Thursday, 27 August 2020
Superannuation Amendment (PSSAP Membership) Bill 2020; Second Reading
Labor will be supporting this Superannuation Amendment (PSSAP Membership) Bill 2020. It builds upon a bill introduced in the last parliament, which Labor also supported, which allowed people who used to work for the Commonwealth to continue using their Public Sector Superannuation Scheme accumulation plan, or PSSap, accounts for their super contributions. Labor understands that the bill before us today is being driven by feedback from members following the passage of the bill in the last parliament.
This bill would allow former PSSap members to use their PSSap accounts for contributions in respect of any employment—that is, employment that does not attract a superannuation guarantee obligation—and if they wish to make other contributions, such as non-concessional contributions. The bill would allow current PSSap members to use their PSSap accounts for contributions from non-Commonwealth employers who they're working for at the same time. It would also allow Commonwealth Superannuation Scheme, or CSS and the PSS—the Public Sector Superannuation Scheme—members to establish a PSSap account for contributions from non-Commonwealth employers who they're working for at the same time. It will also allow CSS and PSS members who cease being members and become pensioners, in the superannuation sense, or take their lump-sum benefits to establish a PSSap account for contributions from non-Commonwealth employers or for other contributions, such as non-concessional contributions.
Finally, it would allow the CSS deferred benefit or PSS preserved benefit members to establish a PSSap account for contributions from non-Commonwealth employers or for other contributions, such as non-concessional contributions. We've been advised that around 10,000 individuals would utilise the new arrangements over the next three years. This consists of around 6,000 former PSSap members, 1,800 people ceasing to be CSS or PSS contributors in the next three years and 1,500 CSS deferred benefit or PSS preserved benefit members.
These are sensible changes to the legislative framework, which allow for the continued use of PSSap accounts, as well as allowing members of the old defined benefit scheme who want to use the PSSap system. While this is a sensible amendment to public sector superannuation, we also say that it's only Labor who will defend the $3 trillion superannuation system and ensure that Australians have a fuller, richer and dignified retirement.
We can't discount the role that superannuation has played in the economic story of Australia, both since compulsory super began and during the pandemic. We also can't forget that every step of the way those on the other side have opposed and sought to undermine the superannuation system, and that continues today. You've opposed—
Senator Rennick interjecting—
That's right, Senator Rennick—you're giving that the big thumbs up. Those on the other side have opposed its formation and opposed increases to the rate of the superannuation guarantee, and now we have more and more of those opposite openly agitating for the currently legislated increase to the super guarantee to be abandoned in some or form or another. We even have the minister, Senator Hume, saying she's ambivalent on the issue of the increase for the superannuation guarantee. The Prime Minister, however, continues to confirm the government's election commitment that they took to the last election to stick to the currently legislated timetable. If he breaks his promise, this will be an attack on workers and their standard of living.
Their recent track record isn't something to crow about either. The Prime Minister's lack of a plan for jobs and recovery has forced people to apply for nearly $33 billion of their own superannuation savings, with nearly $32 billion of that already paid out through the government's early access to super scheme. It's pretty ironic for the party that has opposed the concept of compulsory superannuation all the way that one of the largest economic measures that's contributing to stimulating the economy at this time is people accessing funds out of super. If it weren't for compulsory superannuation, this money wouldn't even exist. There have been 3.1 million applications made, 1.2 million repeat—
Senator Rennick interjecting—
How's your super, mate?
Senator Rennick interjecting—
Yes—good! It's not good enough for anyone else though, is it? It's not good enough for working people, is it? It's everybody else who has to pay. You have the good super, but no-one else is entitled to it. What a disgrace.
We know that almost 600,000 people have no super at all as a result of the early access scheme, with the vast majority being young Australians who will now have to start from scratch to continue to put investments into their super while people like you, Senator Rennick, sit back and enjoy the super that's been provided for your retirement. Analysis has shown that young Australians will be more than $44 billion worse off at retirement because of the removal of their money from their superannuation accounts. After taking into account inflation and costs of living, a 25-year-old who withdraws $20,000 will be between $80,000 to $100,000 worse off in retirement. You reckon that's a good outcome?
Government senators interjecting—
Yes, good outcome—no worries. Your government wouldn't invest in the economy; you made everyone else take out their own private savings to stimulate the economy while you sat—
A government senator interjecting—
Did you withdraw any money out of your super? I don't think so.
