SPEECH TO THE AUSTRALIAN COMMITTEE ON SUSTAINABLE RETIREMENT INCOMES LEADERSHIP FORUM

Thank you very much for that warm welcome and can I thank you very much for the invitation to speak with you this morning in my new role as Shadow Minister for Small Business and Financial Services.

May I begin by acknowledging the traditional custodians of the land we are meeting on, the Ngunnawal people. I pay my respects to elders past and present, and acknowledge and respect their continuing culture and the contribution they make to the life of this city and this region.

I’d like to begin by thanking the organisers of this year's Leadership Forum for inviting me to speak with you this morning.

As a proud – and what some might say parochial – Senator for the ACT it would be remiss of me to not also welcome you to our beautiful city, for those of you who are coming from elsewhere and hope that you get some time to enjoy the beauty of the nation’s capital.

Having recently taken on the shadow portfolio of Small Business and Financial Services, I have been spending a great deal of time trying to get around and meet with all of the stakeholders and can I say there are an enormous amount of you. Particularly in the area of superannuation where there is so much work underway, so much reform happening and so much politics around it.

It’s been really generous of people; I know I have met with some of the people in this room. I have many, many more meetings to go but it has been very generous of people with their time and their preparedness to talk and share information and to provide me with their priorities and other issues of concern.

In terms of retirement income policy there is certainly a great deal of reform and discussion underway. It is our challenge as lawmakers to coordinate these reforms and ensure that those in retirement are properly supported across all the relevant policy areas.

I believe that Labor has been leading much of the discussion in this area and I will comment on that further but my comments here today reflect my initial observations in this portfolio on the key issues facing us and the elements that are required for Australia to continue to build a strong and sustainable retirement income policy for the long term.

I should begin by saying that Labor believes that we need to approach ageing as a positive. 

We should be celebrating our longevity.  It is a sign of Australia’s success that we are living longer and healthier lives.  Of course, that doesn’t apply to all of us. The life expectancy of indigenous people still remains at appalling low levels.

We should be pleased overall that more people are living longer and spending longer in the retirement phase.

Yet often the tone of our public discussion on ageing and retirement is framed in terms of costs.  Older people are not, and should not be a burden.

I’m sure it’s not the intention to frame the debate as being negative; however, one of the downsides of the focus on the fiscal challenges has meant that at a time when people should be enjoying their post-working lives, some are feeling like a burden. 

People who have worked and contributed to the economy and the community for decades, be it in the workforce, family or community sectors have earned the right to a dignified retirement.

The best way to counteract any tendency to consider older Australians a burden is to ensure that our policy settings are as coherent, effective and targeted as much as possible to support our ageing across the community in a fiscally sustainable way.

Government policies directly impact the lives of people in retirement in many ways and they will become increasingly important as our ageing population continues to grow.

According to the Blueprint for an Ageing Australia the number of people aged over 65 will increase by 84.8 per cent from 3.1 million in 2011 to 5.7 million in 2031. I am sure I am not telling anyone in this room these statistics for the first time. 

Concerns have been raised by think tanks such as the Grattan Institute that today’s generation of young Australians may have lower living standards than their parents did at a similar age.

We cannot afford to let this happen and to prevent it we need a well thought through and comprehensive approach to longevity.

Earlier this year, my colleague Jenny Macklin released Labor’s agenda for tacking inequality.  This offered new thinking and a new agenda.  

If we are to ensure that older Australians can be active members of our community then we have a duty to ensure that we have a proactive plan to support longevity, for protecting the rights of older Australians and to provide them with an opportunity to continue to work if they choose to, or to live a dignified and fulfilling retirement.

We believe that Australia needs a national strategy to coordinate longevity priorities, policies and programs across all governments across the country.

Future Labor governments should consider appointing a dedicated Minister for Ageing and Longevity to oversee a whole-of-government approach to longevity policy, similar to the coordinating role that the Minister Assisting the Prime Minister for Women currently plays.

An obvious area for further thinking is the issue of retirement income for women. 

This has come up a lot in my first few months in this portfolio. It is something that Chris Bowen has spoken about previously and my Senate colleague from New South Wales Jenny McAllister has worked very hard on progressing through the Senate Committee process during the last Parliament which many of you may have participated in.

I share Chris and Jenny’s concern around the disparity between men and women’s retirement savings balances.

Women suffer in their super savings in several ways. They earn less during their working life and they often take time out of the workforce with parenting or caring responsibilities. This means that there can be years where no income is received at all or when they do work they work part time hours to juggle the demands of children, ageing parents and their careers.

The facts are clear:

  • 43% of women work part time
  • women working full time earn 19% less than their male colleagues, and
  • women take on average five years out of the workplace to care for children or other family members. 

44% of women rely on their partner’s income as their main source of retirement income and according to a recent Senate inquiry into women’s superannuation at retirement men’s superannuation balances at retirement are on average twice as large as those of women. 

This concerning statistic means that women, particularly single women, are at greater risk of experiencing poverty, housing stress and homelessness in retirement.

If we are to address this issue as a whole we do need to fix the pay disparity between men and women and more generally the way that women are treated in the workplace.

I am not saying that we haven’t come a long way. We have.

If we look back even 50 years women were often limited on their choice of career but we now do have women in senior decision making roles in the board room or indeed, as members of the Australian Senate, but we cannot ignore the fact that women are generally paid less than men for doing the same job.

We will never succeed in ensuring that women can live a dignified retirement if we cannot address the issue of pay equity at the early stages of a woman’s career.

We also need to look more closely at the periods of time when women take leave to have a child. This might be looking more closely at superannuation during periods of paid parental leave. I do acknowledge that this is not necessarily a cheap or easy solution, although it is probably easier than cheaper, and is something that we as a party have not yet reached a final position on, but that does not mean that we are not looking at it.

