Tony Smith (Speaker) Share this | Link to this | Hansard source

I have received a letter from the honourable member for Rankin proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The Government undermining the superannuation of working Australians.

I call upon those members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

Jim Chalmers (Rankin, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

This government would like us to believe that it has changed. Whether it is pensions, whether it is cuts to schools and hospitals, whether it is attacks on penalty rates, unfortunately, changing the front-man has not changed the play list. Unfortunately, that is also the case when it comes to superannuation.

Those opposite see superannuation as some kind of Petri dish for one ideological experiment after another. The new Prime Minister would have us believe that he is some sort of middle of the road, cuddly character, but in reality when it comes to superannuation and all these other areas he sounds more and more like his predecessor every day. When it comes to the economy he has adopted the same script that he was so critical of in the first place, to get the job. The shame of that is that there is so much for Australia to be proud of when it comes to our quarter century of uninterrupted economic growth, particularly when you consider that that 25 years includes the sharpest global recession since the 1930s.

Among our proudest boasts, not just for this side of the House but indeed for the whole nation, is the role that the superannuation system has played and is playing in our economic success. Superannuation is the hope of the side when it comes to boosting living standards in retirement, taking pressure off the pension and creating deeper pools of capital to invest and re-invest in our economy. There was more than $2 trillion in funds under management in June this year, which is up 10 per cent on the year before.

Millions of Australians depend on superannuation to fully or partially fund their retirement. Paul Keating's achievement in 1992 of compulsory superannuation for everyone is not just one of Labor's greatest achievements, but is one of the country's finest achievements. It is something we are recognised for around the world. It means that everyone has the chance to save for a comfortable retirement, not just the most well-off in our community. We are proud to have created a superannuation system that is the envy of the world. Now, this side of the House has a very detailed plan that has been worked up to improve it so that it is adequate, fair and sustainable into the future.

Having a fantastic superannuation system does not mean having a perfect superannuation system. There are still issues that we need to work out. We do need to make it fairer. It is not fair right now to have 38 per cent of the concessions flowing just to the top 10 per cent of income earners. In a tough fiscal environment, something that both sides of the House accept, we need to better target our superannuation tax concessions to those who need it.

The earning concession on superannuation is the fastest growing tax concession in the federal budget. The government's own budget papers show that the cost of the concession is doubling, over just the next four years, to more than $30 billion. That means it will overtake pensions, in terms of cost, in the next four years.

We also need to make the superannuation system work better for women. The fact is that the average retirement payout for women is $112,000, compared to $198,000 for men. Almost 35 per cent of women have no superannuation at all. This means that more women will be reliant on the full or part age pension, and they are at greater risk of experiencing a sharp decline in living standards when they retire.

We need to make sure the superannuation system is adequate and that it is actually paid. Many employees miss out on a superannuation guarantee payment entirely. According to the Australian National Audit Office, something like 20 per cent of employers are failing to meet their SG obligations. There are real issues in the superannuation system for us to solve.

On the one hand it was good to see the Prime Minister in question time today concede the issue around women in the superannuation system. It is a real shame that the policy agenda pursued by those opposite is actually working against the objective that he said he held only minutes ago at the despatch box.

With all of these issues that we can improve in the superannuation system, what we have instead on the government's agenda is to freeze the superannuation guarantee, completely abolish the low-income superannuation contribution, lower penalties for noncompliant employers, and fiddling with superannuation boards. With all of these things that we could do to improve the superannuation system, instead they are on this ideological, badly motivated and unnecessary frolic, when it comes to superannuation boards.

Freezing the superannuation guarantee makes millions of Australian worse off. Rice Warner, an institution that has a lot of regard and respect in the industry, has said that the Abbott government's decision to pause superannuation contributions at 9.5 per cent has wiped the equivalent of $20,000 from the retirement savings of every Australian, and the total cut to the Australian superannuation pool is something like $146 billion.

When we look at the cutting of the low-income superannuation contribution, that of course makes superannuation less fair. A total of 3.6 million Australians depend on the low-income superannuation contribution to help offset the tax on their superannuation. So it will rip $500 off the superannuation accounts of working Australians earning $37,000 or less. This will have a particularly profound effect on 2.2 million women who receive the payment and who will not be receiving the payment once the cut of those opposite comes into effect.

They have also released the draft legislation to lower penalties for noncompliant employers. Remarkably, the government thinks that paying employee SG payments on time is unnecessary red tap and should be removed. It beggars belief.

There is also now the legislation before the parliament—if not today then early next week—that attacks the representative model of superannuation boards. Again, this is badly motivated. It is ideologically driven and it is unwarranted. Having one-third independent directors flies in the face of evidence that industry funds are among the most successful and high-performing in the country. These changes are expected to cost Australians $168 million a year.