We've seen stories of fraud from the scheme, and we had flagged that with the government before the scheme started allowing withdrawals from people's superannuation accounts. We knew you would follow the money. There will always be attempts of criminal activity and fraud, and we have seen that play out. We know that ASIC has received referrals—
Senator Ayres interjecting—
We know that ASIC received referrals from nine separate Commonwealth agencies relating to the scheme, including the Australian Cyber Security Centre. Referrals have included serious and organised crime targeting early release of superannuation payments, real estate agents encouraging tenants to access super to meet rental payments, credit providers advising borrowers to use super to meet loan repayments and members of the public being charged fees to access super.
So, having made those comments, Labor will support this bill. We do, however, have a second reading amendment that has been circulated in my name which I will also move. It replicates an amendment moved in the other place to this bill by my colleague the member for Whitlam. Unfortunately the government voted against their own election policy and what we understood to be government policy. They voted against this in the House. I hope that this amendment gets the support of the chamber both from those opposite and the Labor Party. I move:
At the end of the motion, add:
", but the Senate calls on the Government to commit to ensuring that all Australians have a decent retirement, including by committing to:
(a) no cuts to the legislated superannuation guarantee for Australian workers, and
(b) adequate funding for the aged pension".
I'm sure that's an amendment that everyone in this place could and should support.
I rise today in support of the Superannuation Amendment (PSSAP Membership) Bill 2020. There is no subject that better reflects the difference in philosophy between this side of the chamber and that side of the chamber. Why? This side of the chamber believes in free choice and individual responsibility. It believes in liberty. Give me liberty or death, as the great American patriot Patrick Henry said in his speech that helped trigger the American Revolution, a revolution that has echoed across the centuries and across the world, a revolution that has empowered the individual to make their own choices about how they live their lives, a revolution that overthrew the yoke of oppression, a revolution that continues today as we fight the forces of Marxism and communism.
So many of those forces sit opposite us today, all with their little red books, bobbing their heads to every command issued by their Big Brother: industry super funds run by unions. They sit there so smugly on the other side of the chamber, secretly plotting new ways by which they can impose more command and control over everyday Australians. Of course, there is no greater example of command and control than superannuation. How so, you might ask? By stealth and deception. That's how. By undermining the democratic right of working Australians by not ever seeking a mandate to take 12 per cent of people's hard-earned income every week and give it to unelected, unaccountable fund managers.
The Left love to praise New Zealand, saying what a great country it is, because they've got a leftie in power. Let's give praise where praise is due. In 1996 New Zealand had a vote on compulsory superannuation. Do you know what the result was? They voted it down: 92 per cent to eight. Did Paul Keating ever ask the Australian public if they wanted money taken out of their pockets, to be given to someone that the worker would never meet, until they were 60—with, I might add, no guarantee of ever getting their capital back?
We need to contrast the actions of the Labor Party and the unions with those of the Liberal Party with their belief in free choice. The original liberal philosophers Locke, Bacon and Rousseau sought to replace the norms of hereditary privilege, absolute monarchy and the divine right of kings with representative democracy and property rights. I want to repeat this: there was never anything democratic about superannuation. Keating, in his typically arrogant manner, rammed it through parliament without ever seeking a mandate or holding a referendum, no doubt because he knew that it would never get up if the people were given a choice.
Surely the federal government has an obligation under section 51(xxxi) of the Constitution, which provides that the Commonwealth has the power to make laws with respect to 'the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws', to protect the initial capital put into super funds. It is my view that compulsory superannuation is unconstitutional if it doesn't return the initial superannuation that was contributed to the super fund. Let me add, it's only a matter of time before this gets tested in the High Court. If superannuation isn't voluntary, then superannuation funds, including industry funds, should be forced to make up losses—in keeping with the Constitution—if the initial capital isn't returned. People have a right to expect their property rights to be respected.
Let's talk about how much superannuation is costing us: $40 billion in tax concessions. The cost of these tax concessions is growing much faster than the cost of the pension. It's estimated that the cost of superannuation and the tax concessions will soon be greater. Who do these tax concessions go to? Mainly the wealthy. Don't get me wrong. People work hard and they're entitled to keep as much money as possible, but I fail to see why low-income earners should pay a higher rate of tax on their income than the wealthy pay on their superannuation income. Where is the Labor Party in this? I thought the Labor Party and the unions were the champions of the poor and oppressed. No—not when it jeopardises the rivers of gold that flow into the superannuation funds that then flow into the Labor Party's coffers. Then there's the $40 billion in fees that it costs to run superannuation. To put that into context, that's more than the cost of defence. Most of these fees go to white-collared blowhards in Sydney and Melbourne. Every week, rivers of gold flow out of regional communities, communities that desperately need to retain every dollar they earn.
