This will be another important year for the financial advice sector, which faces the serious work of implementing the reforms passed earlier this year. In some ways, passing the laws was the easy bit. Making sure the new arrangements work for the profession will be just as important.
Labor supported recent legislation to strengthen professional standards for financial advisers because we believe it will strengthen the profession, address some of the shortcomings in the quality of financial advice that has plagued the sector in recent times and weed out the poor and shonky operators. This has certainly been the experience when similar bodies have been established across other professional groups.
Under the new law, financial advisers will be required to hold a degree or equivalent qualification, undertake a professional year, pass an exam, undertake continuous professional development and comply with a code of ethics. There is an obligation on the Australian Financial Services licensee to ensure that advisers comply with the new education standards and are covered by a compliance scheme. The legislation protects the use of the terms ‘financial adviser’ and ‘financial planner’, in recognition of the unique skill set that providing financial advice requires.
The reforms include the recognition of a new standard-setting body that will detail the new education standards and develop a code of ethics for financial advisers. Labor will be watching the appointees to the board of the new standards body closely. This board will have a great deal of responsibility in setting the new degree requirements that financial advisers have to meet. Labor expects people of a high calibre with significant experience to be appointed to the board, to ensure that these new standards are set at a robust level.
I was pleased to see the support across industry and consumer groups for this legislation. These reforms have been a long time coming. It was back in May 2014 that the Financial Planning Association (FPA) released a white paper that put forward a plan to prepare the profession for higher professional standards. And it was in September 2014 that the Financial Services Council called for an independent body to have control of education and professional standards for financial advisers.
With the financial services industry firmly in the political and public spotlight, the challenge before the profession in building and maintaining public confidence is not insignificant and I am hopeful that these laws, supported by all sides of politics and the financial planning industry, will assist with meeting that challenge.
Keen to engage with sector
As the financial planning industry adapts to the changes to professionalise the industry and the financial costs that come with that, Labor is keen to engage with the sector on ways to ensure that personal financial advice is something that remains accessible and affordable for people. This is especially relevant for women and those on lower incomes, who we already know experience financial exclusion to a much greater degree than others and are arguably more in need of the specialist advice that financial planners can provide.
Since taking on the shadow minister for small business and financial services role, I have learnt a great deal about this incredibly important industry. I would like to thank everyone who has invested time and energy in bringing me up to speed on the major issues. In such a complex, changing and politically charged policy space, the expertise and advice that advisers and the FPA have given me in my first few months in the role has been invaluable.
I look forward to strengthening the relationship with financial advisers and their representative bodies in 2017.
This article first appeared in Professional Planner on March 16, 2017.
Thank you very much Melinda for the warm welcome, and for BT’s support for the FSC’s series of breakfast events.
It’s a great opportunity for me to talk with people, to meet you, and to make those important connections.
Can I begin by acknowledging the we gather today on the land the Gadigal people of the Eora Nation, and I extend my respects to elders past and present.
Can I also acknowledge Sally Loane, and all of your team Sally. I really do appreciate the time you have spent with me, the conversations we have had and the opportunities I’ve been given in just the short few months that I have had the portfolio to learn about what issues concern you, what priorities you are driving and what is important for your members. It’s been a great assistance for me in trying to get across my portfolio brief.
It is a great opportunity to speak with you about Labor’s policies in financial services this morning. There is certainly no shortage of policy discussions happening, or reforms taking place. It’s certainly I’ve learnt a very dynamic policy area. It’s been a very busy few months for me.
But today I will talk to you about some of the major issues I’ve been working on in the sector, and I’ll try and outline Labor’s positions on these key issues.
To those who attended the ASFA conference and were there when I spoke on Friday, apologies in advance, there may be some repetition of areas I covered there.
As the Financial Services Council’s 2016 State of the Industry report noted, the financial services industry employs 451,000 people, 52 per cent of whom are women. The ABS data for the June 2016 quarter shows that over the previous 12 months, the Gross Value Add to the Australian economy for the financial and insurance services industry was almost $148 billion. The industry manages $2.6 trillion in funds, including $2 trillion in superannuation funds.