While the government engages in this ideological warfare, we have a plan set out to create and build a stronger and fairer tax system as it relates to superannuation. I pay tribute to the member for Oxley, who did a lot of work in this space, the member for Fraser, who is here at the table, the member for McMahon and others who have done such great work in this area. We are still a year out from an election and these guys put on the table such a detailed plan for superannuation tax concessions. I pay tribute to them for that work. We have said to the government, 'Here it is. Here's a fairer way to do things. If you want to put it into the parliament, we'll vote for it. We'll get it up and we'll have a fairer tax system when it comes to superannuation.' A fairer tax system in super means tightening the excessively generous and unsustainable tax breaks for the wealthiest people. We want to reduce the concessions by 15 per cent for earnings over $75,000 a year, reduce the high-income super threshold from $300,000 to $250,000 and apply the same treatment to defined benefit funds. That plan is expected to return more than $14 billion to the budget bottom line—a far better and far fairer way of returning the budget to surplus than some of the cuts to hospitals, schools, pensions and all the rest of it that are proposed by those opposite. There is a really wide base of support for this plan from well-known socialists such as Tony Shepherd, David Murray, the Business Council of Australia and others—people who have said publicly, over and over again, that the tax concessions at the very top of the superannuation system need to be addressed.

We are also looking at other issues like super adequacy and the gender gap to make sure our system works for more people. I note for the House the good work that my colleague Senator McAllister is doing in the other place to put the gender gap in superannuation on the public agenda through her Senate committee. We await the progress and the report of that committee with great interest.

Some people in the community were heartened when the change of Prime Minister and Treasurer created the opportunity to herald a more sophisticated conversation about super. Those people were tricked. If you take the comments from the Treasurer during the week, it seems that the initial hopes that maybe we would have another look at superannuation tax concessions have been dashed. When you consider some of the things that the Treasurer has been saying, it is very clear that there is no appetite on that side to make superannuation fairer. We know the previous Treasurer, who is in the House, requested advice from the Treasury about concessions on four occasions, the last time being the day that we announced our policy, and since then a lot of those opposite have come out against changing the concessions.

We have a whole plan to improve superannuation. There is some more work to do, but we have some good initial policies on tax concessions. That is how you improve the superannuation system, not by freezing the super guarantee, not by abolishing the low-income super contribution, not by fiddling with boards that are among the most successful funds in the country delivering big gains for their members and not by continuing these ideological, unnecessary and badly motivated crusades, which are more befitting of the Prime Minister's predecessor than the leader of a first-rate First World economy that should be proud of its superannuation system and should be doing all it can to improve the superannuation system for more Australians.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

I give the call to the Assistant Minister to the Treasurer.

An opposition member: No pressure, Alex!

Alex Hawke (Mitchell, Liberal Party, Assistant Minister to the Treasurer) Share this | Link to this | Hansard source

No pressure at all, I would say to the members opposite. This is the member for Rankin's first matter of public importance and it is my second, so I feel like I am starting ahead! I think people listening to this debate today and members here in this chamber would have been wanting to hear about a government undermining the superannuation system, but I think the sense they got from the member for Rankin was that, indeed, the government is looking at all areas of superannuation very carefully as part of the white paper tax review that we are seeing now. The Prime Minister and the Treasurer have been clear in recent days that we are looking at all these matters and that all things are being considered, understanding that the superannuation system is central to the welfare and living standards of retirees and that we need to ensure that all of the settings are right to work, save and invest for ordinary Australians.

We know that superannuation is one of the most important parts of our tax system. It is also being looked at in detail because any changes proposed for the superannuation system are changes that we would take to an election. For people out there listening to this debate, that is the great certainty that a government can provide to people out there who are looking to structure their tax and superannuation arrangements suitably to them. Any government ought to take any proposed changes in such a complex area of financial services like superannuation to an election—to put it to the people so that they can have a say over what happens.

The member for Rankin spoke a little about the superannuation tax concession system. It is important to note here that the lead minister that the member for Rankin reports to on these matters is, of course, the shadow Treasurer. There is nobody better than the shadow Treasurer to listen to on the superannuation tax concession system. He is the best authority.

Dr Leigh interjecting—

The member for Fraser interjects and says he is very good, and I agree: he is very good on this issue, Member for Fraser. Like you—and it is good that you are at the table—the shadow Treasurer has written a book. He has written a very good book, a book that you should read. It is a bit like your book; it has some enlightening and enlivening sections which really get our juices flowing over here, Member for Fraser. We really enjoyed sections of your book. Let me quote the shadow Treasurer's book because it is very enlightening on the subject of tax concessions for superannuation. I quote directly from page 42 of the shadow Treasurer's book:

The tax concessions for superannuation are substantial. They are justified—

that is what he writes—

because they avoid future payments of the age pension and they help boost our pool of savings, with all the benefits for the economy that this brings.

Let me enlighten everyone here once again. This is the shadow Treasurer speaking here about the super tax concession system. He goes on:

But because the tax concessions are costly for the budget bottom line it is natural that the Treasury and Department of Finance are attracted to recommending that they be pared back when belts are being tightened.

This is another direct quote from the shadow Treasurer:

The problem with this is that it creates uncertainty for, and concern by people who are making voluntary contributions to superannuation.

The member for Rankin, if he got a copy of the shadow Treasurer's book, could read on page 42 that the shadow Treasurer is most concerned about creating uncertainty in the superannuation tax concession system—and well may he be that way, because Labor's plan will create great uncertainty in the superannuation tax concession system. Its intersection with the age pension and its intersection with the tax system is one of the key considerations of the government, and that is why the Turnbull government has not ruled out options but instead has said, as part of the tax white paper system, it will be looking at the intersection of these matters and any policy we have will be taken to the next election.

