Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Transport, Roads and Tourism) Share this | Hansard source

I rise today to speak in support of the Superannuation Legislation Amendment (Trustee Board and Other Measures) (Consequential Amendments) Bill 2007. I am absolutely delighted to be speaking on the issue of superannuation. I say that because Australia recently celebrated the 15th anniversary of the superannuation guarantee introduced under the Hawke-Keating government in July 1992. That legislation effectively meant that all Australians are entitled to a minimum superannuation payment of nine per cent and that has effectively meant that we have changed the debate in Australia in terms of savings and the capacity of the private sector to invest, for example, in the provision of vital infrastructure. As a former President of the ACTU, I regard that as one of the greatest achievements of the Australian trade union movement, which worked in a constructive partnership with the Australian Labor Party in government from 1983 to 1996.

That is not just my view and the view of the opposition; the truth is that Australia’s approach to retirement income is world leading. That is acknowledged by many other countries throughout the world. That view has also been appropriately endorsed by the World Bank since 1993, when it undertook a global study of retirement income systems and demographic factors. It concluded:

Systems providing financial security for the old are under increasing strain throughout the world. Rapid demographic transitions caused by rising life expectancy and declining fertility mean that the proportion of old to young is growing rapidly. Traditional safety nets, such as community and extended family care are weakening under the weight of this growing burden. Also in peril are the formal systems, such as government backed pensions, which have proven to be both unstable and difficult to reform. The result is an impending old age crisis that threatens not only the old but also their children and grandchildren who will inevitably shoulder this burden ... Financial security for the old would be better served if governments developed three systems, or ‘pillars’ of old age security: 1) a publicly managed system with mandatory participation and the limited goal of reducing poverty among the old; 2) a privately managed, mandatory savings system; and 3) voluntary savings.

That was the intent of the system developed by the federal Labor Party in government. Its groundbreaking legislation came into effect in July 1992. It is clearly about making sure that we look after our senior citizens in retirement and that we have a capacity for a privately managed superannuation scheme that gives them a guaranteed minimum and that requires voluntary savings over and above the guarantee of nine per cent in 1992.

I compare that to the system that we inherited from the current Prime Minister when he was the Treasurer in March 1983. We discovered on coming to government in 1983 that for most people the age pension was their main source of retirement income; superannuation was largely the preserve of the wealthy or people employed in local government and state and federal public services. We also had in place a number of private superannuation schemes operated by key companies that suggested to many workers that, if they stayed with their employer for a lengthy period of time, they would get some superannuation on leaving the company or on retirement. What we discovered more and more was that in the fine print there were outs for the companies to escape their superannuation obligations. In March 1983 the Australian Labor Party in government—with Bob Hawke as the Prime Minister and Paul Keating as the Treasurer—realised that as a nation with a major demographic challenge confronting Australia’s future in the 21st century something had to be done about the fundamental issue of retirement, side-by-side with the huge challenge to Australia in building our savings base and creating a universal safety net to guarantee dignity in retirement for all Australians.

In addition to that problem we had a taxation problem. That went to the fact that a substantial proportion of concessionally taxed superannuation savings was dissipated well before retirement. It was not just a question of increasing access to superannuation savings; it was also a serious question of having an overhaul of the taxation system in place that was part and parcel of the superannuation system in 1983. The facts showed that, in 1983, 40 per cent of the workforce had some superannuation cover; but, by 1991, through the partnership between the ACTU and the Australian Labor Party in government, that had grown to 72 per cent.

People should not forget that the campaign to spread superannuation was resisted by many major companies in Australia, with the support of the then opposition through its various leaders. This was a campaign that they suggested was wrong for Australia. History has now shown that it was absolutely of fundamental importance to the future of retirement income in Australia, our capacity to save and also our capacity to bring forward public investment in infrastructure by a partnership with the private sector. The whole nation has benefited as a result of the initiatives commenced by the Hawke and Keating governments in March 1983. I say that because the record will show that the superannuation guarantee levy built on the achievement and laid the foundation for the income security and higher standards of living in retirement for all future generations that we rightfully expect as a nation. The fruits of the levy are being felt further today, and people my age and younger will see the benefits for decades to come.

