Stephen Jones (Whitlam, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

I rise to speak on the Australian Prudential Regulation Authority Amendment (APRA Industry Funding) Bill 2020, and at the end of this address I'll be moving a second reading amendment which has been circulated in my name. This bill concerns the funding base for the Australian Prudential Regulation Authority. It both expands the funding base and rectifies problems with the calculation of levies for the regulated entity. It fixes an issue with the current APRA industry funding arrangement that the government has allowed to stand for far too long. The APRA industry funding arrangements have been in place for more than 20 years. The purpose of the arrangements is to provide funding certainty to our prudential regulator—the regulator in charge of ensuring that our most important financial services firms are operating in a sound, safe, ethical manner.

Over the last 20 years, the landscape of financial services has drastically changed. Our largest banks have grown their share of the market to capture nearly 80 per cent of household lending, superannuation has grown to be a $3 trillion cornerstone of our national economy—$2 trillion of that superannuation sector is directly regulated by APRA—and insurance companies have had to grapple with issues such as the growing threat of climate disaster. But despite all of these changes, small customer owned regional banks like the Illawarra Credit Union and the IMB Bank in my electorate have continued to serve regional customers effectively, efficiently and with concern for their communities.

It has to be noted that in the banking industry royal commission—the same royal commission that the government voted against 26 times; the royal commission that uncovered massive wrongdoings by the big four banks—not one complaint was made in relation to customer owned banks, but they have been paying more than their fair share in levies to pay for the regulator that's meant to be regulating and policing misconduct. Under previous arrangements, legislative caps on the total amount of levies that could be paid left smaller banks paying a disproportionate amount of the APRA industry funding burden. Smaller banks, smaller building societies, smaller ADIs were paying a disproportionate amount of the levies. This package of bills lifts those caps and will mean the major banks will now pay their fair share of industry levies. For that, we are saying: 'Good. Fantastic.' It is about time this bill came before parliament with a solution after the community and, in particular, the small banks have been calling for it for some time indeed.

The point of the APRA framework is to provide certainty for financial services and for every Australian who relies on the financial services sector, something this government is clearly incapable of doing. I want to say something about our superannuation sector, which is regulated by APRA. Our universal superannuation system is a bit like a sovereign wealth fund except, unlike sovereign wealth funds in other countries, this one is owned by the people and not by the rulers. It has $3 trillion in funds invested, and Australian workers have amassed the fourth-largest pool of pension savings in the world, equal to 140 per cent of GDP. As a proportion of GDP, that puts us ahead of countries like Canada and the United States.

What we have done in Australia is truly remarkable. Not only has superannuation helped Australians build this pool of retirement savings, it's helped to transform Australia from a country that was entirely reliant on the savings of other people in other countries to fund its capital requirements. Whether it was government debt—and we're amassing lots of that at the moment—or whether it was the capital to build our roads, our highways, our schools and universities, our ports and our critical economic infrastructure, or to finance the businesses or the banks, who finance our businesses, we were overwhelmingly reliant on capital and the savings of other people in other countries.

Because of occupational superannuation and because of universal superannuation, we have transformed that part of our economy. We now have a large pool of domestic savings which is not only delivering returns for members but is providing a pool of capital which has provided a great source of stability, I have to say, during the COVID crisis. I will give you one example. During the four weeks of the economic shutdown, some companies went to their banks when they hit the cash crisis. They ran out of cash to pay for their ongoing operations or they were in a position where they were going to run out of cash. Some went to their banks or their financial institution to access the cash needed. Many listed companies went to shareholders. It is a fact that the Australian Stock Exchange, which raised $20 billion over that four-week period, raised 44 per cent of all capital that was raised on comparable stock exchanges throughout the world. This simply could not have been done without our superannuation sector, because they were the institutional investors keeping Australian businesses afloat—an issue often lost on those enemies of the superannuation who have made a lot of noise over the last eight weeks but less and less sense.

Super will be critical to the economic recovery from the COVID-19 recession. But, unfortunately, government members cannot help but meddle with the policy settings. This week the Treasurer made a song and dance about how important it was for superannuation funds to be investing in local infrastructure and local businesses. We agree. We think our superannuation sector should be investing. It is already a significant investor in local businesses and local infrastructure. We think it can and should be doing more. But the thing that is different about superannuation funds and banks is that superannuation funds hold capital for the long term. It's a long-term capital holding and therefore they are able to make long-term investments—investments which create jobs, drive productivity and build our economic capacity for the long term.