I want to turn now to some of the other points that the member for Rankin made. One of the only things that he had to say was to reaffirm Labor's strident opposition to the government's plan to improve the boards of industry super funds. This is not just about this sector, but he, of course, sees it as being just about this sector. I think that is a big mistake. We know this is about the entire superannuation sector, not just about any one part of it. We know that the need for change has been called for in the international community. Recent independent reviews, the Cooper review and the FSI all recommended that at least one-third of directors on these boards ought to be independent.

To most people involved in or who have experience in this sector, this seems to be a harmless but necessary change. One-third of directors on these massive funds should be independent. APRA has indicated that independent directors improve governance. We know that independent directors improve governance. We know that it is international best practice to have independent directors on the boards of these massive funds, and yet the member for Rankin rails against it. Why would he do this, when we know this is not about any one sector? The changes apply equally to all sectors—all corporate, industry, public sector and retail funds. It applies to everybody. We know that many funds are already doing this. The Prime Minister spoke about First State Super today. But perhaps the member for Rankin should listen to this—

Jim Chalmers (Rankin, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

If they are already doing it, why do you need to mess with it?

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

Order!

Alex Hawke (Mitchell, Liberal Party, Assistant Minister to the Treasurer) Share this | Link to this | Hansard source

If he had been listening, he would know that First State Super has already headed down this path.

Dr Chalmers interjecting—

Because we know that some boards governing the superannuation of Australians will not go down this path. I am happy to answer your question, Member for Rankin. Why are we doing it? Because it is international best practice. Corporate governance is a good thing. Good corporate governance is necessary when you are talking about trillions of dollars of funds under management. It is not a laughing matter, Member for Rankin. You think it is hysterical, but international best practice in corporate governance is not a laughing matter when you are dealing with the future retirement savings of every single ordinary Australian.

Dr Chalmers interjecting—

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

Order! The member for Rankin has had his opportunity.

Alex Hawke (Mitchell, Liberal Party, Assistant Minister to the Treasurer) Share this | Link to this | Hansard source

We know we are talking about 30 million accounts, Member for Rankin. We know that, with the default super legislation that the Labor government passed, you are funnelling ordinary Australians' money into these funds.

Why are we concerned about the corporate governance of these funds? We are concerned about it because we want to make sure, ahead of time, that these funds are using international best practice for their corporate governance, with trillions of dollars under management. We make no apology for that, because it is better to get ahead of problems. It is not good for you—like you do so many times in this place—to come into this chamber and tell us after there has been a problem, after there has been a disaster, after there has been some trouble with some fund, and say, 'We should have done something about it.' What we do is set up good corporate governance standards, working with APRA, with all of the recommendations of the Cooper review, with the independent reviews into the Financial System Inquiry and, of course, with First State Super, UniSuper, VicSuper, Prime Super, Hostplus and Catholic Super—and I am sure there are still one or two Catholics left in the Labor Party.

But, if you do not want to listen to any of those people, to industry funds, to retail funds or to First State Super, have a listen to this, because this is someone you will pay attention to. I know every member of the Labor Party pays attention to former AWU boss Paul Howes. Shen I mention that name, the reverence that hits the faces of members of the Labor Party—

Mr Wilson interjecting—

It does; it warms the heart. We know that walking down from the mountain was Paul Howes, former Australian Workers Union boss. Not only has he indicated his support for the government's changes; he has said—

Opposition members interjecting—

This is Paul Howes; I know you need to be silent if Paul Howes is speaking. He said:

Equal representation has been a success but the evolution of the super industry is important and I cannot see anything negative in having more independents on boards.

Paul Howes, the former AWU leader, cannot see anything negative in having more independent directors and bringing us to international best practice. The Labor Party are the only ones that see anything negative in having independent directors on these boards, and you have to ask why. Why is the member for Rankin bringing in an MPI today to say that government is undermining super, when his main point is that the government is bringing Australia into line with international best practice arrangements for the corporate governance of superannuation? That is your main point; that is the only point that you raised. How can you say that the government is doing anything other than acting in the interests of every single worker by ensuring a reasonable proportion of independent directors on these boards? It does not pass the sniff test. It does not pass the Paul Howes test. It does not pass the First State Super test. It is the Labor Party that is completely out of step on superannuation.

This MPI once again highlights the great differences between the Turnbull government and the approach of the Bill Shorten-led opposition. We have a plan to ensure that superannuation is well governed and well managed and that the money that belongs to the workers—the hard-earned money of ordinary Australians—stays in their hands. It is the Labor Party that has a plan to increase the tax on superannuation, to say to people, after they have worked their whole life, that it will take more from ordinary workers after they have already paid their fair share of tax.

The DEPUTY SPEAKER (15:35): Before I call the next speaker, I would remind the good members for Scullin and for Griffith that they are out of their seats and, if they do wish to interject—which they should not be doing—it would be preferable that they were in their seats. I will enforce that rule during the next speech.

Andrew Leigh (Fraser, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

As the clock ticked down during the member for Mitchell's speech and, with 20 seconds to go, he told us they had plan, I was reminded of that great mathematical proof: 'I have discovered a solution but the margin is too small to contain it.' 'We have a plan but the time does just does not let me explain it.'

