Steve Georganas (Adelaide, Australian Labor Party) Share this | Link to this | Hansard source

I will continue where I left off just before we had our 90-second statements. I was talking about the certainty that we require in superannuation. What this bill does is ensure that there is an agreed objective for superannuation, so different administrations, different governments and regulators that come in keep that scope in mind every time there is a change to superannuation.

As I said earlier, many people depend on superannuation for their retirement. Many people rely on their super, after years and years of hard work, to have some income after they retire. The significance of this bill extends right across Australia to all workers. But the bill does many other things as well. It ensures that we keep a tab on superannuation in terms of the direction it's going and whether it's fulfilling its purpose. We want to ensure that there are no adverse results and consequences for the savings of numerous Australians—millions of Australians, when you think about it—across the nation.

The objective outlined in the bill seeks to militate against such occurrences—occurrences that diminish super in terms of different legislation that may be brought into this place. We want to ensure that the superannuation system fulfils its commitment of delivering a secure retirement for every Australian. Any forthcoming modifications or propositions concerning superannuation legislation must be scrutinised against this objective—again, that is focusing on what we want as an outcome for superannuation—as it should be. This scrutiny will ensure accountability among policymakers in their deliberations on matters impacting the retirement savings of the millions of Australians who contribute towards super.

This objective does not supersede any existing obligations that are incumbent upon superannuation trustees. That doesn't change one little bit. Nor does it alter the provisions allowing early access to super on compassionate grounds. Many people come into our offices—I suspect I'm not the only one—who are in dire straits and need some form of assistance through their super. But those are rare occasions, and it's always on compassionate grounds in terms of being in a completely dire state with your finances. This bill will solidify the overarching principles guiding our superannuation system. It will have a clearly defined objective which will facilitate the maximisation of these broader benefits for the collective interests of the members. Labor's foundational efforts have resulted in our current $3.5 trillion superannuation system, positioning it as the fourth largest globally, the fourth largest in the world.

The commitment of this Albanese Labor government remains unwavering in safeguarding and strengthening the system, as Labor governments have always done from the inception of superannuation in the mid-nineties right through to today. That is a core foundation of the Labor Party. Its purpose was to build retirement funds for people who were retiring, and that will remain its purpose under this government. We need to ensure a secure retirement for more Australians while reinforcing our nation's economic resilience. The Superannuation (Objective) Bill 2023 represents that crucial step towards constructing a transparent and resilient superannuation system, one that serves the best interests of all Australians within the confines of the law, keeping that focus on what the purpose of superannuation is and ensuring that we do everything we can to enhance superannuation. It was at the core of the Labor Party in the mid-nineties to ensure that people could retire with some dignity and with some funds that could perhaps supplement, and in many cases completely take over from, the old age pension.

It's a very important piece of legislation, and we have proven on this side that we're always strengthening superannuation laws. We know the purpose of superannuation and what its goals are. On the other side, the opposition, while they were in government, have continuously tried to diminish superannuation and use it for a whole range of other purposes. The sole purpose of superannuation is to have funds for your retirement when you are not working and you are not earning an income, and to have those funds there to enable you to live the rest of your life in some form of dignity and not wanting handouts.

Of course, that is not the case for everyone. Some people will be supplementing superannuation with the old age pension. Others may not, depending on how much they have put aside over the years while they have been working, but it is a great system. It is one of the best systems in the world. And I know—I've been following it since the nineties—where we are with superannuation. We're now seeing more and more people relying on the funds that they have, more so than the age pension, and that can only be a good thing, because when you retire the bills do not stop coming in. You still need to put food on the table, you still need to pay bills, you still need to put petrol in the car, and you still need to have a form of income; this is what super does. I commend the bill. I support it, and I hope the other side will be supporting it as well.

Monique Ryan (Kooyong, Independent) Share this | Link to this | Hansard source

The objective of superannuation should be to provide an adequate income to ensure that all Australians achieve a comfortable standard of living in retirement, supplementing or substituting the age pension. Preservation, retirement income, equity, sustainability and a dignified retirement should be at the heart of our superannuation policy.

In this country, housing plays a major role in determining retirement outcomes. Retirees who own a home generally have a better standard of living than those who rent. Those renting in retirement often face financial stress. They face high rates of income poverty. Homeownership rates have declined, especially among younger and lower- to middle-income Australians, in the last four decades. The value of housing has shot up since the 1990s. House prices have increased by as much as 30 per cent in some parts of the country in the last 12 months alone. This obviously benefits existing homeowners, but it does not help those who are renting and those who are hoping to buy.

Australians can generally access their super prior to retirement in limited circumstances—for medical treatment, for home modifications, for disability and in emergency situations to prevent foreclosure. The opposition is keen on extending those provisions to allow Australians early access to superannuation for housing. They have recently suggested that doing so might help address housing affordability and that it might help first home buyers enter the property market. It takes but an instant to see two massive holes in this proposition: firstly, the potential impact on retirement savings; and, secondly, the fact that this change would result in reduced affordability in an already overheated property market. Clearly, raiding your super early will have a significant compounding effect on retirement savings. For example, the Super Members Council found that a couple of 30-year-olds who each withdrew $35,000 from their super will retire with about $195,000 less in today's dollars.

But we don't have to imagine an imaginary scenario. Fortunately—or, rather, unfortunately for those involved—the great minds of the opposition have already provided us with a model for the potential outcome of what happens when you allow Australians early access to their super. In the early stages of the COVID pandemic, before the JobKeeper scheme kicked in, the Morrison-Frydenberg government encouraged Australians to sacrifice their retirement savings to support themselves. Through the COVID early release scheme, 4.9 million Australians applied to access their super, taking up to $20,000 from their super during the period between April and December 2020. Half of them were aged less than 35; almost 40 per cent of Australians between 25 and 35 accessed their super at that time. Tragically, 725,000 Australians effectively wiped out their superannuation accounts in early- to mid-2020.

Compound earnings make up three-quarters of our super balance at retirement. So those who lost that super in 2020 will never recoup those losses. It's estimated that $38 billion of early withdrawals at that time will cost those super fund members $85 billion in their retirement savings. A 30-year-old who took out $20,000 then will be more than $93,000 worse off at retirement. In my electorate of Kooyong, more than 21,000 people elected to access their super in 2020; 5,396 Kooyong residents wiped out their super entirely. We mortgaged the future of a generation.

We're all going to pay for that early release scheme, not just those people who needed help at a critical time and had nowhere else to go. The early release of super scheme will mean a higher reliance on the age pension as well as a lower tax income from superannuation. It will cost this country $2.5 billion a year from the mid-2060s. Industry Super Australia has modelled that, for every $1 taken out, the taxpayer will pay up to $2.50 extra in age pension costs. Those early pandemic withdrawals gave young Australians a lifelong form of financial long COVID.

The cost will be borne by future taxpayers either explicitly via increasing their taxes or implicitly via a reduction in the government provided services that they receive: education, aged care, NDIS, child care or health. Over the course of their lifetime, a person now aged 20 who did not access their super in 2020 will still be expected to pay at least $3,000 extra in income tax just to compensate society for the former member for Kooyong's COVID early release scheme. These are the devastating consequences of schemes that break the preservation rules of super. People are left with far less money at retirement, and the next generation, our children and our grandchildren, will have to pay higher taxes to pick up the bill for higher pension costs.

And what of the potential effect on housing affordability? This country already has a housing shortage. Building approvals are at a decade low, having surged during the pandemic. Allowing Australians to access their super will increase competition for existing stock. It will drive up housing prices. It makes no sense to increase demand when supply is so limited. The Super Members Council has published modelling suggesting that median house prices in major capital cities could jump by nine per cent or as much as $70,000 in cities like Melbourne.

Another question is whether young people have enough in their super to afford a home deposit. Under the opposition's proposed scheme to withdraw $50,000, a person would need superannuation savings of $125,000. This is a sum the average Australian does not accrue until they are in their 40s. So who is this policy meant to help? Most people who are genuinely struggling to buy a home have so little super that allowing them to raid it would effectively make very little difference. But, paradoxically, allowing people to use their super for housing would increase the purchasing power of those who already have a higher income and, hence, a higher super balance. This is the group who are already most able to buy. Giving them access to faster capital will push up prices across the board. It'll make it harder for those people struggling to get a foothold in the market.

The Liberal aligned think tank Blueprint Institute has estimated that the demand for low-cost housing would outstrip supply four to one under the opposition's proposal. The Centre for Independent Studies, another right-wing think tank, has said allowing first home buyers to use their superannuation as collateral or as a home deposit would increase access to housing for favoured recipients but decrease it for everybody else. The RBA and APRA have also cautioned against using super for housing, saying that we, in doing so, will inflate property prices. Saul Eslake, a member of the government's National Housing Supply Council, has pointed out any policy measures which would enable people to pay more for housing than they otherwise would results not in people owning homes but rather in existing homes becoming more expensive.

