Tanya Plibersek (Sydney, Australian Labor Party, Shadow Minister for Human Services, Housing, Youth and Women) Share this | Hansard source

As someone under the age of 40, I am amongst the first generation of people who have had access to compulsory superannuation. That contrasts markedly with the experience of my parents’ generation. My father was lucky enough to work for a company—Qantas—that was one of the first companies to give superannuation to all of its employees rather than just to upper management. But, for the majority of people in my father’s generation, superannuation is not adequate retirement income. Looking at this generation of under-40s, we ask: although we have access to compulsory superannuation, will our contributions and our employer contributions over the years actually provide an adequate retirement income?

Of course, we have to acknowledge that it was the last Labor government in 1992 that designed and established the framework for the superannuation guarantee contribution. At the time there were many people on the other side of politics saying that it was a bad idea. I think time has proven that it was probably one of the greatest financial and social decisions made by the Labor government, for two reasons: because it has improved the quality of life for many people after retirement, giving them a little bit more spending power than if they had to rely on the old-age pension, and because funds under management—which the member for Batman was referring to—have given us a multi-trillion dollar pool of investment to invest in both Australia and overseas. It has meant that we now have one of the largest pools of funds under management of any country in the world. That gives us enormous opportunities for investing in productive infrastructure in Australia—of course, always keeping in mind that the primary responsibility of superannuation trustees is to their members, to ensure a good return on investment.

Whilever we have an ageing population, as we do now, the issue of compulsory superannuation will become more important and our assessment of the adequacy of retirement income will become a greater issue. A report was released on 2 August by the Allen Consulting Group for the Investment and Financial Services Association. The report was entitled Australian national saving revisited. That report shows that we have an ageing population and, although we have compulsory superannuation, the pool of funds that will be available in the future does not meet the needs of that population. A report by AMP at the end of July showed that 3½ million Australians will fall short in their retirement incomes. That is about a third of the workforce. The Allen report for IFSA says that there will be a savings gap of about $452 billion. That shows the magnitude of the gap that we are talking about.

Financial planners estimate that retirees need about 60 per cent of their pre-retirement income to live comfortably in retirement. The current level of nine per cent compulsory employer superannuation contribution will give you that 60 per cent of earnings in retirement if you are in employment for 40 years straight. The reality, of course, is that many Australians do not have that unbroken working pattern for a variety of reasons, including unemployment and disability, but most, particularly many women, experience a broken pattern of employment because of their family responsibilities. The median amount of a baby boomer’s superannuation is $30,700 for men but only $8,000 for women, due to a number of factors, including a broken working pattern.

While we have these reports showing that retirement income generally, despite compulsory superannuation, will be inadequate, the situation for women is considerably bleaker. NATSEM data shows that 73.4 per cent of women aged 65 and over now live on an income of less than $300 a week. Three-quarters of women in retirement live on less than $300 a week. That trend of the feminisation of poverty in old age will increase as our population ages. Fifty per cent of women who have either retired or will retire in the next 10 years have less than $20,000 in superannuation; 20 per cent of women who are retired or are on the verge of retiring have less than $5,000 in superannuation. These figures are alarming. By 2019, men on average will have accumulated double the superannuation that women on average will have accumulated. So we are looking at a generation where poverty will be starkly gendered. Older women will be much more likely to be living in poverty than older men.

In July 2005, Dr Ross Clare of the Association of Superannuation Funds of Australia, in his evidence to a parliamentary inquiry into the superannuation of under 40-year-olds, said:

You can do a lot of research and determine quite conclusively that on average women tend to have less entitlement to superannuation than men—or you can ask your mum. Each will give you the same answer.

What alarms me even more than this trend is our lack of engagement with the trend, the unlikelihood that things will change very much in the future. So women, even young women under the age of 40 who have been contributing to superannuation for as long as they have been in paid work, face additional barriers that keep their retirement incomes lower than men. They are barriers that are generally unique to women and they are the result of the superannuation guarantee contribution being predicated on a stable paid linear model of employment that does not take account of the breaks that women’s employment generally shows because of time out, particularly around childbirth but also for caring later for parents and others.

I want to look a little bit more closely at some of the barriers to women’s superannuation savings. The first is obviously the pay gap. The reality is that women’s earnings over a lifetime are often substantially lower than those of men, even for women with similar qualifications and work histories. The sad truth is that we expect in a modern developed country like Australia that the pay gap between men and women’s wages will improve over time. It has been either steady or worse in recent years, and I think that is something that we need to examine very closely. On average, full-time working men are earning nearly $200 a week more than full-time working women. For the last decade, women have earned about 85 per cent of men’s wages. We forget—we think that these battles have been won and yet the figures for the difference between men and women’s wages, even in full-time employment, are substantial.

If you add on to that the fact that women are much more likely to take breaks from paid work to care for children or for other family members, you see the additional problem. Child care is a particular issue. I no longer have shadow ministerial responsibility for child care, but I am still passionately interested in it. One of the main reasons that many women do not return to work within a period after having children is, if you are paying for child care for one child, two children or three children, it is just not worth your while. For some people this is a personal preference, and I applaud that personal preference. It is a wonderful thing if you are able and want to do it. Many women would like to return to work. They see that the longer they stay out of the workforce the more their lifetime earning capacity diminishes, but once they factor in the childcare costs, transport costs and so on, it is just not worth their while. We can improve that situation by improving child care. Countries that have good quality, affordable child care have much higher women’s participation rates. So it is not just about personal preference here.