In some ways this bill continues the tradition of reform started by the Hawke and Keating governments and further enhances the administrative arrangements pertaining to superannuation. It is an ongoing, evolving system. Virtually all employees are now accumulating substantial superannuation savings to help fund their retirement income. It is also interesting to note that the industry wide superannuation funds are performing exceptionally well in terms of earnings and are also exceptionally competitive in terms of the management fees charged, including the death and disability insurance coverage provided by those schemes. Contrary to what was suggested by the current government and many employers at the time, these funds are well managed. They are professionally managed. They are not union dominated. They are joint trustees of employers’ and workers’ representatives, working to achieve the best possible return for ordinary workers who have chosen to join those schemes and, in doing so, to reduce what the nation would have to invest in the old age pension to look after people in retirement in the future. It has been a win-win situation for all, despite the vigorous opposition pursued by the Howard government representatives who, prior to March 1996, were in opposition.

I think it is important, because virtually all Australian workers are now accumulating substantial superannuation savings to help fund their retirement income. It is about them paying their way. The increased self-funding of retirement has enabled the Howard government, and will enable successive governments, to improve the retirement conditions for Australians who, for one reason or another, are unable to adequately fund their own retirement incomes. Having said that, let me also say that older Australians trying to make ends meet on the age pension are among the most disadvantaged in our community, and that is a fact of life today. We should also be paying close attention to the struggle that many of those people who did not have access to superannuation now confront on a day-to-day basis. For them, the welfare of the aged still remains conditional on our capacity to maintain a decent old age pension funded through our tax system at this particular point in time.

Finally, can I say that self-funding of retirement has and will increase the flexibility in the Commonwealth budget, especially as our population ages, and will increase our national savings overall. We should also not forget that during the 1980s economic debate was dominated by the need to increase private savings and to close the current account deficit. Superannuation, I contend, was not only a measure to increase the benefits to people in retirement; it was also essentially about increasing national savings and thereby reducing the need to borrow from foreign sources by creating a large pool of domestic savings.

As we all appreciate, today global capital is footloose. There is enormous foreign investment in Australia, but Australia’s superannuation savings are also going into projects all over the world so as to ensure that we diversify the investment basis of the various superannuation schemes operating in Australia. On that note, another milestone reached this year was the accumulation of over $1 trillion in Australia’s superannuation funds. Who would have thought we would have achieved that when, on winning government, we started this program in March 1983 when we found that retirement income in Australia was in an absolute mess. It is a major achievement and it opens up a wealth of opportunities for Australia in the 21st century. I say that because these funds will continue to be cash flow positive through to 2020, and they provide a significant opportunity for Australians to invest in their future.

Governments, and the people whose taxes they collect, simply cannot afford to fund the level of infrastructure investment needed for Australia’s future economic prosperity without the private sector. For example, in November 2005, according to Ernst and Young, the eastern states of Australia needed more than $100 billion of investment in infrastructure on transport, energy and water over the next 10 years. The truth of the matter is that it is no longer a question of planning projects. The key challenge confronting governments at a state and federal level is how we bring forward the delivery and implementation of project plans. That is what is required of an alternative government, through Infrastructure Australia, working in partnership with all the different portfolios from transport and roads to communications—just to name a couple of areas that need investment at this particular point in time.

The superannuation funds I referred to are looking for investment opportunities overseas. They cannot find them in Australia at the moment because of tardiness at a federal level and, in some instances, at a state level in their incapacity to put these projects in place and bring forward private sector investment. The truth is that Australia’s retirement incomes are therefore being used, in some instances, to fund other countries’ economic growth. While this is a good thing, here at home we are facing a future funding shortfall of $100 billion in infrastructure investment that could increase economic growth opportunities, create training, apprenticeship and tertiary education opportunities, create jobs for our children and grandchildren, eliminate congestion in our cities and, at the same time, provide good earnings on our superannuation savings, thereby improving the capacity of people to retire with some dignity.

