Gerard Rennick (Queensland, Liberal Party) Share this | Link to this | Hansard source

I rise to speak to the motion to take note of this report as well, because I think Senator Bragg touched on a very important point there: that 32 per cent of people take out their amounts of superannuation as a lump sum when they retire, and that makes sense because figures from the ABS show that, today, 40 per cent of people retire with a mortgage. That is up from 10 per cent in 1992.

I don't think that that is necessarily entirely the fault of superannuation, but it is partly to blame because, if you're having 12 per cent of your total income taken out of your wage, for many people—especially if you're earning below the median average earnings—that is 100 per cent, if not more, of your savings, because the median earnings in this country are something like $80,000 a year and you need $40,000 to $50,000 a year, if you're lucky, just to survive. So, if you've got $30,000 remaining, and you're trying to save for a house, and you've got to take out $8,000 to $10,000 of what's left, that suddenly becomes a large part of your entire disposable income. And heaven forbid you get a flat tyre or you've got to get braces for your children or something like that. You have got absolutely no flexibility in how you manage your income.

With all due respect, the coalition has this idea that you're going to allow first home buyers to dip into their superannuation fund to be able to pay off a mortgage. I think you just should be able to let them choose in the first place whether or not they even want to put money into superannuation. Now, I'm happy—and I've discussed this tax policy today—to allow the first $25,000 in superannuation to be tax free, but after that we need to go back to marginal rates because, as I just pointed out in question time, $50 billion of tax concessions go to the wealthiest 30 per cent of people in this country while the lower 70 per cent of retirees only get $54 billion for the pension. That doesn't add up. Superannuation is actually a wealth distribution program from the poor to the rich. We know from the Intergenerational report that was released a few years ago that those superannuation tax concessions are actually expected to become greater than the pension in the next decade. So you have to ask yourself: who is this really helping? Of course, that was the nub of my last question in question time.

Corporations have to hold an AGM. Politicians have to go to an election. I sometimes wonder if these things are worth it or not! But there is no mandatory election process for the members of superannuation funds to elect their board. They have absolutely no say in how their retirement funds are managed. That is for most; if you go to a self-managed super fund, you can. But most people in an industry fund have very little control over how their money is managed, so they just have to hope for the best and that they're going to get their money back when they retire at 65 or 67.

As I point out to people, there is absolutely no democracy when it comes to superannuation. In 1997 New Zealand had a referendum on compulsory superannuation, and they voted against it 92 per cent to eight. Now, do you think that, if Paul Keating went to a referendum in 1992 and said, 'By 2025 I'm going it take 12 per cent of your income, I'm going to give it to someone you've never met and there's no guarantee you're going to get it back,' the Australian people would have voted for it? Absolutely not.

But I shouldn't just criticise the Labor Party for this, because the Liberals were in on this as well. In 1996, when Howard and Costello took office, superannuation received three or four per cent of income. They had the chance then to kill superannuation stone cold dead, and they didn't, because the banks like the idea of superannuation as well. CBA took over Colonial Mutual, National Australia Bank took over National Mutual, Westpac took over Banker's Trust and ANZ did a joint venture with ING. I remember my eyes just about popped out of my head one year when I saw the return on equity of the CBA's wealth division, which included, of course, the old Colonial Mutual. It was a return on equity of 66 per cent for the risk of playing with other people's money. If you can get a double-digit return on equity in any small business, you're doing pretty well. But to think that a big bank like the CBA could get a return of 66 per cent on their equity—because they had so little equity in it, of course; they just charged fees to manage other people's money. I mean, you want to talk about socialism? This is socialism at its finest.

It's not serving the purpose. Again, as I pointed out in question time, today we still have at least 50 per cent of retirees on a full pension, because the median balance for women aged 60 to 64 is $158,000. That is just on half of the asset pension threshold to start having your full pension reduced. So women are nowhere near having enough money in their superannuation to retire, and men aren't much better. Their median balance is $212,000, so they're not going to get there either.

Now, I'll grant you that superannuation is only 32 years old and it's not fully matured, but here's the rub: heaven forbid when it is fully matured, because, once it's fully matured—it will be my age group, because I started paying superannuation when I first started work in 1991—somewhere around 2040, you're going to get the first generation of people with a full 40 years of superannuation starting to withdraw lump sum balances. As Senator Bragg pointed out, 32 per cent are currently doing that. If we continue to see house prices grow rapidly, this figure will continue to grow. The problem is that, when someone pulls out their 40 years of savings in a lump sum, you're going to need 40 other people coming and putting in their one year. So can you see how superannuation is actually a Ponzi scheme? If you go and look at the Australian superannuation fund association figures, they're predicting by 2050 that superannuation is going to have $10 trillion in it or represent about 200 per cent of GDP. I ask you: where exactly are they going to park this money? They won't be parking it all in Australia. They'll be parking it offshore. So a lot of this money you're paying you are not just paying into your super fund. That then gets sent to a bank account electronically offshore. I think it's the Queensland public servant super fund—they've had so many name changes that I forget the name of it now—that's the biggest shareholder in Heathrow Airport. Too bad they wouldn't actually build some infrastructure here.

Super funds are very good at buying existing infrastructure, but they're very bad at building new infrastructure. If we're going to have this rapid population increase, we need to start building more infrastructure. The problem is the people that manage superannuation are white collar workers who go into their ivory palaces in the cities. These guys aren't tradies, engineers, surveyors and things like that; they're accountants, fund managers, wealth advisers and all of this stuff. They don't have the skillset to build the stuff that matters. So they're misallocating capital offshore. That then drives up the cost of living, because we're not building power stations, dams and ports. We're not building the infrastructure we need in this country. We have people who are matching capital but not actually building genuine new wealth. Then we've got this wealth redistribution of $50 billion of people's tax into the upper 30 per cent. A lot of these people, the upper 30 per cent, will take their ski holiday to Japan or go on a European vacation. There's nothing wrong with that. But where is the money going into infrastructure? It's not happening.

Then to go back to Senator Bragg's point about the whole importance of owning your house when you retire, if you have a mortgage today and you're paying six or seven per cent, that means you need to earn 10 per cent pre tax. Most people will pay, on average, 30c in the dollar. So they need to earn 10c. They'll pay 3c tax and then there's a six per cent interest. Super funds brag about getting a seven or eight per cent return. It sounds pretty good, but they're including capital gains in that. When you're paying a mortgage of seven per cent or trying to save up and house prices are rising by seven per cent, you can't keep up. So we need to allow young people to be able to access their superannuation today. I say 'young people', but it's not just young people. It's people all the way through their working lives. We need to enable them to access their wages. They are their wages. Let them keep them and pay down their house. As I said the other day, it's not the chicken or the egg that comes first; it's the nest. You're going to mature and contribute a lot more to society when you've settled down in your own house.

Debate adjourned.