I'm happy to put up a motion with the Labor Party that, if we make superannuation voluntary, I will put the first $4 billion in tax concessions that we save into aged care. We can take some tax from the wealthy Australians and put it into aged care, if you want to make it voluntary. Let's see if you're up for that one. It only costs around $6 billion to manage the pension. Why does it cost $40 billion to manage super? It's time to stop the rorting. And there's more: $600 billion of superannuation is invested offshore, ladies and gentlemen, at a time when Australia desperately needs infrastructure and development. What is industry super doing? Where were they when the Northern Territory government sold the Darwin Port? Where were they? Where was the CFMMEU? I've looked at the maritime union super funds, and they invest offshore. Why didn't they buy the Darwin Port? Why didn't they take an equity in their own livelihood?
Let's not forget the rorts. Entertainment budgets don't comply with the sole purpose test, but has that stopped Hostplus from spending thousands of dollars in wining and dining at the Australian Open? Or the New Dailya Communist propaganda tool used to peddle Marxist ideology—
Senator Ayres interjecting—
For this great cost, is super actually doing what it is supposed to do by reducing the number of people on the pension? Hardly. The number of people retiring with a mortgage since superannuation was introduced has increased from 40 per cent to 70 per cent. That's right. When they retire, more people are now enslaved to the banks than they were when superannuation was introduced. It's just a win-win for the finance industry. They're bleeding interest out of workers as they save throughout their lives, and on the other hand they're bleeding fees out of superannuation funds—they're double-clipping the ticket.
And for what? So much for people having a better retirement with super—what better form of retirement is there than owning your own house? That's right: superannuation is actually counterproductive. It's not doing what it's supposed to do. For all of this expense, the number of people on the pension has actually only fallen from 74 per cent to 68 per cent. It's not even saving that much in the pension. Some estimates put it at about $9 billion, which is hardly what you'd call productive, given that it takes about $80 billion in fees and tax concessions. It's counterproductive.
I also point out that the pension, unlike superannuation, is universal. Everyone is entitled to it. That's not the case for superannuation. The unemployed, the disabled and the stay-at-home parents—they don't get superannuation. Shouldn't good government policy lift all boats, regardless of the choice you make and regardless of the circumstances you find yourselves in? Where is the equality? Well, let me tell you. When it comes to superannuation, there is no equality: only repression, rorts and pork-barrelling from left-wing vested interests.
Do you think Labor and the unions will ever stop asking for superannuation increases? Of course not. Why do we know that? Because at the last sitting of the parliament they refused to vote on a motion that would reduce union fees throughout COVID. Never get between the Labor Party and their rivers of gold from the unions! And who runs the industry funds? It's Greg Combet, a union hack and, even more worryingly, the former environment minister that allowed the Bureau of Meteorology to keep two sets of books.
A government senator interjecting—
Yes, I'll take that interjection. Do you want someone that condoned a public service department running two sets of books, running hundreds of billions of dollars in superannuation? Is he going to run two sets of books and then suddenly find their liquid assets can't be sold for the value they've stated in the books? Yes. I can just imagine the smoke and mirrors the superannuation funds would come up with then, telling everyone it's all fine.
Has superannuation ever built anything? Of course not. That would require fund managers to get off their backsides and learn how to build things. They'd have to be engineers or get out in the hot sun and start sweating. That's not what superannuation funds do, is it? But I'll tell you what they do do. They buy infrastructure. Do you know what infrastructure they bought? It was all those assets that have been privatised—things like CBA and CSL, and in my home state of Queensland the Bligh-Beattie government sold our railways, ports, airports, forestry plantations and lotteries to name a few.
A government senator: And we've still got $100 billion in debt.
Exactly: we've still got $100 billion in debt to show for it. Do you know who Anna Bligh's chief of staff was in all of this?
A government senator: Who?
Who was Anna Bligh's chief of staff in all of this? None other than Senator Watt—or should I say Comrade Watt? That's right, ladies and gentleman: Senator Watt was their advisor. Now she just happens to work for the Australian Bankers Association. Don't let your morals or values get in the way of a big fat pay cheque! And who did they sell to? They sold to super funds, many of which were industry funds. And why did they do this? They did it so that the Marxists in the union movement can gain control over our industries and destroy the true means of production in this country: small business. Greg Combet is on record saying that he's going to have influence in the boardrooms. Do we really want these unelected representatives in the boardroom looking after union interests and not shareholder interests? This is a concern, let me tell you.
The Labor Party hates small business, and do you know why? It's because small businesses stand on their own two feet. They distrust all governments, and they, of course, are the lifeblood and breeding ground of the patriot, the sworn enemy of those Marxists who sit on the other side. As I stand here today, let me tell you: I will never stop fighting for the patriots. That is what this side of the chamber is all about—standing up for those who stand up for themselves, those who believe in free choice, those who believe in liberty, those who believe in family, not those opposite who want to believe in command and control, in big governments, in high taxes, in the repression of free will and in the complete and utter destruction of everything that makes this country great. Let me tell you: as a proud Australian, the blood of the patriot runs deep within me. I commend this bill to the Senate.