So, put simply, the financial sector is of paramount importance to Australia. Because of the wealth it generates, because of the jobs it provides, and because of the unique responsibility it has for every Australian.
It’s also a sector that holds great opportunities for Australia.
The 2009 Johnson Report which Sally mentioned in her opening comments, set out what our financial sector has to offer the world: a skilled workforce, a solid legal and regulatory framework, and the sophisticated funds management sector that has grown up around our superannuation system.
Labor continues to support the Johnson Report’s vision of enabling our financial sector to take full advantage of the opportunities in our region. As the FSC has recently pointed out, many of the recommendations of that Report remain incomplete.
However, as Chris Bowen, the Shadow Treasurer, told the FSC’s Leadership Summit earlier this year, we are willing to work with the government on these measures and on measures that look to reduce any new and emerging barriers for our financial services industry.
If I could just for a moment reflect on my experience in implementing one of the recommendations of the Johnson Report. This is the recommendation that all state taxes and levies on the insurance sector be removed. As the FSC has noted, these taxes add significantly to the cost of insurance and they’re an impost on business. Just as significantly, they discourage consumers from taking out adequate levels of cover.
The FSC’s recent stock take says that implementation of this recommendation has actually gone backwards. That’s perhaps not surprising given some of the challenging budget situations many states face.
However, it is a recommendation that we were able to address in the ACT.
We addressed it as part of a bold, some would say brave, 20 year program of tax reform that my government when I was Chief Minister announced in 2012, and my successor Andrew Barr has continued on.
A key part of this reform was to move our tax base from stamp duties on property transfers to land tax. That was a key element of it. To date, this reform has eluded other states and territories. And yet, it’s reform that has been recommended by economists, tax reviews, and even recently by the Prime Minister and the Treasurer. It’s a tax that is more efficient and it’s more equitable, amongst other things it eases the burden on homebuyers.
Crucially, it also provides a broader, more stable revenue base. This was a key part of my considerations when we went down this path. It was this that enabled us, as part of this tax reform package, to commit to the phasing down of taxes on insurance. I’m pleased to say this phase-down actually finished on July 1 this year when, when right on schedule, insurance duties in the ACT, including duties on life insurance, were completely abolished.
The ACT has become the first place in Australia where businesses are not burdened by insurance taxes; the first place in Australia where consumers are not discouraged from taking out the insurance protection that they need.
But these reforms have not been easy, and, to date, the Labor Party in the ACT has fought and won two elections in the teeth of negative opposition campaigns about these reforms. However, the ACT experience provides a guide to other jurisdictions about how reforms like these can be delivered even in the face of strong political and stakeholder opposition. And it shows that even in the current budgetary and political environments, when governments explain reforms and persist with them, they can be delivered.
There is a strong Labor tradition of pursuing and making the case for difficult reforms in the interests of the community as a whole. And, it is perhaps in this spirit that I will talk later today about our policies on the tax treatment of superannuation. But first, I will mention a couple of other areas.
As you know, part of Labor’s policy is a royal commission into the banking and financial services sector. Our decision in April this year to call for a royal commission was not one that was taken lightly. But it was taken with the aim of ensuring that any systemic issues in the industry are addressed in a thorough and transparent way.
I know that the FSC and everyone here today feels disappointed with and let down by the instances of misconduct and unethical behavior that have come to light. While I know that the FSC is on the record as opposing a royal commission, I also know we share a common understanding of the importance of strengthening consumer confidence and trust in our financial services sector, particularly given that all Australians rely on it.
And despite our differences on the issue, we do recognise the proactive steps that the FSC is taking to improve trust and consumer outcomes.
One such example is the FSC’s Life Insurance Code of Practice. The FSC managed to bring together the industry in support of the industry’s first ever code.
We welcome the code as a first step to lifting insurer practices and obligations so that they better meet consumer needs and expectations.
If the code removes conflicted remuneration for claims handlers, improves the timeframes for the processing of life insurance claims, and limits the use of invasive surveillance, these will be good things.