But why stop there with those opinions? Let's look at what the opposition has said in the past about allowing people to withdraw from their retirement savings to help them buy a home. In October 2014 the then finance minister, Mathias Cormann, said:

Increasing the amount of money going into real estate by facilitating access to super savings pre-retirement will not improve housing affordability. It would increase demand for housing and, all other things being equal, would actually drive up house prices by more. That is, it would reduce housing affordability, including for first home buyers. The only effective way to tackle housing affordability is by boosting housing supply, not by boosting demand.

Thanks, Mathias! Let's see who else has talked about this from the right side. Malcolm Turnbull said it was 'a thoroughly bad idea' and, 'This is not what the superannuation system is designed to achieve.' That was in March 2015. In April 2017, when he was Prime Minister, Mr Turnbull again rejected the idea, at which time the now opposition leader, the member for Dickson, commented: 'I think Malcolm has it right. He's referred back to his previous words on this to say that it's not a good policy, and I agree with him.'

The Deputy Leader of the Opposition, the member for Farrer, said in April 2017:

Young people need their super for retirement, not to try to take pressure off an urban housing bubble, better solved by decentralisation.

The House of Representatives Standing Committee on Tax and Revenue, then chaired by the former member for Mackellar, noted in May 2022:

… the Committee recognises that allowing first home buyers to access or borrow against part of their super to purchase a home would, in the absence of increased housing supply, likely increase demand and lead to higher property prices.

Faced with this genius proposal, in May 2022 Senator Jane Hume said, 'I would imagine in the short term you might see a bump in house prices.' And former prime minister John Howard, the relic they love to roll out at every occasion, said, 'Super is for retirement.'

It is appropriate that we reevaluate how much super Australians are accruing and what they do with it. In my electorate of Kooyong, the political landscape is dominated by cost-of-living concerns. Rent and housing attainability are two of the three highest priorities of my constituents but especially my younger constituents. I've talked to them. They believe in super and the rationale for it. They know it's their money—after they turn 65. They believe that Australians should not have to choose between a house and a nest egg. Their current sense of insecurity heightens their feelings regarding the importance of having security in the future. Some of the young people of Kooyong accessed their superannuation during COVID, but now they feel they have been duped. They are aware of the fact that the COVID early release scheme and others like it can entrench intergenerational inequity. Their response to the opposition's proposal is that this is not the purpose of superannuation. Allowing people to access their super would just put more money into the housing market. In the absence of additional supply, the equation is simple: it would drive up house prices. Those accessing their super would pay more for less. The only people advantaged would be those who own their homes already.

One might think that the opposition is playing to its base: older voters who are already in the housing market. The issue is this: older voters in electorates like mine are smarter than that. They see through this ploy. They want their own children to be able to afford a home in their own lifetime, and they don't want their children to have to rob their future in order to do so. Younger voters in electorates like mine are also smarter than the opposition. They understand the purpose of superannuation. They argue that Australians shouldn't have to choose between a home and a nest egg. They don't trust future governments or their ability to provide adequate pensions in the face of an ageing population and a narrowing tax base. They know that the current housing crisis is the result of successive governments' policy failures.

We all want Australians to have access to secure and affordable housing. It's a right, not a privilege. And we want Australians to have security and comfort in their retirement. With an ageing population and in the face of increasing intergenerational inequity we will not achieve those things by asking our young adults to rob their futures to pay for their present. Governments are responsible for the housing crisis. Governments should fix it. As John Howard said, 'Super is for retirement.'

Daniel Mulino (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

Poverty, vulnerability and uncertainty have been hallmarks of old age for many people throughout human history, and societies have grappled with how to help people navigate these challenges. For much of human history the main mechanism by which older people dealt with these risks was through the family. That worked some of the time, but it was patchy.

In the 19th century, in a number of countries, academics, public policymakers and government officials started to explore whether there were ways in which something better, more stable and more comprehensive could be constructed. One example: in the 1890s, Charles Booth undertook a major survey of poverty of elderly people in Victorian England. At around the same time, in 1899, a departmental committee on the aged deserving poor also undertook a rigorous statistical analysis of those living in poverty and those living with insecurity in Victorian England. They found that a very significant number of older people relied on charity, on their local parish or on the whims of relatives, or some combination of these.

In some parts of England at the time, 23 per cent, or just a quarter of people, relied solely on earnings. Many people relied on other forms of assistance. While that reflected families and communities coming together, as I mentioned earlier, it put many people in a situation where they were vulnerable and where they were insecure, and that led to a number of countries exploring whether it was appropriate for the government to create a safety net.

We saw in Germany in the 1890s and in parts of Scandinavia at around the same time safety nets created, Bismarck's Germany being the one with the highest profile—a basic pension to support those above a certain age. These were important schemes. They were very fiscally modest but they were an important step forward. They provided a much greater level of certainty for people who may not have had family or people who perhaps had suffered other shocks in their lives, like bad health outcomes. Many other countries followed suit. Australia wasn't the very first, but it was one of the first movers. In Australia, legislation was passed in 1908 to provide for an age pension. This was one of the key planks of our social welfare state, and I believe it remains to this day one of the key antipoverty measures, one of the key civilising institutions in our society.

If one goes back to that time in 1909 and looks at that scheme, it's telling. People on the age pension in 1909 received 10 shillings. There were just 34,000 people on the age pension. Each of those received something in the order of 12 per cent of average male earnings. I think what's particularly telling is that the retirement age at the time for men was 65 but life expectancy was 55. So people were getting this benefit but the average life expectancy was materially below the age at which it kicked in. That's obviously totally different to the situation we find today. Women's retirement age was 60 but their life expectancy was 59, a smaller gap but, nonetheless, life expectancy below the official retirement age. What we saw was that, as in other countries in Western Europe and the US a couple of decades later, the age pension was introduced but didn't cost a great deal, partly because the replacement rate wasn't particularly high but also because people weren't living that long.

What we've seen since then is that life expectancy has increased fairly continuously over the last 100 years—a wonderful thing for people; a reflection of healthier lifestyles, more effective health services and other things. We're also having fewer kids. So what we find is that, over the last century, we have a retirement income system, an age pension, that is costing more and more relative to our taxpayer base. We saw superannuation gradually being introduced in the post-war era to supplement the age pension. In Australia, this was a critical means by which we as a country, firstly, took pressure off the age pension and, secondly, provided assistance to people to save for themselves and provide themselves with more autonomy and more agency.

If we go back to 1991 and the introduction of some of the absolutely key pieces of legislation that, to this day, continue to underpin our superannuation system, Paul Keating said, 'I wish to propose the creation of a comprehensive national retirement income system.' At that time, he was making it clear that superannuation was to complement, to add to, the age pension. He talked about the fact that the superannuation legislation that he was bringing in in 1991 would involve not just broader coverage but also a move over time to a 12 per cent contribution rate, for greater adequacy in terms of people saving for themselves, given longer life expectancy. When Keating spoke to students at the Australian Graduate School of Management on 25 July 1991, he said:

Today there are five working age Australians to every Australian over 65. In forty years—

or 2031—

there will be only three of working age to each over 65.

Way back in 1991 he saw the demographic pressures that our age pension scheme would come under. That was one of the key motivations for those seminal and important pieces of legislation back in 1991.

If we look at some of the statements from the Treasurer at the time, in 1992 John Dawkins made the observation when introducing key legislation that, in 1983, 40 per cent of the workforce had some super cover—although, even there, it was patchy in terms of how much it provided. By 1991 that proportion had risen to 72 per cent, and it's far higher today thanks to the legislation that they both championed at the time.

I think it's critical to go back to that period, to 1991, because today's bill is a very important piece of reform that is helping to solidify that second key step. If the age pension back in 1909 was the first step to help our society better deal with vulnerability, uncertainty and poverty in old age, by providing a basic safety net for everybody; and if superannuation as broadened and deepened in 1991 was the second complimentary key step, it's critical to think deeply about what it is that the system is there to achieve.

In his second reading speech for the Superannuation Guarantee (Administration) Bill 1992, John Dawkins spoke in relation to expanding coverage. He said, 'There is also a need to increase the average level of superannuation savings for each individual if these savings are to provide for an adequate level of retirement income.' So it's adequacy of income in retirement, saving at a sufficient rate to reflect the fact that people are living longer and some people are retiring earlier.

John Dawkins in that same speech said, 'It will lay the foundation for income security and higher standards of living in retirement for future generations of retirees.' Higher standards of living in retirement: that's what we are aiming for. In the face of demographic pressures, we're trying to move away from a system where all too many retirees live in poverty, live with insecurity, live worried about whether their savings will last them through their lives, live worried that they will be at the whim of others for their income, live worried about what a negative shock such as a bad health outcome will do to them. This will provide both income security and high standards of living.