What an innovative experience it is listening to Senator Rennick, a sort of out-of-body experience really. Over there is the team 'The Thought Leaders'. I won't include Senator Scarr in this because he's far too sensible, but on superannuation Rennick and Bragg are the thought leaders of the conservative show. I have a little bit to say about Senator Bragg in a moment, but when I listen to a stream of consciousness word salad about little red books, Big Brother, bankers, Marxists, command and control, it feels like I'm at a sort of QAnon cell meeting, not the Australian Senate, not where adults engage in this stuff. After these sorts of claims about the Constitution, next thing we'll be hearing about sovereign citizens. It is not really clear to me what Senator Rennick opposes in terms of industry superannuation funds. Does he oppose the big returns? Does he oppose the low fees? It's unclear to me. The super system was built by Australians working together. Employers and unions built the compulsory superannuation scheme. Millions of Australians who otherwise would have been impoverished in their retirement are living a decent, secure retirement that their parents could only have dreamt of.
The role of super in the stimulus response is worth examination. It is worth, you would think, some deep reflection on that side of the Senate. What's really happened is the government has robbed future retirees of their savings in order to do the work that the government should have done. Many, many people have filled the gap. They have filled the gap in the government's failures with retirement savings. People will be impoverished in the future. If the Morrison government is presented with a pathway that's easy, if they are presented with a pathway that hurts the people they imagine to be their ideological opponents, if they are presented with a pathway that helps their big business mates and if they're presented with a pathway that leaves ordinary Australians out, you can bet they'll always take it—and they have.
There are some big economic issues in front of the parliament this year. This government was dragged kicking and screaming to reach the conclusion that there should be a wage subsidy package out there in the JobKeeper package. I remember watching the bloke who represents the Prime Minister in here, Senator Cormann, bitterly opposing a wage subsidy package. What Mr Frydenberg said a few weeks ago is true: the cold, desiccated spirit of Maggie Thatcher and Ronald Reagan still animates these characters over here today. This JobKeeper program is administratively complex and leaves out millions of Australians. Beyond that was a plan for a snapback, which has now turned to a taper off. They have no plan for jobs beyond the taper off.
The super system, our retirement income savings scheme, that is the envy of the modern world should be a source of strength during our economy's troubles. It should be a source of revenue—not revenue, but investment and capability. It should support—
Government senators interjecting—
It should be a source of strength, but these guys can't wait to wreck it. Their MO from the minister to Senators Bragg and Rennick, the thought leaders over there, is to attack it and then retreat and say, 'We're just trying to help.' If it was up to the Liberals, super wouldn't exist for most Australians. It would be the preserve of the very wealthy. It would be the preserve of the elite. It would be the preserve of big business. They opposed its formation. They opposed every single increase in the superannuation guarantee and the contribution rate.
What happened over when the pandemic hit and the economy was faced with the prospect of millions of people losing their jobs is that most Australians saw a crisis. These guys saw an opportunity. Most Australians reacted in horror to the prospect of losing jobs. Most Australians reacted in horror to the loss of gross national product. But these guys saw an opportunity. In JobKeeper, $35 billion has been spent so far. Through the early access scheme, almost $32 billion has been stripped out of low-income Australians' super funds—600,000 ordinary, low-income, low-balance account holders have emptied their accounts in total. I don't begrudge any of them. The criticism is of you lot. Those individuals knew they couldn't rely on Scott Morrison. They had to go to their own low-balance accounts and strip them out because they—casual workers, low-income workers and women—knew they couldn't rely on this government. Twenty-five-year-olds will be $80,000 to $100,000 worse off because of your policy framework and because you couldn't deliver. The government couldn't deliver.
Government senators interjecting—
The government are now laying the groundwork for their failure to deliver on their legislated increases in the superannuation guarantee. That would represent a real wage cut for most Australians. This idea that there is some contest between wages and superannuation is the silliest proposition. It's the most transparently silly proposition. It's not real. For most people, their wage increases are set out for them in the award system. Their wage increases are set out for them for the next 12 months. For people who are in collective agreements, their outcomes are set out for them. In a period of record-low wage growth over the last three years, presided over by what passes for the economic team over there, the idea that you would also cut people's hope of a decent retirement position should horrify most Australians. What passes for what he calls 'philosophical convictions' in Senator Rennick's mind is a deep conviction of hostility to ordinary Australians doing better for themselves than the government allows. They are for cold charity and the government determining who gets up. We are for Australians working together to do better.