When women return to work after having children, they often sacrifice increased pay for greater flexibility. Again, if that is a personal choice that people make to work part time or more flexible hours that is terrific. What I fear is that a lot of women would love to have more responsible work, would like to have promotions and so on, but that our workplaces are not responsive enough, they are not willing enough to accommodate more flexible working patterns because they do not understand the value and the skills that parents—women—can add to the workplace.

So that pay gap is a significant problem when it comes to the accumulation of superannuation savings. Another barrier is the big increase we have seen in the casualisation of work, and especially women’s work. Industries where women are concentrated have seen some of the greatest growth in casualisation. What we often see now are workers generally, but women more likely, to be cobbling together income from more than one job. There might be two, even three, part-time or casual jobs and, because the superannuation guarantee only kicks in when you are earning more than $450 a month, women who are working irregularly or casually may well be missing out because they are not eligible for employer contributions.

If you are earning $400 each from three different employees, you can see how this can have an impact on women’s long-term ability to save for their superannuation. That increase in casualisation has seen about a quarter of Australian workers now in casual jobs. About a third of women are employed casually. Work Choices is increasing this trend and we also see Work Choices, by driving down penalty rates and overtime as people are forced on to AWAs, has an effect on women’s ability, and in fact on everyone’s ability, to save for their superannuation.

ABS data shows that women who are on AWAs and who work a standard 38-hour week on average are earning $87.40 less per week than those on collective agreements, and women on AWAs who work part-time are earning $85.10 less per week than those collective agreements. If you lose $80 a week or the equivalent moving on to an AWA, obviously your ability to put money away for superannuation is affected—not just the compulsory contribution but any capacity you have to make additional voluntary contributions.

For women who choose to spend time out or are forced to spend some time out of the workforce because of their caring responsibilities, they do—or the family does—get additional support through the family tax benefit part B. That is a good thing. We want to enable people to have the broadest range of possibilities, the broadest range of options when it comes to raising their families. But that money is generally never put away for savings; it is spent on the day-to-day expenses of families, which are so high these days.

Women may be able to make voluntary contributions during a period out of the workplace or their partner or husband is able to make contributions for them, but for most women the reality is that they assume that they will be able to rely on their partner’s or husband’s retirement savings. In most instances this is terrific, it is fine, but sadly in a growing number of cases where you see divorce, women who have assumed that their retirement income would be comfortable because of their husband’s superannuation find that it is not. Changes in the Family Law Act in 2002 went some of the way to addressing this by allowing superannuation to be divided like other property. But, of course, anyone who has taken action through the Family Court knows that you have to have some money up-front to perhaps get the result that you are after through litigation in this area.

The other thing to consider, of course, is that women are more likely to live longer than men. That is not great news for men, I suppose—the longer they live the better. I have some of my parliamentary colleagues very worried here, haven’t I? I would not take any personal action to make that happen. It means that any retirement savings have to last much longer and they are also more likely, with older age, to experience greater health expenses and also greater retirement home or nursing home expenses. So the smaller final superannuation savings of women often have to go a lot further.

There have been some measures in this area, such as superannuation contribution splitting and the tax offset, that have helped women who are in unpaid work caring for their families. The measures in the Superannuation Legislation Amendment (Trustee Board and Other Measures) (Consequential Amendments) Bill 2007 allow some growth in superannuation. They allow women to continue to make contributions to grow their superannuation, including by having some of their husband’s contribution transferred to their fund at the year’s end. The take-up of the superannuation co-contribution scheme introduced by the government has also been high amongst women. Indeed, Labor welcomed the announcement in this year’s budget of the doubling of the government’s co-contribution on contributions made in superannuation accounts in the last financial year.

All of these things are positives, but there are a number of additional things that we should investigate to truly address this problem. I think the adequacy of women’s retirement savings is one of the greatest financial and social issues that will face us over coming decades. We should look at some of the strategies that have been recommended, including through having a parliamentary inquiry by the House of Representatives Standing Committee on Economics, Finance and Public Administration but also by a number of other people. We need to look at specific strategies for helping women boost their retirement incomes. We need to start with a recognition by the government that the financial information that women are receiving about superannuation needs to be specifically targeted and that their information needs are different from those of men because they need to include this information about broken working patterns and so on.

I noticed that the Minister Assisting the Prime Minister on Women’s Issues, Julie Bishop, asked the Treasurer what proportion of the $25 million budget set aside for the Financial Literacy Foundation will be spent on women’s superannuation literacy. I was waiting for an answer; I was very interested in the answer. I think unfortunately the answer is no money. I am advised that the Treasurer’s Financial Literacy Foundation spent no specific money on programs which target women’s financial literacy in respect of their superannuation.

The members of the Standing Committee on Economics, Finance and Public Administration, in their inquiry into superannuation for people under 40, agreed that a lack of superannuation is one of the most pressing financial areas where women are especially prone to a lack of financial literacy. The committee recommended that the Financial Literacy Foundation with the Office for Women target specific programs to improve the financial literacy of women under the age of 40 with respect to superannuation. I do not think that has happened.

We could have another look at some of the other recommendations of that committee, including helping women who are on paid maternity leave to continue to contribute to superannuation with superannuation guarantee contributions from their employer. That is one of the recommendations we should explore. The standing committee recommended that the government should have a look at the particular issue of the lack of super guarantee contributions during periods of maternity leave. (Time expired).

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