Julian Hill MPFederal Member for Bruce

Protecting superannuation for the future

House of Representatives - 18 March, 2024

The Superannuation (Objective) Bill 2023 will legislate an objective to superannuation, and that will serve for years to come—for decades—as a guide to policymakers, to governments now and in the future, to regulators, to industry and to the wider community. A legislated objective—a new law, a legal objective for superannuation—would be 'to preserve savings to deliver income for a dignified retirement alongside government support in an equitable and sustainable way'.

Of course, there are many other positive, beneficial outcomes from Australia's world-leading superannuation system, now a multitrillion-dollar pool of capital: fiscal sustainability for the country in coming decades, reduced costs of international borrowings and so on. But the legislation before the parliament, if passed, will make clear to governments now and in the future that the primary objective, the shared goal, the fundamental point of superannuation is to provide for a dignified retirement, not to allow future lazy Liberal governments to avoid their own responsibilities and force people to raid their superannuation to get by, to cover up failures in future Liberal governments.

On reflection, it is strange that the legislation has never had this kind of objective. Doing it now will improve transparency and accountability in the system, and it'll provide stability and confidence in the future. Members and funds will have more certainty over future changes through both the accumulation and the retirement phases. The fact is that in Australia now your super is part of your pay—and not just for the elite, either.

Decades ago only the lucky few had superannuation, had a dignified retirement. Millions of ordinary working Australians basically fell into something approaching poverty in their retirement because there was no method, no means, no requirement to save for a dignified retirement. Only the higher end of corporate Australia and the upper echelons of the Public Service, the military and so on had that option, that benefit. Everyone else was condemned, from when they retired until they died, to the age pension and whatever few bucks they'd managed to squirrel away.

It was the Hawke and Keating Labor governments in the 1980s and 1990s that made these reforms, that gifted us the superannuation system that Australians enjoy today, and a dignified retirement.

The previous government's record is consistent with that of every other Liberal government before them. They've always hated superannuation. I've never really understood why they've hated it so much. They've never liked the idea of working Australians having a dignified retirement. At every stage—and the record shows this: through the Fraser opposition and then Fraser government, through the Howard-Peacock-Howard oppositions, through the Howard government and through the Abbott-Turnbull-Morrison debacle—when they're in government they try to freeze, nip, tuck and undermine superannuation. They started it in 1974, when the then Whitlam government launched an inquiry into introducing a universal super scheme for Australians, and they've opposed it ever since.

But this time they've got something new. They've got a new silly scare campaign. It's a day ending in 'y'; the Liberal Party have a new silly scare campaign. The opposition are actually claiming that this bill will somehow end early access to superannuation for financial hardship or on compassionate grounds. That is utter rubbish. The bill has no impact whatsoever on existing arrangements for early access for financial hardship or on compassionate grounds. Those arrangements are unchanged by this bill. So, if they are going to oppose it, at least they could try telling the truth and being upfront and consistent about the fact that they just don't like superannuation and they don't like Australians having a dignified retirement.

In addition to that core, the fundamental point, there are numerous other benefits and outcomes of the superannuation system beyond just that dignified retirement, important as it is. Firstly, there are really important fiscal reasons that should be recognised, even by the Liberal Party of giant debts and deficits—the trillion dollars of Liberal debt with not enough to show for it and record deficits as far as the eye can see. It's a bit of a contrast with the government, isn't it? We had the first surplus in 15 years, something they never achieved.

But, if you look back at the 1980s or thereabouts, there were six or seven workers—six or seven taxpayers—for every retiree. That was how things worked in the country then—a relatively young population. Following the intervening decades, we're now down to around four taxpayers for every retiree, and the projections are that not long from now we'll be down to just three workers paying tax to support every retiree. That ratio doesn't add up for a high- quality country. Successive governments have smoothed that curve a little bit with skilled migration, but that's the reality of the trend.

What that means is more pressure on the pension system, more pressure on the health system and more pressure on the aged-care system. Frankly, either we run down and turn into a country of giant debt and degraded public services or, as Hawke and Keating showed, we put in place a system that allows and provides for the dignified retirement of Australians and takes pressure off the budgets of future societies. It's now a right, not a privilege. Australians often criticise governments for thinking too short-term. It's difficult to think of a policy that was more long-term and more visionary and beneficial to the long-term sustainability of our country and the retirement of working people than the introduction of universal superannuation.

The second thing—it's not just fiscal sustainability and it's not just a dignified retirement—is that we've also now built up an incredible national savings pool of nearly $3 trillion or thereabouts under management in this country, and that savings pool now reduces our reliance on foreign capital and foreign finance. It's projected to rise to nearly $10 trillion by 2040. That's an incredible national asset. It means that individual Australians— working Australians—will have a better retirement but also that they own more of our national wealth and what Australia produces. This reduces Australia's reliance on foreign sources of finance, and as of about a decade ago, 2013 or 2014, we achieved an incredible milestone in this country because of our superannuation system.

For the first time in our modern country's history, Australians owned more stuff overseas in other countries than foreign countries or investors owned in our country. That's a fantastic achievement that has only been made possible through the accumulation of the capital pool in superannuation—the first time in our history. We're a capital-intensive country. We've always welcomed proper, productive foreign investment—not speculation on the housing market but things that actually grow jobs and grow our national wealth and economy—but, because of our superannuation system, we've balanced that out and we own stuff elsewhere. That gives Australians an enormous ability to diversify their investments, to bring profits back home from around the world and to enrich individual Australians and to grow our collective national wealth, but also to hedge against economic shocks. And we can apply this national savings pool to productive assets.