You would have thought the economically literate on the other side of the House would say that is a very good thing. But no, they are doing almost the exact opposite. They are contemplating and proposing policies which will cripple our superannuation sector's ability to invest in Australian jobs, drive productivity and invest in wealth creation in this country for the long-term. Silly ideas such as treating superannuation like a bank account, like an ATM that you can get cash from anytime you feel like it, is completely opposite to the purpose for which superannuation was originally conceived. When universal superannuation was first conceived in the early 1980s, we knew we had a problem. We knew that increasing life expectancy, which has been a fantastic achievement of this country—better health care, better education and better sanitation mean Australians are living longer—does have an impact, and that is that the ratio of retirees to taxpayers is growing. There are more retirees and fewer taxpayers, and the fiscal burden on our children and grandchildren will be great if we do not do something about it now.

That's why in 1985 and 1986 the Hawke-Keating government had a vision for a better way—Australians becoming self-reliant and making modest contributions on a weekly or fortnightly basis to their own superannuation savings, ensuring that they had a dignified retirement and were less of a burden on future generations of taxpayers. That problem has not gone away. In fact, the problem has got bigger. Because of the necessary steps that have been made, and will have to be made, to put the economy back on its feet after the COVID crisis, we will be incurring greater government debts well into the future. Some are saying it will be in excess of 10 years before the debt which is being racked up today is going to be able to be paid off. At about the same time as this generation of parliamentarians and people of similar age will be leaving the workforce, we'll still be paying off that debt.

So the problem of funding the pension requirements for the future has not gone away; it's actually got bigger. The government's capacity to fund that problem has not gone away; in fact, it's become even more challenging. If you know all of this, does it not strike you as somewhat reckless—wilfully reckless, militantly stupid—to say, 'We are going to wreck the system which has been put in place to protect against that fiscal problem, that big problem, in the future'? That's exactly what this mob on the other side are trying to do—undermine the universality of superannuation, encouraging people to drain their superannuation accounts, creating a greater burden on them and a greater burden on the future.

I ask those opposite to think very carefully about this—very carefully indeed. You might think there is some short-term populist political gain to be made, but you are gambling with people's future, you are gambling with their ability to pay for their retirement and you are gambling with our children's ability to fund our retirement. It may sound like a populist thing to do now, but you are wrecking a system which has delivered so much for this country.

When the Treasurer stood up this week and said, 'I want superannuation funds to be able to invest in infrastructure for the long term,' it would not have been unreasonable for the fund trustees to turn back to the Treasurer and say, 'We are very happy to do that, but how about you give us some policy for the long term?' If they do not know what the government intends to do on crucial policy settings, such as the legislated superannuation guarantee levies or their ability to invest money for the long term for the benefit of the country and fund members, how on earth are they going to be able to make the sorts of investments in infrastructure, in startups, in innovation, ensuring that we're able to have more companies start up and more companies listing on the Australian Stock Exchange, building the pool of capital within this country? Quite simply, the answer is that they won't. If some of these geese on the other side say, 'We should be treating superannuation just like any other bank account,' you can do that—it is possible to do that—but, instead of getting the eight to 10 per cent that superannuation has been able to deliver on average, per year, for fund members over the last decade, you'll be getting a little more like the bank account interest rates, and you'll struggle to get two per cent, let alone eight per cent. I see the member for Mackellar in the chamber. I wasn't reflecting on him—I think he's a decent bloke; I quite enjoy my interlocutions with him—but, my God, some of his ideas will be a peril to this country.

If we want to have superannuation funds do what the Treasurer is encouraging them to do, we need stable and certain policy settings. That used to be a mantra of this government. We used to almost grow tired of them standing up in question time and asking themselves questions about stable and certain policy. Well, here's an area that requires stable and certain policy, the area of superannuation—long-term investments for the long-term good.

