Nick Champion (Wakefield, Australian Labor Party) Share this | Hansard source

These are interesting appropriation bills, and I am sure we will have a good debate on them in the parliament. Today I want to talk a bit about the superannuation scheme, particularly about some of the ideas that are emanating out of the government as the budget approaches and the effect that they might have on our national savings and on our economic conditions. Superannuation has been a particularly important part of this nation's economic strategy since 1983. It has been a very successful part of our economic story, to the extent that the funds under management are over $2 trillion. That is an extraordinary achievement.

In industry funds alone, there is about $500 billion under management. To give you an example of what that means to ordinary workers, if we are talking about retail workers—who are getting a lot of mention in the parliament at the moment—the Retail Employees Superannuation Trust has $39 billion of funds under management. There are two million members, Australians, and there is $39 million of funds under management. That is an extraordinary part of our national savings. This is every check-out operator, night filler, trolley collector and retail worker in department stores and the like. Their retirement savings are being put away for their benefit. These are national savings that would not have existed but for the creation of industry super and the superannuation guarantee charge.

Just to give you an idea of the returns to members, over the 10 years it has been 6.25 per cent, over the seven years it has been 8.39 per cent, and over the five years it has been 9.98 per cent. That is a great story of industry super and superannuation for retail workers. We have had a big debate about their penalty rates, but it is important to note that this has been a very successful part of securing their retirement incomes free of excessive charges and free of the profit motive. Industry funds exist for their members and not for the profit motive.

These funds have also been a very big contributor to national savings. As I said before, we have now got $2 trillion under management in the retirement income and superannuation system, and this was a very big part of the success story of giving the economy ballast, predictability and security during the global financial crisis. It was a great asset to this nation. We hear cries about foreign investment, which I know gets thrown at your party, Deputy Speaker Coulton, and mine. People say: 'Why don't we buy back the farm? Why don't we invest in our own country?' You can only invest in your own country if you have significant national savings. The reason we have since the nation's founding always been sucking in capital from overseas, first from the United Kingdom, later from the United States and later from Japan and other parts of the world such as the Middle East, is that we have had a shortage of national savings. Industry superannuation and the superannuation system, properly managed, add to that pool of national savings and give the economy great ballast. A lot of it is invested in Australian fixed shares. A lot of it is invested in Australian fixed interest. A lot of it is invested in property and the like. These are primarily funds that are invested in Australia but also give some investment profile overseas. So it has been a very successful scheme.

I do not want to drop names, but Mary Easson was launching a book in parliament: Keating's & Kielty's Super Legacy: The Birth and Relentless Threats to the Australian System of Superannuation. It is a very good book. We have a tendency, I think, to either embark on feats of nostalgia about reforms, thinking that they were easily achieved, or to take them completely for granted. I think this is certainly the case with superannuation. It is worth noting that people like Simon Crean and Bill Kielty, who got the idea of broad based industry superannuation put in the first accord, did the right thing by this country—not just the right thing by workers but the right thing by the country. One of the greatest achievements of the Hawke-Keating government is the superannuation scheme. Prior to this, superannuation was really the province of people who were professional or worked for one company for a long time. They were predominantly, though not always, men, and there were often defined benefit schemes which took you 40 years to realise the benefits and really did lock you into a company or occupation—a company more often than not. So the scheme that existed prior to this did not cover women, did not cover casual workers and did not cover people who moved jobs and thus was not a contributor to national savings and certainly not a contributor to most workers in the wages system.

What do we find? We have got this great success story. We have got this great achievement largely left alone by the Howard government, I have got to say. They did not add to it. They should have added to it. It is worthwhile noting that, if the Keating government program of superannuation increases had continued, we would be at 15 per cent for most workers today and our national savings would be correspondingly higher. It is worth noting that, if this government had kept to the schedule of the Rudd-Gillard governments, we would be at 11 per cent at the moment. Most workers would be at 11 per cent superannuation instead of nine. It gives you an indication that, most of the time, conservative governments do not meddle so much with this system. What we have found, I think, in recent days is that this government is having their internal debate out in the open. Normally, when they have economic debates—and we are debating the appropriation bills, so it is topical as we come into budget time—there is a bit of the opposition asking the government what they might do in the budget with the government playing a dead bat. Very rarely have we ever seen a government having its internal debates out in the open—it is extraordinary.