The third thing I will just note in passing is that it lowers the cost of Australian borrowing and actually helps Australian governments maintain our AAA credit rating. The long-term positive fiscal effect on the federal budget actually boosts Australia's international fiscal credibility—nerdy and niche, but true. When international ratings agencies, bond markets and international partners size up countries and they have a good, hard look at them to decide, 'Well, what's your credit rating going to be and how much should you pay? What's your risk rating? How much should you be paying on money that you borrow? What's your interest rate?' they consider whether they've provided for their ageing population and their pension system. It's not rocket science. It's difficult for those opposite to understand, because they always attack super, but most people could understand the point I've just made.

Countries with ageing population—look across much of Europe—get themselves into terrible fiscal trouble when they haven't put away superannuation and have an unfunded entitlement system and an ageing population. That combination—an ageing population and fewer taxpayers to support every retiree—is a fiscally toxic combination of higher debt and deficits. It's a bit like having a Liberal government, really. Ratings agencies look at these things. Without Australia's super pool, we'd be far less likely to have and hold a AAA credit rating, and we'd be paying more as Australians—every taxpayer would be paying more—for the Liberal debt that they left.

But why now? Why introduce this objective now? Well, there are a few key reasons. More Australians are reaching retirement age right now than at any other time in our history, and better retirement incomes have never been more important. More Australians right now are transitioning from the accumulation phase into the decumulation phase, the retirement phase of their super, and it's natural that any government—or any sensible government—would wish to strengthen the superannuation system in light of this.

If you wrap all this up, the battle lines for superannuation yet again, right here in this parliament with this legislation, are drawn. Labor created superannuation. Labor defends the superannuation system as being good for workers and good for everyday Australians in their retirement but also good for the nation, with that incredible savings pool of over $3 trillion that we can use as a nation to invest in productive businesses and infrastructure here and overseas and reduce our reliance on foreign capital. Labor championed an increase in workers' pay through the legislated increase in superannuation, which the former government were attacking and trying to get rid of. Effectively—you won't be shocked to hear this, so you don't need to be sitting down—they were trying to cut workers' pay, as they always do and as they did—cutting penalty rates, not giving people pay rises and trying to cut superannuation.

There's another set of reasons, as you can see when you look at those opposite, why it's important that the government legislate an objective—a permanent, abiding objective—for the superannuation system: to provide for Australians a dignified retirement. That's because constantly when those opposite are in government— and now they're trying it even in opposition—they're thinking up ways to trash, undermine and wreck the superannuation system.

They did it in COVID. They effectively privatised the first stage of the COVID support, stimulus and recovery work, forcing vulnerable Australians to raid their retirement savings for the then government's own purposes, with a devastating impact on the retirement savings of millions of Australians. Around $38 billion of savings that were meant to last Australians a lifetime were drained out of super accounts in a matter of months. Around one million Australians were forced, when those opposite were in government, to trash all of their superannuation and raid all of their retirement savings, because the former government—this is a word that might freak them out—frankly failed and refused to take the more effective option of socialising the risk by providing proper support to those in need. It was a really shameful exercise. They've still never apologised for it. They've still never said sorry to the million Australians who were forced to draw down their precious and, in many cases, meagre retirement savings to do the job that the then government should have done.

Of course, they're at it again, with possibly the dumbest housing policy you could dream up, their super-for- housing policy, which would raise the cost of housing. You don't make housing more affordable by making it more expensive. There's a tip for free. But that is their policy. It's a good illustration of why we need a legislated objective. If you wanted to introduce something as stupid as their super-for-housing policy, you'd have to actually articulate, in a statement of compliance, what it would do to the dignified retirement of Australians. You'd be forced to have a look at that and not come up with things that are so silly.

There's a reason why successive prime ministers—Abbott, Turnbull and even Morrison until he freaked out a week before the last election and caved in—and successive finance ministers and housing ministers have rejected this silly idea: because it would push up the cost of housing. If you're a young couple, Deputy Speaker Vamvakinou, going to an auction—if you and Michalis, say, some years ago were going to an auction—and trying to buy your first house and you have your superannuation in your pocket, you're bidding up the cost of housing and trashing your retirement savings. It's a gold medal for policy stupidity to achieve two such silly outcomes with one bad policy: trash your retirement savings and push up the cost of housing. Who's the person who wins from this? It's the guy selling the house. You may as well shovel the cash out of your super account into the pocket of the guy selling the house. It's a really bad policy.

In closing, to bring it back to the bill, whenever those opposite can they're dreaming up new ways to trash and undermine the superannuation system; hurting the retirement prospects of everyday Australians;, pushing up the cost of pensions with fewer and fewer taxpayers to pay them; and pushing Australia further into more Liberal debt, more Liberal deficits. And they're potentially increasing the cost of capital, the cost of borrowing for the country, when they run up their giant debt and deficits. International ratings agencies would look at us and go, 'Well, you haven't got a proper super system anymore.' So I commend the bill to the House.

The primary objective of superannuation is to provide a dignified retirement for Australians, and that's a cause we should all support.