I encourage all members on the other side, in their contributions on this bill and other bills that are scheduled to come before the House later this week, to speak in favour of my second reading amendment and say: 'The member for Whitlam is onto something here. If we're going to get our superannuation funds to invest for the long term, we've got to give them stable and certain policy so they can invest in the national interest for the long term.' We know what the alternative policy is: higher taxes, lower pensions, lower growth and fewer jobs. That, quite literally, is what the geese on the other side are proposing: higher taxes, lower pensions, fewer jobs, lower growth and a more impoverished future. The choice is ours. It's in our hands. Let's do the right thing by our kids and by our country. I move:

That all words after "That" be omitted with a view to substituting the following words:

"whilst not declining to give the bill a second reading, the House notes:

1. the Government has failed to provide adequate policy certainty in the superannuation sector; and

2. smaller credit unions and customer-owned banks have borne a disproportionate burden in funding the Australian Prudential Regulation Authority due to the Government’s failure to update funding formulas in a timely manner".

Andrew Wallace (Fisher, Liberal Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Meryl Swanson (Paterson, Australian Labor Party) Share this | Link to this | Hansard source

I second the amendment and reserve my right to speak.

Andrew Wallace (Fisher, Liberal Party) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this the honourable member for Whitlam has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. If it suits the House, I will state the question in the form 'That the words proposed to be omitted stand part of the question'.

Jason Falinski (Mackellar, Liberal Party) Share this | Link to this | Hansard source

Well, his heart just isn't in it anymore. The member for Whitlam—endlessly entertaining but rarely informative—can't even speak for his full 30-minute allocation.

Ms Swanson interjecting—

Yes, indeed, the member for Paterson is right. I should be careful what I wish for. Another 15 minutes of the member for Whitlam would indeed be stretching the friendship. But that's the thing about the member for Whitlam. He's kindly given me five minutes. I won't even need that long—but I see the whip informing me that I will need exactly that long, so I will go for at least five minutes.

The fact of the matter is that the problem for the Labor Party is that they're always putting donors before Australian workers. The member for Whitlam is the greatest shill for industry super funds that this place has ever seen. It is beyond reproach. We have a bill before this parliament—the Australian Prudential Regulation Authority Amendment (APRA Industry Funding) Bill 2020—that does the radical thing of ensuring that the retirement savings of Australian workers are secure. That is what this does, but he still wants to amend the legislation. Ask yourself why. What it is that the Labor Party wants to hide? What is it that their donors in the industry super space are so scared of APRA finding out about?

We don't need to ask that question for too long, because what we found, when this government had the radical approach of saying Australian workers should be entitled to their savings during a pandemic and an economic meltdown, was that all these industry funds went to the Australian government and said: 'Well, we might actually need some money from the Reserve Bank to pay some of this out. You how we've been telling you for years and years on end that we don't have a liquidity problem? Well, it turns out that we weren't expecting Australian workers to actually want some of their money back, so now we do have a liquidity problem. By the way, we didn't mean to mention it, but, now that you're kind of asking us, you know how we told you that we've really allocated our assets and we've matched our risk profiles to our members' profiles really well? Well, it turns out that we actually did put a bit too much in unlisted funds and we do have a liquidity issue now.'

This bill will give APRA the capacity to look deep under the hood and make sure that that never happens. It's on the basis of the radical assumption that this parliament should ensure the retirement funds of hardworking Australian workers. I know the member for Paterson stands up for Australian workers in her seat, so she should be over on this side making this argument, not listening to the member for Whitlam's siren song: 'Oh, no, let's not hurt the good old fund managers. How will they be able to afford their second Ferrari for Christmas this year?' What we need to do is ensure that Australian workers' retirement funds are not in any—and I mean any—danger of not being able to survive retirement. Thank you, Mr Deputy Speaker.

Andrew Wallace (Fisher, Liberal Party) Share this | Link to this | Hansard source

You've got another 30 seconds.

Jason Falinski (Mackellar, Liberal Party) Share this | Link to this | Hansard source

Well, you were just leaning into the microphone. As I was saying, Member for Paterson, there's more to come. So the fact of the matter remains that what this should be about is the retirement savings of Australian workers, not the Labor Party's donors. This bill will allow APRA to look under the hood of all those funds, see what the unlisted funds have been doing and make sure that they have not been investing other people's money according—

Debate interrupted.