I will be working with my colleagues including Senator McAllister to progress our thinking on these issues during this term of Parliament and I would welcome the views of any of you here today on this issue because it’s an area that I have particular interest in and I know many others share my views.

In terms of some of the recent debates around superannuation in particular, the Labor party strongly believes that we need confidence in the retirement incomes system. 

In recent times we have seen significant policy changes proposed and in some cases implemented, to the age pension, the age pension asset and incomes test and superannuation with more to come.

Too many policy changes introduced too quickly can undermine public confidence. People close to or in retirement feel the impact of these changes particularly acutely and I have noticed this in the correspondence I have been getting from people right across Australia since the announcements were made in the budget.

Unfortunately, the Government’s mismanagement of its proposed changes to superannuation taxation has certainly shaken this confidence in the broader community.

Currently the superannuation system holds approximately $2 trillion dollars in national savings with estimates showing that this will grow to $4 trillion over the next 10 years and to $9.5 trillion by 2035 it’s essential that confidence is maintained in the system.

Labor recognises the need for certainty and that is why in the past we have advocated for a Council of Superannuation Custodians which would help to maintain a period of stability over government decisions regarding super and help guide lawmakers about the best approach to policy changes that may affect confidence and certainty in the superannuation sector.

Such a Council would allow future changes to superannuation to be more thoroughly considered and done in a timeframe that allows people to invest their money with greater certainty and without the added concern that government may change the goal posts on a frequent basis.

Many have raised the option with me of only making significant legislative changes to super on a five yearly basis, in line with the Intergenerational Report. This is something we do see merit in and will continue to discuss with stakeholders right across the sector.

For more than a year Labor clearly and consistently made the case that a system which sees half of all superannuation benefits flow to the top 20 per cent of income earners, and 40 per cent of all benefits flow to the top 10 per cent of earners, is a system in need of reform.

In the current fiscal environment, we need to ensure that our superannuation tax concessions are targeted and effective.  That is why Labor proposed changes back in April 2015. 

After initially opposing Labor’s approach, the Government announced changes to superannuation tax concessions in the 2016-17 budget.  Unfortunately, these changes were developed in the rush to prepare a budget to go to the election and the proposed policies had flaws and certainly those were drawn out over the election campaign and over recent months.

The issue of retrospectivity has obviously dominated the recent election campaign and the different views within the Government over retrospectivity have done nothing to encourage Australians to contribute to their superannuation balances over and above their employer’s concessional contributions.

People want to know that decisions they take now will still deliver their intended outcome in retirement. We believe this is crucial and it is something that Labor will always protect.

Labor has attempted to work collaboratively with the government on the changes to superannuation. We took this approach because we believe that it is crucial that, despite political differences, Australians know that their retirement savings are protected and that the Parliament will act maturely and responsibly to legislate in Australia’s best interests.

We will continue to work in good faith as we consider the Government’s latest legislation. 

However, I cannot let the government’s grand plan for addressing women’s low superannuation balances through allowing ‘catch up payments’ go unremarked upon.

Labor’s position to oppose catch up payments as proposed by the government is based on fact.

The fact is that these payments will help those on high incomes and will cost the budget $350 million over the forward estimates at a time when we don’t believe we can afford it.

It won’t provide a vehicle for women on lower incomes who have been out of the workforce for several years to contribute extra to their super balances.

I have talked with many women’s groups about this issue and I have read the independent analysis.

There may well be women who take advantage of catch up payments but we maintain that these women will be predominantly higher income earners who have the capacity to contribute over and above their employer contributions.

We are continuing to analyse the Government proposals that were released in the recent weeks and I will be in charge of taking our proposed response through our normal Shadow Cabinet and Caucus processes in the next sitting period.

In terms of the objective of superannuation the Government has also proposed an objective of superannuation which would be legislated for the first time.

This is something that we do support and it came out of the Murray FSI Inquiry.

We believe that something as significant as the objective of super needs bipartisan support and are seeking to engage more with the Government on their proposed definition. 

The Government commenced discussions and negotiations with Labor in late 2015. This was prior to my time but I am told that discussions were progressing well. However, they did stop in the election and the definition was announced as part of the Government’s wider reform package on budget night without any further consultation.

We understand that there are many in the sector who have concerns with the Government’s process of consultation on the objective as well as its wording.

I have no doubt that everyone here today would have an opinion on what the definition should be and I note that CSRI has expressed a view on the wording of the objective stating that it is “to provide adequate income through all the years of retirement for all Australians in a sustainable way.”

If we are to truly seize the opportunity that we have before us and legislate the best possible objective of superannuation we need to involve all of those who have a view, listen, genuinely consult and be willing to open our minds to other opinions.

If an objective is worth having and is worth legislating then it’s worth doing properly and we are continuing to consult with stakeholders and the government over this and will finalise our position in the next few weeks.

I know in the time I have available to me today I have only touched on a few of the issues and it is my early thoughts in this policy space. I know that there is much work underway and many reviews in train and a lot of stakeholders to continue to get around to. I will say that the approach that Jim Chalmers took and Chris Bowen took on developing policy ideas and genuinely consulting is one that I intend to continue.

At the same time we will work with the government in good faith in the interests of the Australian superannuation system on issues soon to be before the Parliament.

We will also continue to look to ways to further strengthen our retirement income policies for the future and certainly Jenny Macklin has laid down the challenge for us all in that regard.

I once again thank you for the opportunity to speak today as part of this Forum and I genuinely look forward to engaging with you as I continue my work for the Federal Labor Party.