook the effort to save, there would be recognition by the government and, at the end of the day, they would get their savings—their nest egg— and it would be tax-free. They had certainty about what they were getting and they could plan accordingly and get on with their lives—very, very important.

Superannuation is very much about the long term. It is not a plaything of the parliament. It is not about the parliament saying, every year or so: 'We've got a problem. Where do we look for a bit more money? Let's look at super again.' We have been doing this for too long. There have been too many changes to super over too many years. When you talk to the industry and people out there they say, 'We're sick and tired of the tinkering'. Now we have a situation where the government are seeding speculation that they may be about to tax superannuation for high-income earners. But the problem is this: they are not talking about taxing just Gina Rinehart or James Packer. They are talking about nest eggs of around $800,000 to $1 million, which provide a pension of about $50,000 a year if you use a investment rate of around five per cent. These are not high income sums that we are talking about. There are many medium-income people and aspirational Australians in that category.

If this is meant to be a class war, it is a class war by Labor on middle Australians, not just on high-income earners and people with big boats and yachts who travel to the island of Jersey and all those other interesting places where you can set up tax havens. This is ordinary Australians that we are talking about, who have put away a bit. Maybe they have had a small business and they have worked all their lives, they have put up with everything, they have met the payroll every week, they have put their house on the line. They come to the end of their time in business, they roll over their assets and, lo and behold, they get hit. That is the recognition they get for all the hard work. That is the recognition they get for all the regulations they had to put up with. That is the recognition they get for all that government puts on them in terms of various laws, rules, and so on and so forth. That is not good enough for our fellow Australians.

Paul Kelly, in an article today, talks about superannuation. He says:

Labor creates more uncertainty and invites retaliation by putting superannuation benefits on the table for cutting, thereby setting the scene for three months of pre-budget fear and confusion. How on earth does this help Labor's economic standing?

Indeed, how does it help Labor's economic standing? Labor says it is committed to national savings. Labor has not been able to achieve a budget surplus since coming to power. Labor is now tinkering with super. We are not just talking about public savings, we are talking about private savings being affected by measures that Labor wants to take. There does have to be a better way. The very industry super funds which have been set up by the trade union movement should be out there telling the Labor government this is not the way right way to go, because it undermines confidence in all super. But Labor is bent on a class war. It wants to be able to say—in the name of fairness—'We will fund Gonski education reforms, we will fund the National Disability Insurance Scheme and you, the high-income earners, as defined by us, the government, will pay for it. You will have to put up with it, and if you do that we will win, because we think there are more low-income and middle-income people in Australia than there are high-income people.' Jim Cairns had the same idea; he could never understand why the working class could vote for a centre-right party. But the reason was very clear, because centre-right parties want to look after all aspirational Australians. And we will do so, if we are the government after 14 September. (Time expired)

Question agreed to.