However, there are issues that need to be further addressed, and I know that the FSC is aware of these, including the code’s application to superannuation trustees, medical definitions, and the independence of medical specialists assessing claims.
We do believe that there is much more to be done in this space, both for consumers and for confidence in the life insurance sector and I look forward to continuing to discuss these matters with the FSC as they are worked through in more detail, and as future stages of the code are developed.
Another example of the FSC’s proactive work is the role that you all play through your members in the reform to commissions to financial advisers who sell life insurance products. The recommendations of the Trowbridge Review, in which the FSC was involved, were influential in the bill to reform life insurance commissions that is currently before the parliament.
Labor’s supported the Life Insurance Framework Bill when it was first introduced to parliament earlier this year before the election, and that remains our position. However, as we noted then, we have some reservations about the reforms. Industry has been engaged in a long process of consultation over these reforms, but we acknowledge that there are some financial advisers who, whether rightly or wrongly, feel that their voices have not been heard in the process.
And we also acknowledge concerns of consumer groups that the bill could go further in protecting consumers in this space.
The new timeframe as outlined in the legislation means that it will now be 2020 when these reforms are fully implemented. We think that the ASIC Review, now scheduled for 2021, is important in making sure that these reforms are improving consumer outcomes required and desired.
We also anticipate the introduction to the parliament of reforms to mandate professional standards for financial advisers. It was back in September 2014 that the FSC called for an independent body to have control of education and professional standards for financial advisers, declaring that “self-regulation is no longer a credible option for establishing higher standards”. The FSC at the time urged the industry to redefine itself “through robust oversight and high competency standards to rebuild the trust and confidence of consumers so more Australians seek financial advice.” These reforms to professional standards for financial advisers have been a long time coming and the government has announced that they will be in parliament perhaps this year, and we will certainly await their introduction.
We welcome the steps that the FSC through Sally and her team were one of the first groups to knock down my door and come in and tell me about all the work that they were doing. It is work that I welcome, because ensuring that the sector delivers for consumers is a focus that I will bring to this portfolio.
Now let me turn to the superannuation reforms that are currently before the parliament. It does look like these are two of the bills that will – there are three bills – but two will certainly get the attention of both houses of parliament before parliament rises at the end of the next two weeks of sitting.
It’s worth remembering that up until the 1980s superannuation in Australia was largely the preserve of public servants and wealthy corporate employees. The Hawke-Keating government set in train a series of developments which led to super being rolled out to the whole workforce, culminating in the super guarantee. From this, stemmed the benefits of reducing reliance on the aged pension, and a large national pool of capital. And there was the key vision that super should be something not just for the privileged few, but something from which all working Australians should benefit. That was Labor’s vision back then. It remains Labor’s vision today, and it is a vision that we have consistently worked to build on over the past 30 years.
Now, as in the 80s, Labor recognises that the tax treatment of superannuation has to encourage savings, but that it has to be sustainable and equitable. This has been the driving ideology behind the way that Labor has approached the significant reforms which are now before the Parliament.
Superannuation tax concessions cost the budget about $30 billion per annum.
And we note that the top 10% of income earners are receiving 38% of those concessions and the top 20% take 55%. Given the need for budget repair in the current environment and I know that’s a risky statement to put out in the superannuation industry who don’t want super being seen in terms of budget savings, but having said that these figures could not be ignored. There was a clear case for sensible reform which sought to rebalance the growing inequity across the system. And that is why, prior to my time in this portfolio, Chris Bowen and the economics team has been leading the superannuation reform debate arguing for superannuation tax settings that are targeted, fair and sustainable.
Now, we first announced our intention to make reforms to super tax concessions back in April 2015. At the time the Government attacked those proposals and criticised them. However, they then announced their own rushed package in the 2016 Budget with several measures that were if not similar to Labor’s package, certainly delivered a very similar outcome.
The pledge at that time was that the policies were ‘iron-clad’, but as everyone in the room will know there were several months of discomfort and the Government scrapped the most controversial part of their super reform package by getting rid of the $500,000 life time non-concessional contributions cap.
Following the Government’s revised legislation we had a look at our own package again and revised it against the package that was actually going to come before the parliament.
