Chris Bowen (Prospect, Australian Labor Party, Minister for Financial Services, Superannuation and Corporate Law) Share this | Hansard source

One month after this government announced the biggest reforms to superannuation since the introduction of compulsory superannuation in Australia, we finally have the opposition talking about superannuation—not talking about the reforms, not outlining their position, not responding; but at least they are mentioning the word ‘superannuation’. We have had two contributions from those opposite. We had the member for Cowper, the shadow minister against superannuation, and I welcome him back to the debate. He has been in the witness protection program for a month: not a word from the shadow minister against superannuation about the reforms, not a word about their plans for superannuation. Then we had the member for Mackellar, a symbol of all that is wrong with the opposition, a symbol of all that is wrong in relation to superannuation—a member of the other place and of this House who opposed the introduction of superannuation tooth and nail in this country, who railed against giving working Australians and working families a chance to save for their own retirement, who railed against giving them tax concessions so they could have a dignified and comfortable retirement and who is still opposed to superannuation so many years later. So we had the shadow minister against superannuation, and the shadow minister for seniors, who is meant to actually care about Australians retiring for their own incomes, and all they did was rail against superannuation.

What we have is an opposition not willing to talk about the serious reforms to superannuation. Well, we will talk about them, and we will also talk about the scare campaign that the opposition is so grievously running. Superannuation, for the record, despite the opposition of the shadow minister for seniors, despite the opposition of the Leader of the Opposition and everybody who sits opposite, has been a good thing for Australia. It has been a very good thing for Australia. It was introduced by a Labor government against vociferous opposition from those opposite. Its benefits have been many. It has created a pool of funds for infrastructure investment. It has created a pool of funds at the disposal of the economy, which was very important in terms of getting through the global financial crisis. But, most importantly of all, it has improved the capacity of Australians to save for their retirement.

When Australians put money into superannuation, it gets invested. And since compulsory superannuation was introduced we have had returns of 7½ per cent a year, as opposed to an average inflation rate of four per cent a year—so Australians having the chance to become self-funded retirees, with the support of the Australian tax concessions. This was a visionary plan, but not all saw the vision of the Labor government introducing superannuation. The member for Warringah told the House on 25 September 1995:

Compulsory superannuation is one of the biggest con jobs ever foisted by government on the Australian people.

And he has not changed his spots. He went on to say:

I say to the voters of Australia—

you can just hear him saying this, can’t you—

‘Beware! There is no pot of gold at the end of the superannuation rainbow. Any money you put in is your money and you are certain to get back less than you put in.’

Now, I know the Leader of the Opposition is bored by economics. We know he does not understand economics. But I would have thought he would at least understand the principle of compound interest and return on investment, and understand that if you put money into superannuation and invest it over your working life you have a chance of a dignified and comfortable retirement—something he opposed, but something I do not think he even understood.

But it is time to rejuvenate the financial system. It is time to rejuvenate superannuation and make it even better, to build on the reforms of the previous Labor government, to deal with the savings gap, which has been assessed by the Investment and Financial Services Association at $690 billion. It is time to deal with that by increasing the superannuation guarantee from nine per cent to 12 per cent, by dealing with the equity of taxation treatment of superannuation.

As I said in the House yesterday, superannuation is taxed at a flat rate of 15 per cent. That is very attractive if you are on the top marginal tax rate. It is quite attractive if you are on the second-top marginal tax rate. It is even very attractive if you are on the next marginal tax rate. But it is not attractive if you are on the lowest marginal tax rate in Australia. If you are one of the lowest paid workers in Australia, if your income is under $37,000, there is no incentive for superannuation—and the opposition just do not care. They rail on behalf of mining companies. They are a lion when it comes to defending mining companies. They are a mouse when it comes to defending low- and middle-income earners in Australia, with not a word to be said—and, worse, they actively oppose our plans to introduce more equity into superannuation in Australia. They rail against it and they actively oppose it. They will vote against it, they will campaign against it, and that shows their true colours.

The other thing we have done is improve the tax concessions for people over 50—something I thought the member for Mackellar, as the shadow minister for seniors, would have supported. It was something the shadow minister for superannuation did support before he got rolled. On 19 April, to a great fanfare, he announced opposition policy, which would be to allow people over 50 to make more tax concessional contributions to their superannuation accounts. It was a written speech, carefully scripted—gospel truth. It lasted a month. It lasted a month before the shadow minister for finance announced it had been discontinued.

The shadow minister for superannuation got rolled and he should hang his head in shame that he has let down, and his party has let down, people aged over 50 who are trying to save for the future. What the opposition has instead done—in this MPI and in so many other places—is engage in a scare campaign. They do it so well. I say you have to stick with what you are good at in politics—and they do it so well. They did it on the petroleum resource rent tax. They did it on national superannuation. They did it on Mabo. They did it on the CPRS and now they are doing it on this. They love a good scare campaign.

I know many in the community want to know about what is happening with share prices in Australia. They want to know about what is happening to the impact on share prices. So let us just go through it for the benefit of the House. From 30 April this year the Australian Stock Exchange 200 Materials Index that covers mining companies has fallen by 6.3 per cent. That is what enables the shadow minister for superannuation to get up here and say, ‘$20 billion has been wiped off the value of Australian mining stocks, and it’s all due to the resource super profits tax.’ Well how about the Standard and Poor’s 500 materials index, which covers the United States: a 9.7 per cent reduction. In Brazil—the home of Vale, one of the world’s biggest miners—the materials index showed an 11.2 per cent reduction. Clearly they are very worried about the resource super profits tax in Rio!

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