Again, Keating, from that same year in parliament, said that for him a decent standard of living in retirement lay at the heart the superannuation system. In his words: 'It is the difference between a full, active life and a life governed by budgetary exigencies the vagueness of politics.' Superannuation was to provide people with a decent, adequate, secure standard of living in retirement. Again in Keating's words: 'The difference of being able to enjoy the free time at the end of one's working life and wanting the means to enjoy it.'

As opposed to 1909, when some people lived beyond 65 and enjoyed years in retirement, but not that many, now we have a situation, fortunately, where the vast majority live past 65, and many for decades past it. That's why superannuation is absolutely critical if we are going to provide that dignity.

It's important to go back to that period, to 1991 and 1992, with the architects of the scheme to look at the core purpose they saw this scheme providing and, I believe, the purpose that it has actually lived to provide in its maturity. This bill embeds that purpose into the superannuation system. The purpose in this bill that we are discussing today is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way. Those words go right back into 1991. They could have come out of the second reading speeches of Treasurer Dawkins or PM Keating. They could have come out of the commentary at that time. That is why today's bill is so important: because a dignified retirement and security and sustainable and equitable supports for people remain absolutely at the heart. This is a simple but cogent and coherent purpose that is contained in this bill.

This bill also does not just define it; it says that future changes to the superannuation system must support that objective rather than undermining it. That means that half baked or populist measures that will undermine the system, such as measures that undermine the potential for people to keep money in their accounts over long periods of time, schemes that attack preservation, will need to come into this place, and the onus will be on people proposing such schemes to justify how they support the system, how they support the purpose of superannuation rather than undermining it. In my opinion they will have a very hard time doing so. So clearly defining the objective will make it that much harder for people to bring forward schemes that have a very short-term objective, a very political objective, but that undermine the scheme. It is absolutely critical for our retirees that that protection is there.

I will finish on the point that, again, those architects back in 1991 had it so right. They talked about the fact that you need a public safety net. You need voluntary savings and then you need mandatory savings, which is what the superannuation scheme is. It's those three key pillars. When you go back to the mid-1990s, the World Bank in its seminal report, Averting the old-age crisis, it was built around those three pillars. So it almost could have been structured around the second reading speeches I just read from. It's this ability to provide risk-management at the individual level, by having a safety net, providing people with management against longevity risk, with protection against inflation risk and with protection against other shocks in their lives, like health outcomes. The age pension is still very good at providing individuals with that risk protection. But the mandatory superannuation system is very good at providing people with protection against an aging society. It's intergenerational, in the sense that it's helping individuals to save for themselves at a future time when there will be fewer taxpayers to provide for them. And it's the fact that we have a retirement income system with all of these pillars working together. Today's bill is critical for that, because the purpose of that third pillar—the superannuation system; the mandated savings—which is to provide adequacy and sustainability and equity in people's retirement income, is absolutely critical.

I'll just go back to the words that were spoken in that debate, back when these key bills were introduced: that, when the superannuation system works well and when people are not forced to take away from today to support themselves today at the expense of tomorrow, and when preservation is protected and when people are contributing at a suitable rate, then, in the words of those wise people back in 1991, our superannuation can help to provide 'the difference between being able to enjoy the free time at the end of one's working life and wanting the means to enjoy it.'

Our superannuation scheme has fulfilled so much of the promise that it held back in 1991, and today we're strengthening its ability to continue to do so in the future.

Luke Howarth (Petrie, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

I'm really happy to rise today to speak about superannuation. It's a subject that's dear to my heart, as someone who started my own super fund when I was 19. The Superannuation (Objective) Bill is pretty straightforward—'a bill for an act relating to the objective of superannuation'. Most people would already know what super is for. This bill I think really just sort of explains what is already in place. The reality is that super is there for people when they retire.

But not everyone knows a lot about what actually happens with their super. Some of the things that the former coalition government did have really made Australians aware of the options that they have around super. The former coalition government delivered real reforms to superannuation that actually delivered for Australians. On this side of the House, we understand that superannuation is Australians' money. It's not the government's money, it's not the Prime Minister's or the Treasurer's money, it's not the unions' money, it's not the member for Kooyong's money; it's actually Australians' money. It's their money. And with $3½ trillion in super funds at the moment, the government has a tremendous responsibility to every Australian who has invested in superannuation.

I sometimes think that those opposite, the current Labor government, don't seem to understand that super is Australians' money. They might think that it's their money—that it's an opportunity to have those funds for them to use—and I'll come back to that a bit more later.

The basic principle of superannuation is pretty simple, and I think it's important that we outline it here. Quite simply, superannuation is about providing for people, for Australians, in their retirement. We've heard some conflict there from the Treasurer, where he's mentioned that superannuation should be used for nation-building projects—often associated with industry super funds that are linked to unions—or to invest in social housing through industry super funds. Well, I'll say it again: the basic principle is that superannuation doesn't belong to the government, or even the industry super fund or the retail fund that's managing it. It's up to Australians how they invest their money.

When I was 19, I had the fortunate opportunity where my dad said to me: 'Luke, put away $80 a month. Salary sacrifice $80 a month into super.' At the time, I think I was earning about $290 a week or something, working in retail, and I didn't really want to give up 80 bucks a month. That would have filled up my car well and truly back then. But, over time, that just built. I understood and learnt a little bit about salary sacrificing and watched that grow over time. The company that I invested in was bought out by someone else, and then I ended up with some shares. As a former assistant minister for youth, I also learnt that a lot of our younger Australians, particularly those aged between 15 and 24, don't always have the financial literacy that I was fortunate enough to have been taught. So, rather than the $400 million, or whatever it is, being spent by the government on advertising tax cuts—which they wouldn't be doing if the former coalition government hadn't legislated stage 3 tax cuts to start with—that money could be better spent on financial literacy programs like the First Home Super Saver Scheme, which explained salary sacrificing and how people can get into a home that way as well.

We've also seen that the government have broken promises in relation to super. We know that during a cost-of-living crisis it's even more important that we ensure our superannuation schemes remain focused on those people they're meant to bring security to—the Australian people. We had the Prime Minister promise before the last election that life would be easier under him, that the cost of living would be reduced under him, that there would be no changes to superannuation under him, and now we have seen that the government has broken a number of promises, time and time again, in less than two years. At the 2022 election, the Labor government claimed that they wanted to end the superannuation wars. That's what they said. The Prime Minister and the Treasurer promised no changes to superannuation prior to the election. Then, in February 2023, after he was elected, the Prime Minister promised no 'major' changes. So there was one thing before the election and one thing after.

We know that the government have introduced a new superannuation tax on unrealised capital gains. That will affect the youth of today, because, while it's on balances over $3 million and kicks in from 1 July 2025, it's not indexed. If it's not indexed, people that are 19 today, like one of my sons, will, in 40 years from now, be hit with a tax that's double the rate it is today in March 2024. It's currently taxed at 15 per cent, and they have legislated to take it up to 30 per cent. So they have broken the trust of the Australian people. The government have continually come into this place and justified it by saying, 'It's only wealthy people,' or, 'It's only people that turn over a certain amount.' They continually pit Australians against each other. They did the same thing with the stage 3 tax cuts, with a promise not to change them, and then they did that as well. There were many policies that weren't taken to the election or that they said they wouldn't change and have now changed, and it's not good enough.

The former coalition government understood that the primary purpose of super funds is to make investment decisions that are in the best interests of members, and this was critical to our Your Super, Your Future reform package. Once again, the government have indicated that they're looking to make changes there as well—that they want to make changes to benefit the people that donate to them. That's what the Labor Party often does around legislation when they come into this place. They legislate for union donors. We saw that through one of the first moves this government made, which was to repeal the arrangement that we set in place around Your Future, Your Super, namely:

… Clearly, expenditure on items that are not supported by identifiable financial benefits to members articulated in a clear business case, are unlikely to satisfy the requirements of the best financial interests duty.

This move alone has allowed unaccountable expenditure to run rife since the election of this government, in less than two years. In the last financial year, 2022-23, 10 super funds made over $15 million in payments to unions and over $21 million to the now-defunct Industry Super Australia. The premise of this legislation is important to ensuring that the objective of super remains within the best interests of Australians, and the government can't be trusted when it comes to this.

I mentioned before the First Home Super Saver Scheme, which the members here in the chamber at the moment all voted against. It was a pretty simple policy that actually did more to help young Australians and educate them on financial literacy than anything that this government has ever done, because it taught thousands of Australians about the importance of salary sacrificing where they're earning a wage. They might be on $80,000 a year. At the time they were getting about 10 per cent—another $8,000 a year—in super . What we legislated was that they could salary-sacrifice more funds into their super and then withdraw them for their first house. All these youths throughout Australia—and not just youths under 25 but some people in their 30s as well—had started to salary-sacrifice into their super.