We are in an Australia where inequality is at a 75-year high. Inequality is one of the signal issues of our age. President Obama, speaking at Osawatomie, has channelled Teddy Roosevelt in talking about the need to tackle excessive inequality. In Evangelii Gaudium, Pope Francis has spoken about inequality as a central challenge of our age. Thomas Piketty's 700-page economics book has given heart to wonks and social justice activists everywhere. It is not just the Pope, the President and Piketty. It is also the many Australians who are concerned about the rise in inequality and about the gender impacts of that rise, with a widening gap between rich and poor—a central factor behind the fact that the gender pay gap is now at a 20-year high.

When Labor were last in office we increased the pension, bringing a million Australians out of poverty. We put in place the National Disability Insurance Scheme for some of the most vulnerable Australians. We raised the super contribution rate. We put in place dental care for children. We made a record investment in homelessness. But since they came to office the Abbott-Turnbull government have taken Australian in the opposite direction. They are looking to cut penalty rates, which is disproportionately paid to low-paid workers, and to raise the GST, which disproportionately hurts those at the bottom of the distribution. They are getting rid of the low-income super contribution, a measure designed to redress the super gap between men and women and between low-paid and high-paid workers. They are opposing Labor's sensible multinational tax changes, which tackle the debt deduction loopholes and add $7 billion to the budget bottom line over the course of the next decade, and they are opposing our sensible superannuation changes, which add $14 billion to the budget bottom line over the next decade.

Those opposite like to say they like super, but let us go through the record. When it was introduced they voted against universal super in 1992. They froze contributions in 1996. They froze them again in 2014. In fact, I am struggling to think of a moment when any one of those opposite might have voted in favour of a superannuation measure that benefits ordinary workers. Put your hand up if you are someone opposite who has ever voted for super to benefit low-income workers. No; I did not think so. And that is the story, because superannuation is fundamentally about looking after the most vulnerable.

Labor is concerned about making our superannuation system better, and reducing the fees is at the heart of that. That is why we put in place the MySuper reforms and that is why we are opposing the coalition's ideologically driven changes for more independent directors. A report brought forward by the UNSW's Monica Tan and Marie-Anne Cam finds that as you increase the number of independent directors the fees go up. We know we needed 295 more directors, which would add $168 million more to the cost of superannuation funds. When we look at how they have performed over the last decade, not a single retail fund makes the top 10, which is composed entirely of industry funds. In fact, if a typical investor had been in an industry fund rather than a retail fund, their superannuation account would be $16,000 better off. And at the same time as fighting against good superannuation and making the superannuation system cost more for low-wage workers, this government is trying to make things tougher to find out the tax affairs of large companies. They have just passed through the Senate a measure which winds back Labor's tax transparency laws, despite the fact that when we asked them if they had received a single bit of correspondence calling for this wind-back of tax transparency they said there had not been a skerrick. The Prime Minister in question time today said that they had to wind back tax transparency in order to protect firms who were negotiating with suppliers. He has obviously never heard of IBISWorld, on which you can get a range of information on private corporations, nor has he thought for a moment about how you would go back from tax paid to work out exactly how profitable a firm is. The fact is that we are not seeing serious tax reform from this government, because the Abbott-Turnbull government are on their second Treasurer and their third Assistant Treasurer. They have dropped the ball on good tax reform.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

I would remind the good members on my left that they should be in their seats if they wish to interject.

Dan Tehan (Wannon, Liberal Party) Share this | Link to this | Hansard source

That was an enlightening speech by the member for Fraser. It was enlightening in that it showed one clear thing: he started talking about the need for people to start to demonstrate a plan, and I thought we were going to hear from the member for Fraser what the opposition's plan is for superannuation. But he could not last 4½ minutes talking about superannuation; he had to get onto transparency of taxation when he hit about the four minute and 15 second mark. That shows that there is no plan over on that side. They do not care about the future of Australia's superannuation industry—but we on this side do because we understand how important superannuation is going to be, and is, for Australians.

The Australian superannuation pool is projected to reach $9 trillion by 2040, so why are we bringing this measure into the parliament today? It is because we want the best people governing the retirement savings of Australians. I am going to say that again: we want the best people governing the retirement savings of Australians; that is why we have put this measure into the parliament. Once again, what are we talking about? We are talking about a projection that superannuation savings will reach $9 trillion by 2040. Why would those on the other side not want the best people governing those retirement savings? This is common sense. This is making sure that we will get the best returns for the ordinary workers that people on the other side like talking about, because we will have the best people on those boards. Yet you on the other side oppose such a common-sense initiative. You have to ask yourselves why. We do not need to tell you. You need to ask yourselves why—ask that question—and then you might learn something. You might learn about who you are beholden to and why you are beholden to them. What we want to see is the best people running Australians' retirement savings, and this is what this debate is all about.

How did we get to this?

Two independent reviews have recommended these changes: the Cooper review and the Financial System Inquiry. They recommended these changes. So why are those opposite opposing them? Once again, ask yourselves why. There are practical reasons for these measures. We have already seen that, where there have been mergers of equal representation super funds, they have failed because there could not be agreement on who would take the positions on the boards. So there are practical reasons why these changes are being brought forward.

