Craig Emerson (Rankin, Australian Labor Party) Share this | Hansard source

The genesis of the Standing Committee on Economics, Finance and Public Administration inquiry into improving the superannuation savings of people under 40 was a concern that superannuation is not considered an attractive option by Australians under the age of 40. There was also a concern that, while there is a compulsory component for superannuation, where there is discretion, under 40s tended to prefer either to spend their money on consumption or to put it into other savings vehicles.

The committee therefore had a look at the idea—which has been floated on many occasions—of allowing some of the superannuation savings to be used as a deposit on a home or on alternatives such as learning accounts and so on. But the committee came to the conclusion—and one that I strongly support—that superannuation is a savings vehicle designed for retirement, and to access those superannuation funds before retirement would effectively defeat the purpose of superannuation. The committee very wisely found that the preservation of superannuation should not be eroded by schemes that allow early access to superannuation. It also noted that superannuation tax concessions are very large. They are provided by government to encourage savings only for retirement income purposes, not for expenditure either on consumption or savings in other forms before retirement.

The second major issue was the adequacy of the superannuation guarantee rate of nine per cent. The committee found that the question as to whether it was adequate to provide a reasonable income after retirement depended in part on whether you formed the view that superannuation should be the only post-retirement income or whether there could also be access to the age pension. We agreed that there could be access to the age pension, but one of the real problems about the adequacy of nine per cent is that it requires people to start with the nine per cent when they first start working and to work continuously throughout their working lives. If that did not happen then there were real problems with adequacy.

We were then looking at what possibilities might be available to boost contributions above that nine per cent so that we could achieve adequacy. That is where we came up with quite a novel scheme: when new employees commence work, they are automatically placed in a voluntary arrangement where they can choose to opt out at any time. It would not be compulsory, but we recognise that most people, through inertia, would say: ‘I’m in the scheme. I won’t bother filling out the paperwork to opt out, even though I have a right to opt out.’ We felt that that might increase the superannuation contributions and, therefore, the adequacy of retirement incomes.

We had a long debate about the threshold at which the superannuation guarantee applies. It is currently $450 per month. We received representation from some employers that that should be lifted. We believe that it should, at the very least, stay at $450 a month or be lowered. I thank the coalition members of the committee for agreeing not to entertain the idea of lifting that. People who have a lot of casual jobs might not earn $450 a month and therefore would miss out on their superannuation contributions from employers—which were, as one committee member pointed out, in lieu of a wage rise. That is how it came about. Good on the committee members for agreeing not to increase it but perhaps even to reduce it.

The most vulnerable in terms of adequacy are women and multiple casual job workers. We came up with a number of recommendations to improve adequacy for women, including relaxing the current co-contribution arrangements a little, and a suggestion that paid maternity leave also be subject to the superannuation guarantee. After all, again, that is in lieu of wages and, ordinarily, if you are earning those wages you would attract the superannuation guarantee. I also think the maternity payment should be subject to the superannuation guarantee.  Can I finish by saying this report was prepared in a spirit of bipartisanship. I pay tribute to each and every committee member for achieving a very good outcome.

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