We had Mr Michael Sukkar, the member for Deakin, coming out—he has been given this new job and he is keen to get on with it. His first step was to tell people that they should get a highly-paid job in order to buy their first home; and the second idea that he had, off the top of his head, was to use superannuation—that a first home buyer should be able to use their superannuation to buy their first home.

This was immediately shot down—it was interesting—by the finance minister who pointed this out in 2014, apparently, that if you activated this option, you would only drive up house prices because it pumps more liquidity into the market. Interestingly enough, the member for Deakin is not happy to have one side of the debate; he is producing this idea but he is happy to have the other side of it. He says those comments are largely correct—I am quoting from the Financial Review here on March 14, 2017:

If all a government does is try to pump further liquidity into the residential housing market, inevitably, all you do is push up house prices.

So he wants to push people's superannuation into the housing market, even though he knows it will push up housing prices and thus become completely self-defeating.

But he goes on to say:

… the classic example—

this is what I love—

was the Howard government's $7,000 first homeowners grant which, he said, may as well have been given straight to developers such was its effect in pushing up prices.

Pretty extraordinary criticism of the Howard government's first buyer grant—I commend his candour. But, if you think about it: it is exactly what he is proposing but then turning up the dial, because what we would suddenly create is a completely sophisticated industry of spivs and corporate pirates. We have all seen it with the real estate spruikers in this country. Imagine if they could get access to your superannuation. Imagine the vast army of white ants that would come out to nibble into people's superannuation: you would very quickly get a very sophisticated array of people who would hold seminars, who would create self-managed superannuation vehicles and who would take large accounting fees for the privilege of raiding superannuation. I know the Deputy Speaker represents blue-collar workers in the bush. He knows exactly the people I am talking about. We have all seen them.

We have got the member for Deakin taking both sides of the argument. We have had the Treasurer rule it out but not really rule it out. We have had the finance minister being quite explicit about what he thinks of it. There is a debate going on in the government. We have had the Prime Minister considering the superannuation property plan—that was in Samantha Maiden's article; I am not sure if that was in TheSunday Mailit was Sky News on Thursday 16 March saying that he would consider it, despite having called the option a thoroughly bad idea in the past. The Prime Minister knows it is a bad idea. He knows it is a thoroughly bad idea and yet continues down this path of considering this thoroughly bad idea.

You think maybe the Senate might save us from this lunacy where we would have the nation's national savings given to the real estate spruikers. But, no, we have got the Xenophon team—Nick Xenophon is the ultimate populist, so this is a great idea; it sounds good on a radio grab somewhere. It is not very well thought-out, because Xenophon has previously promoted this and said that we should look at the Canadian scheme; it is a great idea. There is just one problem. Garth Turner, who is a former Canadian MP and a mate of Mr Xenophon's—I do not know how they have become friends—has cautioned him not to mimic Canada's policy, as reported in The Guardian:

"Nick, I'm not loving your most recent crusade—

Most recent crusade! There are a lot of crusades, but anyway—

In fact, I think you need a better research assistant because you've just messed up as far as Canada is concerned," Turner wrote in an open letter. "We're reaping the bitter harvest sown when that dumbass legislation passed.

"Allowing first-time buyers to remove tax-free money to buy a modest home they could not otherwise afford, then restore it to their long-term retirement savings makes perfect sense in theory. In practice and inexperience, just the opposite [happened]."

I do not agree with Mr Turner. I think it is a bad idea in theory. It is a terrible idea in theory. It is a ghastly idea in theory, and anybody with an ounce of common sense could see that driving your national savings, that allowing a young person to remove their retirement savings and put them into the hot real estate markets of Sydney or Melbourne, is only going to make those markets hotter.

What will happen is that the minute you allow first homebuyers to do it the pressure will come on: 'Why can't I take Mum or Dad's super and invest it in my house?' We know this is already happening around the place. There is already pressure on parents to put their savings into deposits for their children. This is a terrible idea. The government should end its internal debate and we should just put this idea in the bin, where it belongs. It is a terrible idea and it is an indictment on this government that they are even considering it, because it will be disastrous with a capital D if it is implemented. It is a disastrous idea, and I plead with the government not to do it.

Debate adjourned.

Federation Chamber adjourned at 19:18

See this speech in context