And let's make it very clear: the bill does not prevent union representation on these funds. It does not prevent them. All it says is that we want the best people on these boards. Let's look at the sensible way it has been introduced. How has it been introduced? With a three-year transition. Funds have three years to move down this path. Who is supporting it? The Association of Superannuation Funds of Australia, the Financial Services Council, APRA, the Australian Institute of Company Directors. Who is already heading down this path? There are already industry funds heading down this path. As the previous speaker on our side superbly mentioned, First State Super, Hostplus, Prime Super, UniSuper, VicSuper and Catholic Super are already heading down this path. So why, when we have $9 trillion forecast to be in the superannuation pool, would you oppose it? We on this side could tell you why you are doing it, but you are not going to learn from that. You have to learn it from yourselves. Ask that question: why are you opposing this?

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

If you want an example of just how out of touch the Abbott-Turnbull government is then look no further than their approach to superannuation and retirement savings. In 2013, the Financial Services Council conducted the most comprehensive study and survey on the attitudes and views of Australians to superannuation and Australia's superannuation system. It is the largest qualitative survey of the views of Australians on our superannuation system.

The results are very interesting, and they clearly demonstrate just how reckless and destructive this government has been when it comes to retirement incomes and promoting superannuation. On the question of the amount of compulsory contributions in superannuation funds, a remarkable 83 per cent of Australians support an increase in the compulsory level of superannuation savings from nine to 12 per cent. Eighty-three per cent of Australians support that increase—an overwhelmingly positive endorsement of Labor's program to increase the pool of retirement savings in this country. That is responsible planning by a Labor government for the challenges of the future: promoting more retirement savings necessary to ensure that people have enough money in their own superannuation accounts to fund their own retirements, and reducing the reliance on the age pension.

What has the response of the Abbott-Turnbull government been to that policy program? What has the response of those opposite been to the increase in compulsory superannuation from nine to 12 per cent? They put a halt to it. They stopped it. Let's be clear about what the Abbott-Turnbull government did: they stopped an increase in compulsory superannuation for Australians from nine to 12 per cent. They stopped Australians saving more for their retirement. They stopped Australians saving more, which would have taken pressure off the age pension and our aged-care system. I ask: why has that been done? Australians are asking why on earth would they do that? When 83 per cent of Australia say, 'We want more in our retirement savings,' why would they do that? It is because they do not believe in superannuation. They never have and they never will. They have an ideological bent that is muzzling our nation's economic development.

Our nation, because of those opposite, will spend more on the age pension in the future. That is a fact that they cannot escape. Because of what they have done, Australia will pay more and spend more on the age pension into the future. We will spend more on aged care into the future, because of the policies of the Abbott-Turnbull government. This demonstrates how reckless and how out of touch they are when it comes to economic management.

The other point about the Financial Services Council survey was that the most common fund that people have their superannuation retirement savings in are industry funds managed cooperatively by workers and by employers. In fact, 59 per cent of Australians have their superannuation in an industry fund. The reason for that is quite simple: industry funds are the best performing by far. They are the best performing, they have the safest returns and they have the lowest fees. That is why the majority of Australians have their money in industry super funds.

Instead of promoting industry super funds, instead of encouraging this great savings vehicle that has led to $2 trillion in savings and retirement incomes—a bank of investment for infrastructure projects to promote growth in our economy—what do those opposite do? They attempt to tear down the industry super fund system. They are attempting to tear the system apart by intervening—the government intervening—in the management and the make-up of the boards of those industry super funds. Why? Once again, it is their ideological bent against workers managing their own money. It just demonstrates how out of touch they are.

In the seconds that I have left, I want to deal with the low income superannuation contribution because, again, it clearly demonstrates just how out of touch they are. We need to be encouraging low-income workers to save more. At the current rates of savings, they are not going to be able to save enough to ensure that they do not need to rely on the age pension. We need to promote more savings amongst low-income workers. There is a tax disadvantage for low-income workers in that, if they earn a certain amount of money, the effective rate of taxation on their superannuation is more than their marginal tax rate. There is a disincentive to work, so Labor fixed that by offering the low income superannuation contribution, a tax deduction to ensure that there is an incentive to work. What did those opposite do? They wiped it out. And, in doing so, you have affected two million women and provided a disincentive for them to work. You are out of touch when it comes to superannuation.

Matt Williams (Hindmarsh, Liberal Party) Share this | Link to this | Hansard source

Let's just look at the independent bodies that have supported this initiative in terms of the governance of superannuation funds. The member for Kingsford Smith referred to the Financial Services Council. Let's see what they had to say about this:

Independent directors on trustee boards, appointed using a strong definition of independence, will ensure that the interests of consumers are put ahead of the interests of shareholders or a sponsoring organisation. As superannuation grows from $2 trillion today to $7 trillion by 2035, good governance will be imperative for protecting consumers from potential conflicts of interest that may arise on boards of superannuation funds.

That was from Sally Loane, the CEO of the Financial Services Council, in June this year.

I am sure the people in the gallery and the people on this side of the House and all Australians are interested in the strong rationale behind the changes that we make in this place. It is about good policy. What are we trying to achieve? What are the objectives? We know that, as we have said—and the member for Wannon outlined this quite well—we are looking at having the best people governing retirement savings. Getting the best people involved—that is the objective, that is the strong policy rationale, that is why this is being brought forward. Independent board members bring different skills and expertise, so they bring different values to the table.