Those who are now in government fought against it all the way and said they'd repeal it. I congratulate them on not doing that, because, once again, it's helped tens of thousands of people into their own homes and taught them about salary sacrifice. Rather than paying 30 per cent tax on their wage and ending up with a $10,000 contribution—a $7,000 deposit, because they lost $3,000 in tax—they put it into their super and are taxed on it at 15 per cent, so on that $10,000 their tax is $1,500, and they end up with $8,500 as a deposit, as opposed to $7,000. That Australian is $1,500 better off, with a higher deposit for their home. That's happening right now. It's legislated law of the land today. The coalition put that in place, along with a number of other policies to help Australians into their first home. So it won't surprise Australians if we take to the next election—which we will—the opportunity for Australians to use a little bit of the super that they currently have in place to help them into their first home. We're not making apologies for it, and this bill does nothing to stop it. We will take that to the next election. I can say to my coalition colleagues in this place that we should continue to take it to elections and explain it. If we think it's the right thing to do then we should continue to take it to elections.

It's the same with energy or anything else. The Treasurer often speaks about using superannuation and industry funds to invest in clean energy, but they won't invest in, or even talk about, nuclear power. In fact, he rubbished it today. We know that, if they're serious about climate change and want to meet net-zero emissions, it's probably the only baseload power they can do. So what we get is hypocrisy from this government, because on the one hand they say, 'Oh, you can't do this with your super,' but, when it comes to industry funds, that's okay. It's alright if their union donors who manage these industry funds do it.

It's absolutely wrong, and in the lead-up to the next election I and others around the place will be out there talking to young Australians about their super and encouraging them to salary-sacrifice. I believe in super. I want people to salary-sacrifice. I want them to contribute over and above what their employer contribution is. But, if they want to use part of their super to help get them into a home in the middle of a rental crisis, they should be allowed to. The reality is that our policy, which we'll take to the next election, will enable them to do that. If they sell their home in 10 years and upgrade, that original deposit will go back into their superannuation, plus a share of the capital gain. You can use super and industry funds to invest in social housing or in community housing, but the Labor Party say that you can't use your own money to invest into your own house.

The coalition will continue to talk to people, and not just in my own seat of Petrie. I have had widespread support when I've spoken to people in my own electorate. In fact, I was at a polling booth for the Brisbane City Council elections on Saturday—two days ago—and I was talking to a man in his late 30s. He'd been through a relationship breakdown. He was renting. He'd never owned a house before. He's obviously doing the right thing and paying his ex-partner maintenance for their children and so forth, which is good. When I spoke about superannuation and the opportunity to use a little bit of his super to get a deposit on his first house, he was excited about it because he had quite a bit in super and he just can't save the deposit with everything else that he's doing with his growing family and in the middle of the cost-of-living crisis that we've seen under this Albanese Labor government, with 12 interest rate rises. It's pushed up mortgage payments rents; it's pushed up electricity bills; it's pushed up the cost of food and everything else.

So, when we get out there and explain it and talk to people, that's good. I don't know who the member for Kooyong has been talking to when she comes into this place and says she's talking to people. Maybe she is referring to people who are wealthy and who own their own homes and are voting for her. But, I'll tell you what, there are a lot of young people in this country that are excited about our policy. And, in the lead-up to the 2025 election, the coalition will continue to talk to those people—people who need that help, people who want to invest their own money into their own home.

So, as the federal member for Petrie, I can say to the government, to everyone in this House and to those in my electorate: I believe in super. It's a good thing. It's a really good thing. We want to continue to talk, and every member in this House should talk about financial literacy and salary sacrifice, and they should promote the programs that the coalition started and that the Albanese Labor government are continuing—and I'll put it right on the front of my website, LukeHowarth.com.au—the First Home Super Saver Scheme, the First Home Loan Deposit Scheme, the Family Home Guarantee, offering two per cent deposit for single parents to get into their own home. That's important. We all have a responsibility to our constituents to want to see them get ahead. We don't have a responsibility just to our donors and what they want or always what our party wants. But we do have a responsibility towards what is in the best interests of our constituents—to help them get ahead.

If the coalition believes in different policies—and I say this to my colleagues—we should continue to fight for that. John Howard did that—going back to the GST. It was defeated in 1993 and then they revisited it in 1996 and they took it to an election. Unlike this government, they took the GST to an election, won that election and implemented it. And it has actually been a bonanza for the states and it has actually been fairly good policy.

Alicia Payne (Canberra, Australian Labor Party) Share this | Link to this | Hansard source

I'm very pleased to have this opportunity to speak on a bill legislating the objective of superannuation. It's a bill that builds on a proud Labor legacy of Australia's superannuation system. A system renowned across the world, a transformative system, which has changed the lives of millions of Australians as they enter retirement.

Superannuation is the definition of Australian values in action. It is a statement that when you work hard throughout your life, when you contribute to your nation, your financial security should be assured in your retirement. And, alongside your own savings, and our age pension system, this is exactly what superannuation guarantees for Australians. Through compounding interest, Australians entering the workforce today will have the comfort that, when they eventually retire, their lifetime of hard work will be rewarded.

Hawke and Keating established superannuation because they knew that Australians at that time did not have that comfort. Super is a scheme which takes significant pressure off the pension system, allowing government funds to go to those who need it most. Because the Hawke and Keating governments also knew that Australians were living longer after retirement and that the cost to the public purse of supporting the ageing population would only increase, and that more people would need support in retirement, superannuation was fundamentally long-term responsible decision-making. And what a success it has been. Our super system today is worth over $3 trillion. That's $3 trillion of economic security for Australian workers, $3 trillion of smart, proven future-planning brought to you by the Australian Labor Party. This is a system that has been so successful that Australia now has the third-largest pool of retirement savings in the world. As a share of GDP, our private retirement savings outrank those of the US, the UK and Canada. It is a policy success that cannot be rivalled.

The bill legislates for the first time the objective of Australia's superannuation system. So what is that objective? This bill sets out the objective of superannuation: 'to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.’ This is very important. This objective, in the words of the Treasurer, serves as a reminder that achieving better living standards for Australians in retirement is at the heart of the superannuation system, and that future policy changes should be compatible with the legislated objective.

So why is this bill necessary? In 2014 the Financial System Inquiry recommended that the parliament legislate an objective for superannuation. The inquiry suggested that this would deliver better outcomes and a more seamless experience for superannuation members throughout their lives. In their final report, they said:

The superannuation system does not have a consistent set of policies that work towards common objectives.

…   …   …

The lack of an agreed policy framework and objectives reduces the efficiency of the system.

They continued:

The absence of agreed objectives contributes to short-term ad hoc policy making. It adds complexity, imposes unnecessary costs on superannuation funds and their members, and undermines long-term confidence in the system.

This was the exact experience during the long decade of coalition rule. We know that those opposite have an ideological obsession with destroying Australia's superannuation system. They hate that something that Labor implemented and that Labor improves when we're in government has been so successful. They hate that the union movement are associated with the best-performing funds, the industry super funds, so they seek to undermine the system at every opportunity in every way, regardless of the fact that Australian workers love our super system and deeply appreciate the financial security it delivers for them in retirement.

During the Abbott-Turnbull-Morrison government, we saw multiple attempts at this undermining, whether it was the misleadingly named 'your future, your super' bill, which would have stapled up to three million Australians to underperforming funds for life, or the COVID-era decision to force around three million Australians doing it tough to draw down $37.8 billion worth of their own super so the government could get away with lacklustre support. On this measure particularly, safeguards were totally lacking, and as a result we saw far too many stories of Australians on low incomes withdrawing their super funds and using that money for short-term needs that undermined their financial security in retirement.

That is what those opposite miss about superannuation, and the member for Petrie has just given a speech on this. I agree with him wholeheartedly on one point, and that is that superannuation is your money. It belongs to Australians. Of course it does. What it's not there for is for governments to use it whenever they feel like using it to address a problem, making the poorest Australians—those on low incomes, those who need it most in their retirement—to undermine it early on in their savings journey. During COVID, when young people withdrew from their super, it would have been worth so much more to them in their retirement than it was at that time because of the compounding interest. This is the whole point of superannuation, and the whole point is that those with the least stability to make that decision at the time—because they need that money now—are those who most need it in retirement. These are the policies that undermine that future for them.

There was also the plan to force first home buyers to raid their retirement savings to scrape a deposit together for a home. This is a perennial favourite of the coalition, and it keeps on coming up. This is exactly what I'm talking about. Of course, there was possibly the most egregious attempt: the idea that was floated to force women fleeing domestic violence to draw down their super to escape from their abusers. It was perhaps one of the most tone-deaf policies of the Morrison government, and it was abandoned following one of the most incredible speeches I've witnessed in my time here from my dear friend the late Peta Murphy, the former member for Dunkley. She killed off that disastrous policy in just 90 seconds, because, in Peta's own words, 'When Australians are forced to raid from their future to survive their present, the government is failing them.' I couldn't articulate it as clearly as Peta did there, but that's exactly the problem and why they just don't get it.