I have been horrified by what Senator Bragg, the self-styled expert over there on industry superannuation, has had to say about this. Just seven days ago, in a tweet, which is his preferred mode of communication, beyond books, with the Australian people, he said:
Keating told the 1992 ACTU Congress—
and the next part is in quotation marks, so he's indicating the former Prime Minister said this—
"You are losing your industrial muscle; I have given you the opportunity to take on financial muscle. You will get that through your superannuation funds."
Except Paul Keating never said that. He never said that. And there was no ACTU Congress in 1992. Senator Bragg said that Paul Keating said that at a 1992 ACTU congress. But he didn't. When one tells a lie, it needs details to be credible, but it's also really important that the details aren't so easily verifiable, because the important thing about telling a lie is that people don't figure you out so quickly. Senator Bragg has a history of making wild—it's hard to say 'wild' in the presence of Senator Rennick—untrue claims to further his argument. I'm not sure whether it's attention-seeking behaviour—I'm not talking about you, Senator Rennick—or because the ideas themselves are running out of puff, or whether it's just compulsive.
A government senator: Senator Bragg wrote a bestseller.
I'll take that interjection. It's a bestseller in pulping operations all over the country.
A government senator: Have you read it?
Yes. He said:
Make no mistake, industry super funds are on track to be the biggest political donors in Australia. They'll be bigger than the CFMMEU and Co.
Except, it's just not true. It's not remotely true. It never has been true. It never will be true. He makes the claim because it sounds scandalous. The truth is, if you review the AEC records—and the super industry organisations have done this—they show $25,000 worth of donations as far back as records go. The super industry bodies wrote to Senator Bragg and told him all about this in a completely verifiable way, but he's chosen to ignore that. Just for scale, or perspective, that's about three-hundredths of a per cent of what Clive Palmer spent supporting your re-election bid last year. Just for perspective, it's less than Senator Rennick donated to the LNP immediately prior to his preselection.
Government senators interjecting—
Yes. There was a clear imputation in Senator Ayres's comments that there was a connection between Senator Rennick making a substantial donation to the LNP prior to his preselection and his successful preselection. There was a clear imputation, and I think it would be courteous to the chamber for Senator Ayres to withdraw, or at least confirm that that imputation was not intended.
Senator Ayres, in my view, there was a clear connection in your statement between—
Senator Rennick interjecting—
Senator Rennick, please allow me to finish. Senator Ayres, there was a clear connection that you were drawing between his preselection and his donations. I invite you to either clarify what you had to say or withdraw it.
I'll make it absolutely clear that the contribution that Senator Rennick made was at the time that it was made—I make no imputation beyond that. Some others opposite have drawn that imputation. It's a matter entirely for them.
Why does Senator Bragg continue to say the things that he says? Why does he continue to say things that are demonstrably not true? Why is he so committed to the path that he has embarked upon of deliberately saying things about industry superannuation that are not true and distorting the facts? Last week he claimed that contributions to super have been lifting house prices. I imagine he'll shortly be saying that they cause climate change or are responsible for the Broncos' performance this year. Senator Rennick and Senator Scarr might take some comfort in that. He might say that it's responsible for the drought. Every claim that he makes shouldn't be taken seriously in this debate, because he resorts so easily to making assertions that are not true. Ultimately, one loses credibility if one keeps making wild and extravagant claims—something that you, Senator Rennick, might pay some attention to. Let's make this debate about the interests of ordinary Australians, not the ideological predilections of the far recesses of the Queensland LNP.
I rise to address the Superannuation Amendment (PSSAP Membership) Bill 2020. Superannuation is actually a good idea, but it has been poorly executed. What I mean by 'poorly executed' is that its very birth was, frankly, a chaotic birth, because who can think of any other fundamentally intergenerational scheme that hasn't even got a framework or an objective?
There are two schools of thought as to how this scheme came to life. The first school of thought is that it was developed by Bill Kelty and Iain Ross, who were staffers at the ACTU in the late eighties and early nineties. They advised the Keating government on formalising the accord arrangements on superannuation into legislation. The other school of thought is that the Treasury was asked to do some basic modelling at a pub in Canberra, on the back of a coaster, which was, sadly, thrown out and lost to history. Either way, the scheme was not put in place with the sort of economic rigour with which it should have been born so that over time it would actually be effective. By 'effective' I mean that what this scheme should be doing is getting people off the pension and saving the government and the taxpayer money. It is a demonstrable failure because it costs the budget vastly more than it saves and it gets very, very few people off the pension.