Let's just have a look at some of the history of where this has come from in terms of recommendations. We have had a number of reviews over time. The Cooper review in 2010 by the previous government recommended that the act be amended so that equal representation no longer be mandatory. This was by the previous government, so they heard this loud and clear. I know that the member for Fraser, in a speech in 2011, referenced the Cooper review, so he was across this. He knew that this was a recommendation of the review. Then in 2014 the financial system inquiry report, the Murray report, concluded that the independent directors on all superannuation trustee boards promote good governance by bringing an independent, objective perspective to issues the boards consider.

I just want to go on to a few other independent recommendations or testimonials as to why we need these changes. We have heard from the member for Mitchell on Paul Howes, who you have listened to so attentively throughout your history—and if you want to have a career like Paul, then continue listening to what Paul says. David Murray, the chair of the financial system inquiry, says:

Independent directors are more likely to ask the right questions of where the interests of members lie …

That is all that we have been doing in this House: asking the right questions about why we are making these changes on good, sound policy.

Regarding the Self Managed Super Fund Association, Andrea Slattery, who I hope the member for Rankin has engaged if he is doing the right thing by consulting with industry bodies, is a fantastic CEO of the Self Managed Super Fund Association. What did she say in June 2015?

Jim Chalmers (Rankin, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

I spoke to her yesterday.

Matt Williams (Hindmarsh, Liberal Party) Share this | Link to this | Hansard source

I am glad. What did she tell you?

Jim Chalmers (Rankin, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

She came to my office to say that—

Matt Williams (Hindmarsh, Liberal Party) Share this | Link to this | Hansard source

Good, and I bet she told you this:

It's critical to improve the governance of all superannuation funds, and having independent directors and chair is a positive step in this direction.

If she gave the member for Rankin this advice, he is obviously not listening. He is not listening to the advice from all these independent bodies that are looking at the best interests of superannuation funds and that have the best interests of Australians at heart.

Dr Chalmers interjecting—

Well, I am glad you have done something with your life, Jim! Well done to that!

Opposition members interjecting—

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

The member for Hindmarsh has the call. There should not be interjections in the chamber.

Matt Williams (Hindmarsh, Liberal Party) Share this | Link to this | Hansard source

Let's just hear what the Treasurer said yesterday in the House about stability and certainty in superannuation. He said:

… we are encouraging Australians to invest in their superannuation—then they have to have some certainty about what is going to happen … in the retirement phase.

We need to know, and we do know, that there needs to be some stability in the superannuation system. That is what we are about. We have had all these changes to superannuation, but this is a change for the better in terms of a better system of governance for boards, of getting the right people and of getting the best results in the interests of superannuation and of Australians.

Pat Conroy (Charlton, Australian Labor Party) Share this | Link to this | Hansard source

I am feeling in a charitable mood so I am going to do a favour to the member for Hindmarsh and just ignore his contribution. Because it was that sad and pathetic, I will just ignore it. Let's go back to what we are talking about here: the superannuation system. It is a very important system, a system where 40 per cent of the concessions go to the wealthiest 10 per cent of Australians, a system where the concessions will soon out-cost the pension. It is an area where we do need to change, an area where we do need to acknowledge that change must occur. We have competing propositions here. We do have a choice here, and that is good. We are here to debate policy, and there is a clear distinction here. We have those on the other side, the coalition government, that had a choice about what concessions they were going to cut, what concessions they were going to attack.

An opposition member: Was it a hard choice?

Not for us, but for them it clearly was not either. They had a choice about the concessions that go to the 475 Australians who have more than $10 million in superannuation. They earn $1½ million in income tax free per year. They could have gone to those concessions or they could have cut the low-income superannuation contribution for 3.6 million Australians. There was a distinct choice here—475 of our wealthiest concession holders or 3.6 million Australians. They chose to cut the assistance to the poorest paid Australians, to cut their concession.

If there is one political party in this place that practices class warfare, it is those on the other side. They engaged in the politics of class warfare to attack the 3.6 million low-paid Australians. It is a disgrace, and I condemn them for their actions. We have got a fair plan, a plan that says, for those 475 Australians who have $10 million in super and who earn $1½ million tax free, you can still earned the first $75,000 tax free but you might pay 15c tax on income after that, so you are paying the same tax as a retail worker. What an extraordinary outcome! Our plan is fair, it is detailed, it will work and it will make our superannuation concession system more sustainable.

I want to go to superannuation governance for a minute. I want to present two separate sectors of this industry.

An opposition member: Compare the pair, Pat.

I will compare the pair. Who thought up that great idea? We have one part of the industry where the fees are $449 million, where they manage 26 per cent of assets but charge 82 per cent of fees, where the average fee per member is $31 and where the rate of return over 10 years averages 4.9 per cent. Compare that to another part of the industry where the funds are $88 million, where the average fee per member is $7—that is $7 versus $31—and where the average rate of return over the last 10 years per annum is 6.7 per cent. So which one do you think needs governance reform: the one that underperforms compared to the other; the one that charges four times the fees of the other; the one that, despite having only one-quarter of the assets under management, charges nearly 90 per cent of the fees? No, of course not. It is the low fees one, the one that constantly outperforms the other. Why? Because it has union representation on the board. That is the only reason.

I support independent trustees, if the board wants it. If the board wants it, that is great. We have got some great super funds that have one-third independent trustees, such as Hostplus. And if they choose that, that is great. What I am opposed to is mandating reducing representation from employers and unions, which is what the coalition government is doing, because the system is absolutely working. I would urge them to have a closer look at their own supporters, their own backers, their financial supporters in the retail funds that charge their related service providers $485 per member, compared to $185 for the not-for-profits.