The key theme in all of these half-baked failed policies is that the coalition sees super savings as a way to avoid government expenditure. They see it as a way to make their books look better, with zero regard for the future of Australian workers. Many of these attempts to undermine superannuation have disproportionately impacted Australian women, and we already know that women are retiring with $136,000 less in their super accounts than men on average.

The Albanese Labor government has decided that enough is enough, and we are working hard to ensure that this superannuation gap is closed, including with our announcement the week before last that we will be paying superannuation on the Paid Parental Leave scheme. This is an incredibly welcome change and something that women have campaigned for for many years and again builds on another proud Labor legacy, which is our Paid Parental Leave scheme, introduced under the Gillard government and social security minister Jenny Macklin.

We are working to close the superannuation gap by introducing this bill to safeguard Australian women's and indeed all Australians' superannuation. What does this bill require going forward? The bill requires that members of parliament who introduce a bill which proposes changes to the superannuation system shall provide a statement of compatibility which explains how the bill is compatible with the objective that we're legislating today. The bill also requires that makers of regulations related to superannuation publish a statement of compatibility which explains how the regulations are compatible with the legislated objective of superannuation. This strikes the right balance of accountability to ensure that changes to the super system are consistent with the objectives while providing flexibility for ministers to prepare fit-for-purpose statements depending on the nature and complexity of future measures relating to superannuation. It complements other measures that the Albanese Labor government is implementing to improve the financial wellbeing of Australian workers. One of these measures that I am most proud of, as I mentioned, is the recent announcement to pay superannuation on paid parental leave.

But we have done a lot in our relatively short time in government to ensure that wages are on the increase. Unlike those opposite, it is not a deliberate policy of ours to keep wages low. Also, our recent announcement of tax cuts means that Australians will be not only earning more but keeping more of what they earn.

As I touched on earlier, we know that in Australia women on average retire with a super balance of up to 40 per cent less than men. A large part of why this is an issue is because women are primarily still the ones taking a majority of time off to care for families, leading them to miss valuable super accumulation earlier in their careers. Labor wants the disparity to end. Of course those opposite don't understand this objective of super that we're talking about, so it doesn't surprise me that the natural reaction to our paid parental leave policy was initially not to be supportive. Labor is the party of super, and we always will be. We will always act to protect it. We will always block attempts to undermine it. This bill future-proofs the superannuation system so that it continues to benefit all Australians. I commend the bill to the House.

Elizabeth Watson-Brown (Ryan, Australian Greens) Share this | Link to this | Hansard source

In 2015 the Liberals commissioned the Murray review into superannuation. That's the origin of this legislation. Murray said that the parliament should make it clear what the objectives of our superannuation system are. The coalition, while working to enact this objective into law, was never able to get internal consensus on what the purpose of super is, so no legislation was ever introduced. However, the Labor Party committed, if elected, to enshrine an objective into law. While this legislated objective does not affect any law or enforce any enforceability upon anyone, the following proposed objective is intended to guide future governments and parliaments: 'The objective of superannuation is to preserve savings to deliver income for a dignified retirement alongside government support in an equitable and sustainable way'.

There are a few problems with this definition. It assumes that the super system is equitable, when it is far from that. It is Australia's biggest homegrown tax haven, actually, where large amounts of excess income can be parked and accumulate sheltered from our tax system. The list of inequitable policy settings in our superannuation system is quite a long one. Our super system is regressive, with a flat tax rate of 15 per cent, which benefits wealthier earners over lower income workers, who receive no tax benefit. The high concessional and non-concessional cap settings; the exemption from capital gains tax in retirement; the $250,000 level where high income tax rates kick in; carry-forward contributions; spousal contributions—these are all geared to benefit high-income households. There are a thousand and one little systems and quirks, like cycling income through transition to retirement schemes, with financial planners very well placed to help their clients minimise their tax.

The other major concern that the Greens have with this proposed definition is that it's silent on where our superannuation is actually invested. We believe that one of the clear objectives of super should be to direct this $3.7 trillion pool of savings into productive investments that improve the quality of life for all Australians, instead of just speculating on the stock market and forcing investments into coal and gas companies, as currently happens under the existing performance test benchmark. Instead of using our nation's savings to chase other speculators around the stock market paddock—that's what happens—which doesn't do anything in the real economy, our super should be encouraged towards productive investment in clean energy, clean technologies, affordable housing, expanded public transport networks and all the things that actually improve society, improve people's lives, protect us from the ravages of the climate crisis and advance our quality of life.

This legislation won't do anything to improve equity or to get capital away from speculative parts of the economy and into productive parts of the economy. However, the bill won't actually make any of this worse, either, so the Greens will reserve our position in the Senate.

Jenny Ware (Hughes, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Superannuation (Objective) Bill 2023. The stated purpose of this bill is to legislate the statutory objective of Australia's superannuation system. In principle, this is supported. It has as its proposed objective to preserve savings to deliver income for a dignified retirement, alongside government support in an equitable and sustainable way. Again, in principle that is supported. However, as with anything to do with this government, we need to look at the devil in the detail and we also need to look at the promises this government has already broken in relation to superannuation.

Before I head into that territory, I think after almost 30 years of compulsory superannuation, bringing this bill before the House is an opportunity for us to revisit the fundamentals of superannuation in Australia. I also intend to highlight the way that various superannuation funds have unfortunately, in many instances, jumped into bed with the union movement. This is not in the interests of their members. With more than $3.4 trillion in funds under management, more than Australia's annual GDP, our superannuation system is a key institution in our economy. With that institutional weight comes an institutional responsibility. To understand superannuation today to enact legislation, its intended role in Australia's retirement income system should be considered.

Australia's retirement income system has traditionally been viewed as having three main components, parts or pillars. Firstly, there's the social security means tested age pension. Secondly, there are the compulsory superannuation contributions, and, thirdly, there are additional private savings. Each pillar interacts with and influences the others. For example, superannuation is counted in the assets test for the age pension for persons who have reached pension age. In addition, income from superannuation is included in the income test for the age pension. In that way, these three pillars all interconnect.

The superannuation guarantee was introduced in 1992. At that time the legislation did not include a statement about the objective, but the then Treasurer said:

The levy … will provide a coherent and equitable framework in which retirement incomes objectives can be progressed. It will ensure that, by the beginning of the next century, virtually all employees will be accumulating substantial superannuation savings to help fund their retirement income.

Former Treasurer and Prime Minister Paul Keating described the means tested age pension as a 'basic anti-destitution payment' designed merely to alleviate poverty rather than provide income maintenance for its recipients in the years prior to and at the time the compulsory superannuation was introduced. 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. And I've been present in this House today, where I've heard the member for Ryan and the member for Bruce make a number of quite outstanding—ridiculous, with respect—comments in relation to the coalition's apparent objection to compulsory superannuation. We absolutely support compulsory superannuation. We support in any way the right of Australians to save for their own retirement and to look after themselves in their retirement. So I think that both the member for Ryan and the member for Bruce, with respect, need to look a bit more carefully at the coalition's attitude towards Australians saving for their own retirement.

But we come now to some of the work that the Albanese Labor government has done in relation to changing superannuation for Australians. At the last election the ALP policy on the National Reconstruction Fund said that it will allocate $15 billion to partner with the private sector, including superannuation funds, to support investments which demonstrate they'll grow the economy and increase employment. Particularly, the government—the then opposition—referred to opportunities to invest in energy and housing. But superannuation is Australians' money. It's the savings of Australian workers. It's not there to be used to prop up already exorbitant government spending. It's not there when the government cannot work out sensible policies on energy and housing. The government should not be having access to Australian workers' money in this way. It is in fact using members' funds, the superannuation savings from Australia, to fund its own spending. This was never the intention when the legislation was introduced way back in 1992. And it's quite curious, therefore, when the government said it wants to use some of the superannuation money for housing, that it will not adopt the coalition's sensible policy of allowing first-home buyers to use their superannuation as collateral for a deposit to assist them into home ownership.

So the government will allow Australians, through superannuation and at the discretion of those funds, to invest in other people's housing; but it won't allow Australians to use their own money to invest in their own housing. That's unbelievable.

It was never envisaged in those early days of compulsory superannuation that it would be used to plug revenue gaps or to become an alternative source of government spending. That was never the intention, and it should not be the intention today. But this is what we are seeing here with the Labor government's new taxes on superannuation, which I'm about to come to, and its intention to facilitate the super funds to utilise members' funds to pay for energy, housing projects and anything else that the Labor government decides to dream up.

In Australian superannuation schemes, the investor has to accept compulsion in return for the superannuation benefits that belong to the individual. But, again, these are private savings, and this is a crucial part of the superannuation. Because at the end of the day it is fundamental: superannuation belongs to Australians. It is Australian workers' money. It's not the government's. It's not the Prime Minister's. It's not the Treasurer's. Superannuation is Australians' money. It's not a piggy bank to be spent or taxed to fill budget holes. In recent years, the objectives and purposes of the superannuation system have been examined on several occasions. On none of those occasions, whether it be the 2014 financial system inquiry or the 2020 retirement income review, did it say that superannuation should be used to simply prop up government spending or to plug a budget black hole whenever the government feels like it.