The other thing it does, which is a very real issue for a lot of low-income Australians, is damage people's prospects of securing a first home. Now, many factors have led to the lack of home affordability in Australia. I should take this opportunity to correct the record. I have not said that superannuation has increased the cost of housing ever. What I have said is that, if you are a low-income earner and you are forced to save into a superannuation scheme, it is harder, by definition, to secure a deposit for a first home. This is real money. These trade-offs are real. You can have a debate about the superannuation guarantee rate; the money doesn't fall out of the sky. The money, which is a cost of employment, is part of workers' wages. So your super guarantee increase is a trade-off against a wage increase, just as it is a trade-off against any other financial judgement, like pulling together a deposit for a first home.
This is an important issue for legislators to consider carefully. It is one of the biggest things that we do to the Australian people. We compel people to put almost 10 per cent of their own wages and salaries off away into these opaque funds, and we hope for the best, effectively. It is a lightly regulated industry.
People have said that I'm a socialist. People who know me know that that is not true, but I have advocated a higher level of regulation in this space because the way that this scheme was set up by the Keating government is that it was gifted to the financial institutions and the unions to run and they have run it poorly. You can look at the behaviour of the industry funds during this COVID crisis, when they have put their interests ahead of the national interest every single day—shocking, disgusting rent-seeking. You can see the even more appalling behaviour of the retail funds, who were exposed by the royal commission as always putting the shareholders ahead of the members and therefore breaching their fiduciary duty. This is a disgustingly administered scheme. Why is it so poorly administered? Because of the money. Each and every year, $32 billion in fees is sucked out of people's accounts. Australians spend more on super fees than they do on power bills. The only response we ever hear from the other side is effectively that there should be more and more super, more and more super, more and more super. There is not enough focus on the outcomes of the scheme.
Over the course of its 30 years, it has failed, really, on three fronts. As I said, it costs more than it saves. This year alone we're looking at almost $40 billion in forgone tax revenue. The industry says, 'We've probably saved the budget about $9 billion.' I know that you can't net those figures off, but you're a long way behind. Secondly, pension reliance is stubbornly high. Seventy per cent of people are on the pension today, and that will be the same in 2050. Yes, there will be more part-pensioners, but who can think of a scheme that after 50 years and 70 years of operation is getting virtually no-one off the pension? Thirdly—and this is a real issue for many lower income Australians—it is damaging the prospects of people pulling together a deposit for a first home.
The vested interests here are very, very strong. As I said, it was gifted to the banks and the unions, and the problem with the characterisation of the debate around unions and industry funds is that it's not just the unions that are the guilty parties; it's also the large employers. The large employer groups and the unions have been in bed together for the whole time that super has been in existence, and they will always put their own narrow interests ahead of the workers, just like they do on penalty rates. Just as they will cut workers' penalties rates to feather their own nests, they will always advocate for more and more super because of the board positions and associated revenues which flow into the employer groups and the unions.
Senator Ayres said that I have been making misleading statements about the Australian Electoral Commission data on payments to unions. The fact is that in this calendar year $13 million will flow from super funds into unions. That is not my data; that is the Electoral Commission's data. I have projected, based on a nine per cent growth rate over the past 10 years, that it will hit about $31 million by the end of this decade. By 2030 there will be $31 million flowing from super funds into unions. That is a significant amount of money. As someone who spent some time as a party director, I can assure this chamber that $31 million will pay for a lot of campaigns. And this is only the money that is captured under the AEC's definition of a political payment. It doesn't include the enormous expenditure, through advertising and other means, of the funds on promoting themselves. You can turn on the TV and watch a footy game, and all you'll see is super fund ads: 'How good is super?' 'Fantastic. It must be a great deal.' So the vested interests are a real problem. As I said, the financial institutions are just as bad. They have had their colours lowered by the banking royal commission; too often they have put their own interests ahead of the workers. But who could blame them? This is the only industry in Australia where they open the door and the money just piles in.
The Labor Party are isolated on the question of the superannuation guarantee. The ACOSS advocates for those on low incomes, the independent economists at Grattan and CIS, the Treasury, the Governor of the Reserve Bank—everyone has said this is a bad time to raise the super guarantee. It's a bad time because it will cost workers a wage increase, it will cost people jobs and, by the way, the system doesn't work very well. So, they're all saying, 'Why would you plough more money into this system?'
The Labor Party often likes to lecture us about being the advocates of low-income workers. Well, they're very isolated. ACOSS were against it. In fact, ACOSS were against the scheme at the beginning. And Peter Walsh, a decorated and very capable finance minister in the Hawke government, said that the only reason the scheme is being established by the government is to help the unions, because they want to get their toe into super funds management. That has been a cost-ineffective investment for workers, but it has worked really well for the unions. That's why all the people in this place fall over themselves to defend super. I wonder how many preselections depend on that.