This is the closest relationship to conflict of interest, and then charge triple the amount if they are in a retail fund where directors often sit on allied bodies. So if those on the other side are serious about reforming superannuation, they will stand up for the 3.6 million low-paid Australians, they will stand up and support industry funds that work, that reward hardworking Australians instead of rewarding their corporate spivs and engaging in class warfare that demeans them, demeans the party that they stand for and, yet again, reminds us that their former Prime Minister said superannuation is a con. This is the party that voted against superannuation when it came into power; this is the part that not only does not understand super, it hates it and it wants to destroy it! (Time expired)

Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source

It is always pleasing to stand up in this place and speak about this very important topic for the future of a great many Australians who have superannuation accounts from small balances through to the 475 that the member for Charlton mentioned. But what he did forget to mention, and this is common in this debate, is that there is no analysis in this debate of how those people actually got the money into their superannuation funds. They got it into their superannuation funds perfectly legally—probably under the rules that, in a lot of cases, those opposite created when they set up the superannuation system. Isn't the whole point of super that Australians can save for their retirement, that they are not then a burden on the government and on other taxpayers that they need to receive an aged pension from? Everybody in this place agrees with that notion.

I think it was the member for Kingsford Smith who spoke about a survey by the FSC—interestingly, sponsored by ING Direct. I wonder what their interest in the outcome of that survey was! You can gather their interest in the outcome of that survey from the question that was actually asked that got that 83 per cent response—that is, people would prefer to have the SG contribution increase to 12 per cent. For the edification of the House, the question is:

In Australia, it is the law that people (or employers on their behalf) make a compulsory contribution to superannuation of 9.5% of employment income (wages or salary). Do you support or oppose this system?

Of course people would support that system. The next question, which is the important one, said:

You may be aware that the Federal Government will continue to increase these compulsory contributions from 9.5% up to 12% of income over the next decade.

It asked: do you support that? The majority support that, yes.

The final question is about where that is paused, at 9½ per cent. What the question does not ask, or does not say, which is very important in this debate for those opposite and for their historical edification, is that the super system was set up in a way that in part was a trade-off for future wage increases. It was set up in part as a trade off for future wage increases. So what those questions do not ask, Member for Charlton, and those opposite, is: are you prepared to trade off a potential future reduction in your wages for an increase to your superannuation contributions? I would respectfully suggest that if that was actually the question asked, you would get a very different result—an enormously different result! That is the important thing, that this is about moving money from people's pockets for them to spend day to day, to cover everyday living costs—and we know that many families in this country are under financial strain and financial pressures because of rising living costs—as opposed to taking that money out of their pocket and putting it into their superannuation fund. That question has not been asked. Before we go compulsorily adding more money to people's superannuation accounts, that should be the question asked.

People are still free to make the choice. That is a very important but overlooked aspect of this debate. Yes, the SG contribution has been frozen at 9½ per cent, but that does not mean that people cannot use salary sacrifice or other means to put more money into their super fund if they have the free cash flow to do so. That is entirely their own personal choice—it is not compulsory, it is their own personal choice. It is interesting to note that when those opposite were in government, they reduced the contribution limits for concessional contributions for people under 50 from 50,000 to 25,000. So they complain about the fact that people cannot put money into superannuation, yet they are the ones who made it even more difficult! It is this side of the House that has an interest in seeing our superannuation system continue to grow and be strong for the future of all Australians.

Tim Watts (Gellibrand, Australian Labor Party) Share this | Link to this | Hansard source

Superannuation is one of those issues in this House: almost no other issue better defines the different values, the different priorities between those opposite and those on this side of the House. To use a coined phrase—it is widespread in the superannuation industry—I encourage Australians to 'compare the pair': compare the values and priorities of the Labor Party with the values and priorities of the coalition opposite. The Labor Party seeks to build a retirement savings scheme that provides a dignified, secure retirement for the majority of Australians—for all Australians, for Australian workers in all professions. Where did this come from? Where did compulsory superannuation in this country come from? It came from people like the meatworkers union in my electorate, people trying to create a system that provides for a dignified, secure retirement for hardworking, average Australians.

What have those opposite done since coming in? They are fighting tooth and nail against all rationality, against all evidence, against even some of their erstwhile supporters, to stand up for the big end of town, for their mates in the one per cent. What was their first act on super policy when they came into government? What was the first priority of those opposite? What was the burning need for change when they got in? It was slashing the retirement savings of more than two million Australian women, millions more Australian workers, through the abolition of the low-income superannuation contribution scheme. But when it comes to the superannuation of high-income earners, when it comes to the superannuation income of the one per cent, a very different approach is taken.

It is one of the most obvious policy reforms going in this country. Superannuation tax concessions for the top end of town is something about which Paul Keating would say, 'Every galah in Australia needs reform.' At the moment 38 per cent of superannuation tax concessions go to the top 10 per cent of income earners. There are 475 Australians with super in excess of $10 million who earn $1.5 million tax-free from their superannuation every year. How is that justifiable? It is extremely difficult to justify when you look at the people who are calling for change in this area. The reform of super tax concessions has been supported by the IMF; the chairman of the government's Commission of Audit, Tony Shepherd; the head of the government's own financial systems inquiry, David Murray; and many in the industry itself, such as the Australian Institute of Superannuation Trustees and the Association of Superannuation Funds of Australia. And what do they say? What is the problem here? Well, as the IMF says:

… higher-income earners gain relatively more from the favourable tax treatment of retirement savings (indeed, low income earners lose: subsidies are insufficient to offset the effectively higher average tax rate on superannuation contributions than on other earnings), which undermines the progressivity of the income tax system.