Overall, the coalition support a legislated objective, provided that the objective does not stray from superannuation's primary purpose. An emphasis on supporting retirement incomes for Australia is the driving force of the coalition's thinking on the next priorities for superannuation, but Australians themselves should be making their own decisions about their super. These should not be decisions that are being made by government whenever it simply wants to move some money into another pet project.

I turn now to some of Labor's broken promises on super. In 2022 at the election the government claimed they wanted to end the superannuation wars. A year ago, almost to the day, we instead had the government reignite those wars. Only in the last few months have we seen what those changes really look like: a doubling of taxation on Australians' retirement savings and a new un-indexed annual tax on unrealised capital gains—that's right; unrealised capital gains. The Prime Minister and the Treasurer went to the election promising no changes to superannuation but, in February 2023, have since broken that promise by introducing a new superannuation tax on unrealised capital gains. This is a world-first wealth tax that will hurt, mostly, farmers and family businesses. It's forcing Australians to pay tax on profits on income that has not been realised. The government's failure to index their new superannuation tax means that 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. Superannuation belongs to Australians. It is a long-term saving strategy. Australians make decisions on their superannuation based on election promises. These election promises have been broken—more broken election promises.

I turn now to one last issue that the government has not addressed in any of its changes to superannuation: the link between many super funds and unions. Particularly, I commend the work of Senator Andrew Bragg in the other place to highlight, for example, the AEC data from 2021-22, where super funds paid $10 million to unions in political payments. No wonder the government has been silent on this issue. Since 2006 super funds have spent more than $115 million on the trade unions. The CFMEU banked $4.47 million in 2021-22 and $35 million overall. Super funds are retirement homes for Labor politicians, but they are also current cash cows for the unions and Labor. These payments should not occur. They are not in the best interests of the members. They are not in the best interests of Australians.

If we are looking at legislating an objective to superannuation, there are a number of other issues that this government should also be taking up, which include not using Australians' superannuation money to fund their own projects, and they should be calling for a proper investigation into the link between the union movement and many of these superannuation funds. With over $3 trillion in these superannuation funds—$3 trillion of Australians' hard earned money—this is now urgent.

Anne Stanley (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

Today I rise to discuss the Albanese government's Superannuation (Objective) Bill 2023. I live and serve a diverse seat. Werriwa is home to families that are working towards growing their super as they reach retirement. I also serve those who require the age pension and every day see the importance of a welfare system that has been brought into place and honed by successive Labor governments. The diversity in my area means that having certainty in retirement is vital to my constituents, a certainty that comes from this bill. Despite being a pillar of the Australian retirement system, superannuation has no defined objective. This has led to confusion over how to shape policies that will provide ongoing stability and confidence to Australia's world class superannuation system. The Albanese Labor government seeks to define superannuation's objective as being:

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

The government has worked with the superannuation industry in Australia to ensure all stakeholders are happy. This resulted in over 190 submissions, with strong support from the superannuation industry for the government's bill and the proposed objective. In 2016, the now opposition attempted to legislate an objective for Australia's superannuation system. The previous government's attempts failed, as they didn't consult with the superannuation industry widely enough, only giving nine days to canvass what is a broad and very complex issue. The previous government's attempt at defining super was purely pecuniary and sought to define superannuation as goals to provide income in retirement to substitute or supplement an age pension.

The Albanese Labor government recognises that viewing the Australian super industry purely as a financial objective doesn't recognise that all Australians deserve dignity in retirement. The government instead wants to ensure that the objective is to allow for a dignified retirement for all Australians and to ensure that the superannuation system is equitable and sustainable while achieving this. Future changes to super will also have to ensure that they deliver on these objectives. This will require a statement of compatibility, ensuring that all changes to super going forward deliver to Australians the dignified retirement that they have earned and that the changes are sustainable and equitable. The bill does not change the core obligations for trustees under superannuation law, and ultimately superannuation firms will still have to provide the best financial advice and services to the customer, as is required now. The bill ensures future governments will need to work to make sure that the superannuation system stays fair, sustainable and equitable and is a tool to ensure the dignity of all Australians, not the wealth of some.

The Albanese government is dedicated to ensuring that all Australians retire with dignity and to making sure that our welfare systems are up for the task. The government has worked with the superannuation industry and will make sure that our plan will benefit everyone. Almost all Australians have a super account, and making sure that their account and the super industry works for them is vital to the nation's prosperity. I commend the bill to the House.

Keith Wolahan (Menzies, Liberal Party) Share this | Link to this | Hansard source

I rise to speak to the bill before the House, the Superannuation (Objective) Bill 2023. It's sometimes easy in this place to gloss over the actual wording of what we're seeking to pass and the consequences of that wording. We'll often see—and it's no criticism of either side—a tit for tat about how what a particular party does in government is great and what a particular opposition is proposing is terrible. We'll see a lot of that in amongst serious contributions, and that has occurred on this debate.

I would like to take you to the actual words here in the bill. In section 5 it actually has the nub of what we've been asked to consider, which is the objective of superannuation. It says here in subsection 5(1):

The objective of superannuation is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.

For those listening or watching at home, Australia has long prided itself in a bipartisan way on our three-pillar retirement system. What is the three-pillar retirement system? It is as follows. Pillar 1 is a sustainable and equitable pension system for those that need it, an important safety net that we all pride ourselves on supporting in this nation. Pillar 2 is a superannuation system, and that is what we are discussing here: how will the superannuation system be consistent with a purpose that we can agree on and that is sustainable and equitable, according to section 5?

But this part in section 5(1) leaves something out. It acknowledges those first two pillars; it says the objective is to preserve superannuation alongside government support. But it doesn't acknowledge the third pillar, a dignified retirement, which should have bipartisan support—that is, the equity that people can save through their lives and draw upon. There's no more important or substantial equity that people can save for and draw upon in a secure retirement than their own home.

The Australian dream means many different things to many different people, but for most people, when they think of a life in retirement that is secure and that gives them comfort, their own home is high on that list. That's not just an emotional bond. Your own home gives you financial security later in life. It's equity you can draw upon. The idea is that you can go to sleep without another person who has an interest in your property telling you what you can do or whether you can stay there. For those who are just on their pension and do own their own home, the combination of those two are essential for a secure retirement.

But, if you look at section 5(1) as drafted, it's a two-pillar retirement system. Why is that? Why is it leaving that third part out? That's really what this bill is designed to do: it's designed to strike a dagger in the heart of any idea that people can choose what to do with their own superannuation. The coalition isn't telling anyone what they have to do. We are merely saying, 'Why can't people choose where their money goes?' because that's what superannuation is: it's their money. It's not the government's money; it's their money. They worked hard for it; they earnt it.

Many have, with great flair and invective, criticised the previous government for the moment where people could draw down on super when they needed it most. I was one of those people. I'll tell you why: I was in one of those professions that was shut down. So, instead of relying on government support, I drew on my own savings to keep a roof over our head and to provide for my children. Many people in small business and many people in professions where they didn't work for the government or work for a large corporation carried themselves—that's what got them through. To stand over there and criticise that decision is the height of arrogance. It's the height of arrogance because what it's saying is that you know better—the government knows better than what people will do with their own money and their own choices that they make.

I want to come back to the actual wording here again and go to the second part. There's a three-pillar system, and this talks about two—not three. But then it says 'alongside government support, in an equitable and sustainable way'. Those words sound benign and those words sound like something that reasonable people can agree on. Those words are either of consequence, meaning that they have power, or they are meaningless—they are redundant. Now, if we are using this purpose and this particular section just to give a motherhood statement that has no power, then we shouldn't be doing that. That's not what bills are for. But, if it has real power, then what is that power—what is that consequence? We should go to that. So, if you go to section 5(2), it says:

This section does not affect:

(a) the operation of any law of the Commonwealth (other than this Act or regulations made under this Act); or

(b) the operation of the governing rules (within the meaning of the Superannuation Industry (Supervision) Act 1993) …

The explanatory memorandum is important to read alongside the actual bill. It says in section 1.71 on procedural matters: 'The statement of compatibility'—which I just read out—'will not be binding on any court or tribunal.' That first sentence makes it appear that this is more motherhood than power. But then it says the following: 'This is not intended to exclude the operation of section 15AB of the Acts Interpretation Act, which deals with intrinsic materials'—such as this explanatory memorandum—'in the interpretation of an Act or legislative instrument.'

The Acts Interpretation Act, for those who are listening at home, is an act that covers and flows through all of our legislation and assists courts and tribunals in interpreting many things. One of them is resolving ambiguity. As clever and competent and professional as this place is and the wonderful staff who help draft bills, which become acts, there is ambiguity. That's why we have courts to help us resolve ambiguity. So in coming to these words 'in an equitable and sustainable way', because those words mean many different things to many different people, there is necessarily ambiguity that will have to be resolved and potentially future court cases on decisions made by the executive or matters appealed through other courts and through the tribunals that we have.