At the end of the day, I am not an advocate for this system's abolition. I think that as a fair-minded person you have to look at the idea of trying to support people to be self-funded in retirement as a good objective and as a good and sound idea. So I would be an advocate for fixing the scheme rather than junking it. I think that it should have an objective and that there should be a clear framework. People should know that this system exists to get people off the pension. We should try to get at least half the population off the pension because we have an ageing population and that will cost the country significantly.
We should also look, as a first order, at trying to cut fees. Seriously, if you're looking at $32 billion being sucked out of this scheme every year, when you're putting in about $100 billion, that's a pretty material amount of money that's being pulled out, effectively, to pay for this largesse that you see in the finance sector and in the union movement. So it would be quite a reasonable idea for there to be significant market intervention here. I see no reason why the government couldn't offer a simple, cheap and cheerful government default fund. That was in fact the recommendation of reviews in the 1970s that looked at the idea of having a superannuation scheme, but, when the Keating government got around to legislating superannuation, they of course gave it to their friends in the union movement and the finance sector.
It is also my view that historically—because I try to be a balanced person—the finance sector has had too much influence over the Liberal Party. I think there is no doubt that, particularly in the financial planning space, there has been too much influence, and people have not come to these issues and looked at them clearly. You would struggle to find a single member of the Labor caucus who would argue against having 12 per cent super, even though that would be argued in the face of all the independent evidence—from Grattan, from the Reserve Bank, from ACOSS. Every fair-minded private sector economist would say it was a bad idea. But there they are, apparently arguing against their own core constituency.
The other thing we should try to do is actually enforce the laws this parliament sets. Why on earth would super have a sole purpose test designed to ensure that the money is managed only for members' benefits? It would be totally undermined, particularly by the regulator APRA—and I have to say, I've lost the great confidence in them that I had for many years. APRA is basically green-lighting super funds and allowing them to make significant political payments. They're also allowing the super funds to break their own prudential rules. There are people who have been on these boards for 10, 20 or 30 years. APRA has a board renewal policy that says you're not supposed to be on a super fund board for more than 12 years. There are people sitting on superannuation fund boards today who have been on these boards for 26 or 27 years. Until last year, there were two directors of super fund boards who had been on these boards for 32 years apiece. Now, 32 years is the age of the newest director of Telstra, Bridget Loudon. That's a good comparison.
At the end of the day we will always try to look at these issues relating to superannuation in a practical way, because we are practical people on this side of the chamber. We will look at the super guarantee rate. We will look at system design. We will always try to get the best deal for workers, because we recognise that this is a significant intervention into people's private affairs. We want the scheme to work, and we'll look at it with clear eyes.
I want to reflect on this very good quote from the House of Representatives on Tuesday, where the Prime Minister said:
Those opposite want to keep the hard-earned savings of Australians away from them when they need it most and have them tucked up in the industry fund by union fund managers as they count their directors fees.
The problem here is that the Labor Party really have no idea who they represent when they come into these chambers. Are they representing the super funds, or the unions, or the people who elected them? I really wish they would come into these chambers and reflect upon that very carefully. People can talk about people's past, their histories and what their prior views were—that's fine. But when you're elected into this place you really should look at every issue through the prism of what's going to be best for the workers, especially now that we're in an environment in which we have not been previously with super: this is the first recession we've had with super. So for people to come in here and advocate to send more and more money off to the banks and the union so they can count their big directors fees and make their significant payments to shareholders in a scheme which is not working is I think a very, very significantly bad judgement, and people will remember this.
I know that the Labor Party think that the super funds will come and campaign for them, that they'll threaten the crossbench and do all this stuff—that they'll use all the bullyboy tactics they have used in years gone by. That might be okay, but I think the Australian people will judge very harshly political parties which are desperate to put vested interests ahead of the national interest and vested interests ahead of their own interests. At the moment, the Australian people want more jobs, higher wages and a secure future. They don't want to see people coming into this place and trying to feather the nests of their mates.
It gives me great delight to speak on the Superannuation Amendment (PSSAP Membership) Bill 2020 and to follow someone who has recently been referred to as a 'baby faced Liberal', Senator Bragg. Of course, our ex-Prime Minister, the Hon. Paul Keating, made a somewhat gratuitous comment, which was totally in keeping with his history and character, referring to 'baby faced Liberals'. I think he said something along the lines—and I'm happy to be corrected if I'm wrong in this regard—that 'It was, perhaps, the highest form of political modesty to be a first-term backbench senator.' Well, I'm happy to be in the company of these baby faced Liberals, although I must say that I don't think Senator Rennick qualifies in that regard! Perhaps on one hand we have baby faced Liberals here—a former political modesty—but on the other hand we have a cranky ex-PM who perhaps has unrivalled arrogance. I'll leave it there.