I am assured by many that, for example, road tolls will never be accepted. The truth is that tolls developed by government in partnership with the private sector by and large deliver value for money, through more time for work, family or play, lower fuel costs, lower greenhouse emissions, less noise and air pollution, and less wear and tear on vehicles.

What is required is delivery and leadership at a government level to bring forward some of this infrastructure investment in partnership with the private sector. In doing so, you deliver to the shareholders who are, effectively, ordinary workers who have chosen to select various superannuation funds in which to invest their retirement incomes. I am not just talking about the big operators, such as the Macquarie Banks and the Leightons, who are at the centre of these projects; I am also talking about the mum and dad investors saving, through superannuation or direct investment in the share market, for the future of their children and grandchildren, and for their own retirement.

In the 21st century, public ownership of infrastructure assets does not have to mean public funding. Public ownership today can just as legitimately come from direct investment through the share market, through listed infrastructure funds or through superannuation as through public sector investment derived from taxes and other government fees and charges. It comes back to a capacity at a government level to lead and break through the barriers. It is something that is lacking at the Howard government level through lack of direction and strength at this particular time.

It is about time we as a community realised that there is more than one form of community ownership when it comes to roads and infrastructure, including water and communications infrastructure. Community ownership of infrastructure in the modern sense is about the economic empowerment of individuals to make their own investment choices—investment decisions that, I suggest, can build the infrastructure for their children’s and grandchildren’s future and grow their retirement incomes at the same time.

Just think, for example, about if we had been able to bring forward some of this infrastructure over the last five to six years in terms of our coal export opportunities. We would have earned hundreds of millions of dollars worth of additional export earnings, if we had not had the blockages in places such as Newcastle, Dalrymple Bay and Hay Point. A lack of leadership at a government level and a failure to actually bring forward the investment has deprived Australia of an even bigger economic cake and, in doing so, ripped away apprenticeship opportunities and employment opportunities in those very key regional centres of Australia.

Also, that effectively means that capital is footloose. If we do not bring on these projects in Australia sooner rather than later then they are looking for investment in other countries. That is why, for example, Indonesia has now overtaken Australia as the major coal-exporting nation in the world. That is why Brazil was looked to by some of these major mining companies in the past as an alternative source of supply for iron ore.

I stress today that we have a responsibility at state and federal government levels, in partnership with the private sector, to bring forward some of these investment opportunities via the superannuation funds. We can no longer be tardy on this particular front. It is no longer about the extraction of taxes and spending by governments on behalf of the Australian community. This represents a real challenge. The lack of leadership on infrastructure at a Commonwealth level in recent years has meant that Australia has denied itself a wealth of economic and employment opportunities.

I say in conclusion in support of the member for Prospect that, as he has already said, the main purpose of the bill before us today is to make consequential amendments to 30 current acts, arising from the establishment of the Public Sector Superannuation Accumulation Plan on 1 July 2005, the establishment of a single entity to administer the Commonwealth superannuation schemes for Commonwealth government civilian employees, the introduction of a new regime for managing legislative instruments, and, finally, changes to the earnings base of the superannuation guarantee regime from July 2008. Federal Labor support this bill, but let me say that superannuation reform must continue in Australia, regardless of which party is in government, to ensure that it seeks to achieve what we set out to achieve in March 1983—that is, secure incomes for future generations of Australian retirees and a better standard of living for the aged in our society.

The superannuation guarantee legislation today is a proud achievement of Labor in government seeking to do the best thing by all Australians, rather than superannuation, as it was previously, being the preserve of the better-off in the Australian community. The 15th anniversary should not be forgotten. It is a great achievement, and Australia is better off. Today’s superannuation legislation builds on the achievements of Labor in government. I commend the bill to the House.

See this speech in context