What's the point of that? Why does that matter? It matters because it goes to the real power that is contained within this bill. It's not just a statement of something that reasonable people can agree with on a superficial level. It has a consequence for the future parliament, future ministers acting in good faith on election promises or on commitments to resolve and improve superannuation. The bill says that the relevant minister will have to have a statement of compatibility. When you look at the explanatory memorandum and you see that 15AB of the Acts Interpretation Act allows a court to consider the purpose to resolve ambiguity, that is of consequence. The two words that are of consequence are 'equitable and sustainable way'.

I'd like to turn to the word 'equitable'. Equitable means many different things to many different people and many political parties. I am proud of my political party's heritage on focusing on equality of opportunity. I don't want to speak for those opposite, but I'm sure they are proud of their party's commitment to equality of outcome. They're two different historical traditions of what equity means. That's not resolved here at all. If you go to the explanatory memorandum, on page 8, from 1.39, it says in 1.40, 'While equity is a subjective concept', and it talks about it meaning different things to different people. In 1.41 it notes differences in demographic factors and structural inequities. Then there is this sentence: 'This includes intergenerational inequity and outcomes for different groups, including women, First Nations Australians, vulnerable members and low-income earners.'

Of course, when you look at one version of equity, if you look at groups rather than individuals, those inequities exist. But what this bill does and what that section does with section 15AB of the Acts Interpretation Act, is that it risks ambiguity being resolved in a political way, but not by people in this place, not by ministers, but by those in the courts who will be asked to resolve hard, complex cases about what this particular provision means.

What does that have in common with the original criticism that I put that this is a two-pillar retirement system, not a three-pillar retirement system? It is about trust in the people and then trust in the people that they send here to make decisions on their behalf. That's all it is. Do we trust our fellow Australians to make decisions on their own financial affairs, or don't we? If we don't trust them, let's at least be honest about it. Let's be honest about the lack of trust in Australians making decisions for their own affairs.

Both sides are proud of our superannuation system. Some tribal politics have been used in speeches here to claim that only one side of politics supports super, but the key difference between us is about trusting Australians to decide how their money is spent. That is something that we should always turn our mind to and that we should always defend. That third pillar of a secure retirement and equity in your own home is a key part of the Australian dream. Right now that Australian dream is in deep trouble, and all of us need to work much harder to improve that.

One factor—and the housing crisis is a complex issue—is having a proportionate number of migrants relative to the country. I am a proud migrant. Two-thirds of my electorate is first- and second-generation migrants. It is migrants that are emailing me, calling my office, and speaking to me on the doorsteps and on the phones, saying that it has to be proportionate. Again, for those who would like to make political hay with that, if the number is now right, at 500,000 or 600,000, why didn't you say it was wrong when it was at 250,000 or 125,000? Of course, supply and demand matter when it comes to housing, and at the moment there is a disproportionate number of migrants coming to this country.

The proportion that matters is our capacity to build houses and infrastructure like schools and hospitals and our capacity to preserve green space. All of these things are what make our society one that is worth living in. We need to make sure that that proportion is right. Right now it's out of whack. That isn't just key for making sure that this is a society that people want to live in. It's also the social licence for our migration system, which we all support. That social licence comes with it being proportionate, and right now the government needs to recognise that it is not proportionate. We need to make sure that it matches the capacity for housing, infrastructure—schools, hospitals—and green space.

Sharon Claydon (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

I certainly won't be supporting the amendment, but I am delighted to rise in this House to support the Albanese Labor government's Superannuation (Objective) Bill 2023. I've listened to some of the contributions here, and it frankly breaks my heart that the coalition seems unable to support a single superannuation bill that is put before this House—for what has been almost decades now.

As I said, I am delighted to rise in this chamber to support this bill on a policy made universal and compulsory by the former Keating Labor government. Superannuation has a long history in Australia. The super guarantee laws passed through this very House in 1992. Mr Keating was able to see that the number of those reaching retirement age in Australia was going to explode in the coming decades—we know he was right—and that that would result in increased pressure on age pension payments and put additional strain on the economy. That was going to present some challenges, and one of the great solutions to those challenges was superannuation.

I note the three pillars of a secure retirement, which were explained, perhaps incorrectly, by members opposite a moment ago. The first was to ensure that we had a social security age pension. That's a great thing. The second component was the compulsory superannuation contributions, and the third part was additional private savings. Working together, they would make sure that Australians had a comfortable income and some dignity in retirement.

There is a fundamental disconnect and misunderstanding about what superannuation is in this House, and that is tragic. One can only assume that there is some deliberate misunderstanding going on here. Despite those opposite purporting to know about the three pillars of a secure retirement, they have taken absolutely every opportunity to undermine superannuation in Australia—to undermine the very intention of superannuation.

Let's go back to the Howard government's freezing of the planned increases in contributions. It exploded over the past decade when the former government allowed—and, indeed, strongly encouraged—Australians to raid their own super funds with reckless abandon and lifelong detrimental impacts. I think that's what people really need to understand here. This is not just an impact for now, particularly for women—I'll come to this point later—who already have more than 25 per cent lower superannuation balances than men. If you raid that super fund now, you never, ever, ever catch up. You're already behind the eight ball, and you will never catch up. What a depressing outcome. But that is exactly the reckless-abandon behaviours of people opposite who like to appeal to populous ideologies about this.

During the COVID pandemic we saw exactly what would happen. The former Morrison government strongly encouraged people to go out there and withdraw money from their own super funds to stump up for their recovery, rather than asking the government to have an economic stimulus package that was a fairer distribution of the common wealth—the common monies that belong to the Australian citizens. Under the former coalition government's scheme Australians could make initial withdrawals of $10,000 in the first half of 2020 and then a further $10,000 from 1 July. Figures from the Australian Prudential Regulation Authority reveal that, during this short window of 12 months, Australian workers withdrew more than $36 billion from their retirement savings. It means that those Australian workers were not only abandoned by the Morrison government but were then asked to pay for the failure of the Morrison government's policies to protect them during a time of crisis by spending all their superannuation. They will be far worse off in the future.

On average those who used that scheme under the former coalition government cut their super balances by 51 per cent. In fact, expert analysis of that scheme suggested that those people have now deprived themselves of $120,000 in retirement savings, missing out on compound interest over their working lives. Those who withdrew super moved quickly to spend it. We know that because they were withdrawing on average $1,064 from ATMs, at a time when the use of cash had dropped significantly. The next identifiable expenditure that we could track was gambling, with an average spend of $293 per person on gambling. That's where that money went. Earners of the lowest incomes were most likely to use their withdrawal on the quick cash spends that I was just talking about. People with low incomes and people in regional and remote parts of the country are the groups of people that the former government failed to assist, letting them raid their super funds to make up for failed policies of the other side. Let's not sugar-coat what happened there.

Those that were on higher incomes—and I heard the member for Menzies speaking earlier, alleging that he funded himself through his super funds during COVID-19—were more likely to save their money than withdraw it. This unprecedented, short-sighted political attack is a catastrophic blow to the retirement prospects of an entire generation of Australian citizens. Yet those on low incomes are the most disadvantaged—again, let down by the former Morrison government.

In the following year, in 2021, while women were taking to the streets saying 'Enough is enough', speaking out about sexual harassment, sexual assault, and family and domestic violence and calling on the government to do more and be better, the Morrison government, rather than increasing funding and support to those frontline women's services and organisations, announced a plan—it was gobsmacking, I have to say—to say to those women: 'Do you know what? You go and access your own superannuation funds. Your retirement plans can all go out the window now. You go and fund your own safety escape plan now.'

The member for Dunkley, the late and great Peta Murphy, marched straight into this chamber when that policy was announced. She was astounded and outraged, as we all were, at this—yet again—failed policy approach by those opposite. She said at the time.

It defies belief that women who are protesting should not only be glad they're not getting shot but should also have to go into poverty to escape violence.

She said:

The response of the Morrison government to women needing to flee violent relationships is to say, 'We know you earn 42 per cent less than men in superannuation, we know that the fastest-growing cohort of homeless people is women over the age of 55, and we know that single women in retirement are more likely to live in poverty than men, but don't worry—if you need to escape a domestic violent relationship, you can draw down on your retirement savings in order to do so.'

Well, the coalition government quickly withdrew that idea. They instead turned their attention to raiding super for housing. So, ahead of the 2022 federal election, the coalition released a housing policy built on the premise that the only way to make sure young Australians can afford a home is to allow them to raid their superannuation funds. Luckily, they were not re-elected.