The member opposite who spoke previously said, 'Well, this is people's own money; they ought to be able to do what they want with it.'

Mr Hawke interjecting—

Do you support progressive taxation or not?

Alex Hawke (Mitchell, Liberal Party, Assistant Minister to the Treasurer) Share this | Link to this | Hansard source

What do you mean by that?

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

Order! The member for Gellibrand should place his remarks through the chair.

Tim Watts (Gellibrand, Australian Labor Party) Share this | Link to this | Hansard source

He asks, 'What do you mean by progressive income taxation?' What we mean by that is that millions of low-income-earning Australians ought to be paying less tax—

Alex Hawke (Mitchell, Liberal Party, Assistant Minister to the Treasurer) Share this | Link to this | Hansard source

That is regressive; you really do not understand, do you?

Tim Watts (Gellibrand, Australian Labor Party) Share this | Link to this | Hansard source

than people who are taking $1.5 million in income a year tax-free. It is outrageous, and what it goes to is that the Liberal Party has never believed in superannuation for Australian workers. They believe in advantageous tax arrangements for their own kind; they do not believe in it for workers. John Howard called superannuation a 'job killer', and it was unsurprising when his government scrapped the proposed increase in compulsory superannuation from nine to 12 per cent within six months of coming into office. Tony Abbott infamously called superannuation 'one of the biggest con jobs ever foisted by government on the Australian people'. When he came into government, what did he do? He froze the increase in compulsory superannuation from nine to 12 per cent.

The reality is that you cannot trust the Liberal Party with superannuation; you cannot trust the Liberal Party with your retirement savings. This is a government that sees the total cost of superannuation tax concessions within the period of the forward estimates increasing beyond the scale of the total spend on the pension. And it says, 'Do nothing'—do nothing in the name of uncertainty. We need to provide certainty to investors—as though people taking $1.5 million a year from their super are relying on certainty in order to survive—the certainty that they did not take into account when they slashed the superannuation income of millions of low-income working Australians. You cannot trust the Liberals on super. (Time expired)

Rowan Ramsey (Grey, Liberal Party) Share this | Link to this | Hansard source

I believe that the subject of today's MPI is that the government is undermining superannuation of working Australians. Aside from the fact, of course, that this is a totally faulty premise, I am just amazed that the Labor Party would bring this particular subject into this chamber today, after the scurrilous, low-grade, reprehensible and ill-fated attack on the Prime Minister and his investment decisions. They have just displayed their ignorance in their questioning of the Prime Minister today. It is unbelievable, because this totally ignorant attack on the Prime Minister has been led by none other than the assistant shadow Treasurer and the assistant finance minister. Their ignorance in the way international managed funds invest—and why they invest—in certain places has been manifest today. It has been unbelievable, really, because many of them have money invested in superannuation funds that also have investments in the Cayman Islands. Their attack today is unbelievable, because their own leader has sat on a superannuation board that had and continues to have investments in the Cayman Islands.

Why do they bring this subject to the parliament today? I think it is because they are desperate to turn the spotlight off themselves and on to something else, and they do not really care what it is. They do not want to talk about the royal commission into union corruption, for instance. They particularly would not like to speak about their baseless attack on ChAFTA. And they certainly do not want to be talking about their scurrilous and low-grade attack on the Prime Minister today and yesterday. So they turn to superannuation, and their government's attempt to bring world's best practice to bear on this industry. It has been brought up before that there is $2 trillion invested in Australian superannuation schemes today. That is expected to lead to a $9 trillion investment by 2040.

One of the most important things that Australian investors in superannuation funds must have is trust. After their family house, the biggest investment they are likely to have in their life is their investment in their superannuation fund. They deserve superannuation funds that are transparent, open and do not have an implied conflict of interest—hence the government's move to make one-third of superannuation fund board directors independent, an action based on the advice of the Cooper review and the Financial System Inquiry. The government's motives are above board and clearly apparent and certainly do not undermine the superannuation of working Australians. In fact, they are ensuring their future.

Another issue raised here today is the low income superannuation offset. Once again we have seen the Labor Party's ignorance about the way that financial payments and systems work. A tax deduction is one thing; a cash payment is another—and that is what a taxation offset becomes. At a time when the government is borrowing to meet day-to-day expenses, courtesy of Labor's last stint in government, the Labor Party is suggesting that the government should borrow money for individuals to put in their superannuation accounts so that they will not draw on the pension as much later on. That makes about as much sense as trying to get water to run uphill. We would be borrowing off today's taxpayers to try and fund some kind of superannuation break for people in the future who would otherwise be on the pension. Either way they would be relying on the taxpayer of the day to meet that expense. It just makes no sense at all.

When you are talking about taxation relief, you are providing an incentive to people to put their own money into a superannuation scheme, which will relieve the burden on the taxpayers of the future. This government is working to ensure that superannuation is a sound and just system in the future for the Australian workers of today.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

The time allotted for this debate has expired.