Senator Gallagher referred to the government attacking the superannuation system. It is somewhat odd for Senator Gallagher to make that remark, having gone through, in quite fair and reasonable fashion, what a benefit this bill will be to the members of the relevant funds. On the one hand she said that this bill is for the benefit of the members in relation to those funds, and then she accused the government of attacking the superannuation system. It's totally inconsistent. This bill promotes choice, flexibility and efficiency—choice, flexibility and efficiency—and that is what we should be seeking to do in relation to our superannuation scheme.
Senator Ayres interjecting—
I will just say to Senator Gallagher, and to Senator Ayres, that from our perspective the reforms which were introduced to allow members to withdraw $10,000 prior to 30 June and then a further $10,000 after 30 June were a matter of personal choice—personal choice in the circumstances of a pandemic. What it underlined to those members who did exercise that choice—and it wasn't the government exercising the choice—was that it was the government giving those members that choice to decide whether or not to withdraw that $10,000. It was the members who were given the choice, and that emphasised that it is the members' money. The money in those superannuation accounts is the members' money.
Before we had superannuation, prior generations used to put away a nest egg or they used to put away some money for hard times in a bank account. And when the hard times arrived they would draw down on that money. Why should people be deprived of that choice today in the middle of a pandemic? This government has given them choice and I'm proud to be part of a government that has delivered that choice.
There is a real beauty about a Freudian slip. Senator Ayres gave us the best Freudian slip I've heard for a long time. He referred to the 'revenue' from superannuation—'revenue' was the word he used. Whose revenue is it? The union's revenue? I think that's the revenue he's referring to. He finds it difficult to take off his AMWU hat. I understand that. He was a very effective leader in trade union organisations and I respect him for that. But this is the whole point. Superannuation should not be about the revenue of the trade union movement. It should be about the members and their retirement. It's not a revenue source for third parties—and I don't care who they are. It should be for the benefit of the members, and the members should have a choice, in the time of a pandemic, whether or not they want to draw on some of those funds and make a decision—their own decision—with respect to how they want to apply those funds. They might want to pay off a home mortgage, taking some of the financial pressure off them today. I respect each and every person who has made that choice. That choice is certainly something we should be promoting in this place.
Senator Ayres also asked Senator Rennick: 'Well, what do you oppose?' I thought it was quite clear, listening to Senator Rennick, as to what he opposed. He opposed industry super funds making political donations, or any super fund making a political donation. He opposes that because it is against the sole-purpose test. I oppose that as well. He opposes superannuation funds having exorbitant entertainment budgets. Why? Because it's against the sole-purpose test. It's not consistent with the sole-purpose test. I oppose that as well. And I do this not on an ideological basis. I'm actually a member of an industry fund. I'm a member of AustralianSuper. I congratulate Ian Silk and his team on the returns he has given me over a number of years. I left an AMP super fund because I wasn't happy with the returns in that respect and joined AustralianSuper, on the recommendation of my father, in fact—one of many recommendations he has made to me that I have followed, dutifully, as his son. I've been very happy with the performance of my industry super fund. I am unhappy when they defer in any way from that sole-purpose test.
This bill is about choice. It's about flexibility. It's about protecting the integrity of Australians' retirement savings and I commend it to the Senate.
I would like to thank all senators who have contributed to this debate. The Superannuation Amendment (PSSAP Membership) Bill 2020 extends membership of the Public Sector Superannuation accumulation plan to certain current and former Commonwealth employees who are not otherwise eligible to continue making contributions to a fund run by the Commonwealth Superannuation Corporation. The bill will ensure the choice-of-fund principle extends appropriately to Commonwealth public sector schemes. It allows current and former PSSap members to avoid paying multiple fees to maintain separate funds under different trustees. This bill will support them in saving for their retirement.
This bill allows former PSSap contributing members to use their existing PSSap account in respect of any employment, like self-employment, not just employment that attracts a superannuation guarantee obligation, and to make other contributions, such as non-concessional contributions. PSSap contributory members will also be able to make contributions to their account in respect of any non-Commonwealth employment that they undertake concurrent to their Commonwealth employment.
The bill will also allow certain members of the main Australian government defined civilian benefit superannuation schemes and others that are currently a contributing or a preserved benefit member to establish a PSSap account where they choose to also have future superannuation contributions held by the Commonwealth Superannuation Corporation.
I commend the bill to the Senate.