You would hope that that terrible policy idea would have quietly faded away when they lost government. Instead, just last week the shadow housing and homelessness minister, the member for Deakin, reaffirmed the coalition's commitment to it and flagged that it could indeed be expanded, that they might expand the policy to increase the amount that first home buyers can withdraw. The Super Members Council has slammed the proposal, with modelling showing that property prices could rise by nearly $75,000 across Australia's five largest capital cities—not to mention the fact that it goes against the very principles of superannuation: delivering a dignified retirement to more Australians.

Time and time again the coalition government has raided the superannuation system for its own ideological purposes, despite, as I said, those lifelong detrimental impacts on Australian workers. And it will no doubt continue to do so, with this week's confirmation of expanding their ridiculous idea of raiding your super fund now to cover up 10 years of failure to do anything constructive about addressing the housing crisis in Australia. They throw their hands in the air and say: 'Sorry, we've got nothing to say about how to fix the housing crisis. But do you know what? Do you need some cash? Go and ensure that your retirement is absolutely put in jeopardy, that your chances of retiring in dignity is put in jeopardy by the lack of policy capacity of our members'—those opposite.

This is why the bill before the House today is so important. It will go some way to making sure this sort of short-sightedness never happens again. It will enshrine the objective of superannuation in legislation to preserve savings and to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way. This simple and straightforward objective will serve as a guide for future governments, regulators, industry and the wider community, instilling greater confidence in the system. It will make sure that the focus of super is on the best interests of its members and not of those interested in ideological battles, and it will ensure that any future changes to the superannuation system will support its objective, not supplant or undermine it. Put simply, this bill will secure super's future by embedding its purpose into law, and it will do so by requiring ministers to produce a statement to parliament explaining how any proposed changes to super are compatible with its legislated purposes. Policymakers will be held to account, and that's a good thing. They'll be held to account when considering changes that affect Australians' retirement savings.

The objective will not alter superannuation trustees' existing obligations. Super funds will continue to be required to make investment decisions in the best financial interests of their members. This legislation also doesn't change the ability of members to get early access to their super on genuine compassionate grounds or in cases of genuine financial hardship. They are absolutely legitimate reasons for early access to super funds. For trustees, the objective will serve as a reminder of their role to support members during their working life and into retirement, and, with more Australians approaching retirement age than at any other time in our history, delivering better retirement incomes has never been more important. It is astonishingly shortsighted, and not just that but utterly reckless, for those opposite to suggest that we should just be raiding these super funds at this time in history.

This bill's an important step towards making a stronger super system for a stronger economy, and it has been met with strong industry support. I want to thank the industry for their engagement. Built by Labor, the now $3.5 trillion superannuation system is the fourth-largest pool of retirement savings in the world. I'm very proud to be part of the party that built superannuation. We will protect it and make it the best it can be, to ensure that it continues to deliver dignity in retirement for generations of Australians to come.

Michelle Ananda-Rajah (Higgins, Australian Labor Party) Share this | Link to this | Hansard source

The growth of Australia's world-class superannuation system is a major economic and civil achievement of the past 30 years. While there are shortfalls for some groups—like older women, for example—that need to be addressed, Australian wage earners will increasingly finish their working lives with super balances that will allow them to plan for a dignified retirement. Super works together with the means-tested age pension and private savings as the three pillars that provide income for retirement. However, there has not been a broadly agreed upon purpose for the super scheme, making it possible for variations on the use of the super scheme to be enacted. An example was the early access to super that occurred during 2020 in the early days of the pandemic. While this was of benefit to some participants in keeping up with mortgages and expenses, it was poorly designed and resulted in thousands of young Australians draining their super and effectively losing the benefits of compound interest.

This legislation codifies a shared purpose, a true north, for super, as follows. The objective is:

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

Legislating an objective of super will provide stability and confidence to policymakers, regulators, industry and the community that changes to super policy will be aligned with the purpose of the system. It will also ensure that members and funds have more certainty over future changes to the super system throughout both the accumulation and retirement phases.

How will it work? Policymakers will be required to assess future changes to super legislation for compatibility with this objective. The terms used in the proposed objective are worth exploring. 'Preserve savings' means that super savings should not be accessed for purposes outside of retirement income, apart from truly exceptional circumstances—and draining your super for cosmetic surgery is not one of them. This recognises that super exists as a savings vehicle to provide income in retirement and is not a pool of individual savings to meet other lifetime costs prior to retirement. When savings are preserved, the compound returns on super help an individual's savings to grow over a longer period of time. That's the benefit of compounding interest. Young workers who cleared out their super balances in 2020 will miss out on these gains. The bill has no impact on existing arrangements for early access due to financial hardship or on compassionate grounds. These are unchanged.

'Deliver income' means super savings should be drawn down to provide individuals with a source of income during their retirement. The focus on delivering income in the objective makes it clear that super is not for tax minimisation. The inclusion of 'dignified' in the objective indicates that there is a certain standard of living in retirement which the super system should strive to deliver for Australians, alongside government support. 'Dignified' also reinforces the concept of delivering income and clarifies the need for trustees to ensure that they know their members' needs and support members to optimise their standard of living in the retirement phase. It's all about preserving a standard of living that Australians rightfully expect in retirement.

As Australia's super system continues to mature over time, more individuals are expected to retire with larger super balances but many Australians will continue to rely on government support to achieve that level of dignity. The inclusion of 'equitable' in the objective reflects that super policy can have a distributional impact across Australian society, and policymakers need to be aware of these impacts when making changes to this system. 'Sustainable' signifies that the super system should be robust to demographic and economic change and cost effective in achieving its objective. That speaks to intergenerational equity.

There is significant public attention paid to the accumulation phase in super in comparison to the retirement phase—for example, to public identification of underperforming funds. The super objective clarifies that super is about income in retirement. Australians will benefit from better information and guidance as they enter the retirement phase. This could be a follow-on from enshrining the objective. The objective will serve as a reminder that achieving better living standards for Australians in retirement is at the heart of the super system and that future policy changes should be compatible with this objective. I commend this bill to the House.

Stephen Jones (Whitlam, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

Can I start by thanking all of the members who have contributed to this debate. It has been a good one. The Superannuation (Objective) Bill 2023 defines the objective of superannuation in law, saying it is 'to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way'. This clear, simple objective will guide future governments, regulators, the industry and community and instil confidence in the superannuation system.

Australia has got a world-class superannuation system. It's envied the world over. Whenever people come to Australia, one of the first things they want to ask us about is how we got the system and how they can copy it. But there are some issues, and, for the last decade, super policy has been confused, chaotic and costly to members. The worst of this chaos saw the coalition, when in government, raiding the super system for their own purposes, which saw around $36 billion in savings drained from super—savings meant to last a lifetime. Legislating an objective of super will make sure that that kind of short-sightedness never happens again and that there will be some discipline in the way this parliament debates future propositions of that sort, ensuring the aim and the focus of super is in the best interests of members, not those interested in having an ideological battle.

The objective will help guarantee super delivers on its fundamental promise of providing a dignified retirement for more Australians and secure its future by embedding its purpose in law. It will enshrine the core goal of supporting delivery of retirement incomes in law, ensuring that any future superannuation changes support and not supplant this objective. Once past, should any minister propose changes to super, they'll be required to produce a statement to parliament explaining how any changes are compatible with super's purpose, where policymakers will be held to account when considering changes that affect Australians' retirement savings. That, after all, is what it's all about.

The objective does not alter existing trustee obligations. Funds will still be required to act in the best financial interests of their members, and the legislation does not change the option for early access to super on compassionate grounds, as many speakers have already commented on, so I won't go back over that ground. With more Australians approaching retirement age than at any time in our history, delivering better retirement incomes has never been more important. This bill is an important next step towards a stronger super system for a stronger economy, and it has been met with strong industry support.

I listened carefully to the debate within the House, and we can separate out the noise from the way people propose to vote on this. I think it bodes well for the early passage of this bill through both houses, and I welcome that. There'll be other times over the next 12 months where we can debate issues such as super for housing—a proposition that I think is ill-conceived, but there will be other times and other debates where this matter can be heard out. We need to have a unified objective for super, and this proposed legislation achieves that.

Having a legislative objective of super will help ensure its broader definitions across investment in national economic priorities and strengthening in our financial markets can be maximised. Legislating an objective of super will provide stability and confidence so that any changes to policy will be aligned with the purpose of the superannuation system.

You can expect those on this side of the House to be particularly passionate about these issues. We did, in prior governments, build the superannuation system, or protect it, to make sure that it continued to deliver dignity in retirement for generations of Australians to come—something it is already doing and something I hope all members in this House support.

With those comments, I again thank all members who have contributed to this debate and commend the bill to the House.

Ian Goodenough (Moore, Liberal Party) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this the honourable member for Hume has moved, as an amendment, that all words after 'That' be omitted with a view to substituting other words. The immediate question is that the amendment be agreed to. A division is required. In accordance with standing order 133, the division is deferred until the first opportunity the next sitting day.

Debate adjourned.