I think we’ve tried to work in good faith with the government to see genuine reform in this area, and Chris Bowen and I finalised a package which we announced a couple weeks ago that sought to find that balance between sensible reforms which make the system fairer whilst also contributing to budget repair.
I should say at this point, and to give you some hope on the job of reform that sits before parliament, I think there are nine measures that the government seeks to address, there are five where Labor agrees with the Government. There are two other areas where we think there should be further amendments, and two area where we oppose – and perhaps if I just go to those.
In terms of the areas where we don’t agree, where we are proposing changes to the Government’s measures, they’ve introduced a $100,000 cap on non-concessional contributions cap. We believe there’s room to lower that to $75,000 per annum.
It’s clear that fewer than 1 per cent of Australian taxpayers made $100,000 or more in non-concessional contributions. While over 86 per cent of taxpayers made no non-concessional contributions. That’s back in the 2012/13 financial year.
Many Australians will however provide one lump-sum, large non-concessional contribution at some stage in their working life – and the superannuation system allows for this and should allow for this. And the proposal is to bring forward three years’ worth of contributions into a single year if people need it. It’s very clear that under the Government’s proposal, or Labor’s proposal that there is still more than enough room for those one-off lump sums to be provided.
I think the Treasury figures show the average contribution for these one-off lump sums is $135,000 – so well under what would be allowed under either of the Labor or the Government’s plan.
In terms of the other area we would seek amendments it relates to the higher income superannuation contribution. The Government wants to reduce that to $250,000. We believe there is room to lower that to $200,000.
In terms of the areas where we don’t support in the package, one of them is the catch up contributions. Basically our opposition to that and the tax deductibility for superannuation contributions, is that they will open spending in the order of $1b over the forward estimates, but also about $12.3b over the ten year period.
We don’t think that at a time when the budget is in the state is, and we’re looking to refine so of the superannuation tax concessions that it’s the time to open up new tax concessions. Particularly if the evidence is, and this goes to the catch up contributions, that they are not going to attract the benefits for the people that the Government says it is.
I know that catch up contributions are very much being sold as something that will help women who have fragmented time in the workforce. But it’s very clear from the figures, whilst they haven’t been provided by the Treasury because Treasury hasn’t done any gender analysis of that measure, but by other experts, that it would not be women who would benefit from this. Predominately, it would be men who are on higher incomes and have the capacity to put that money into super.
In terms of the objective of super – and I will finish very shortly, I know it is a long speech –I have sought the agreement of the Government to refer this off to a committee. I know that will probably reach a few groans in the room. But the point here – and I know that many of you would have provided submissions for this legislation, is that there seem to me to be, well, I think I found one submission that was supportive of the objective as currently defined by the legislation. There were a lot of submissions across the board, from the left to the right, with views about what it should be.
I know while there had been some good early work done on consultation on this that the work that was done post the Government settling on this Bill was very short, about 9 days for people to get their submission in. And there remain a number of unanswered questions.
Not just about the objective, but about the secondary objectives or the subsidiary objectives and about how they relate to the primary objective, where they are located in the legislation – at the moment they are located in the explanatory memorandum and not in the Bill. Also, about how compatibility statements would work. There is seemingly no enforceability of that.
And for something that seems to me to be at the heart of the discussions that will be happening about super and super 2.0, the fit for purpose discussion that will be ongoing. I have no doubt, it seems to me that getting the objective right and as David Murray said in the FSI report, a broad political consensus or I think those were the terms used, that we should attempt to reach that before an objective is legislated.
I don’t know if that’s possible. But I think we need the time to try and get it right.
Many people have said to me that their preference would be to have no objective of super if it meant that we got one that nobody agreed with considering the role that it will play in formulating public policy, but also the role we see super playing, particularly as people are living longer and spending more time reliant on retirement savings.
My own view is let’s get it right. I pretty sure – In fact I am sure the Government agreed to carve that legislation off. It will go for a committee inquiry. I expect people will be able to resubmit the submissions they have provided to Treasury. So there won’t be too much more work but we’ll be able to have that discussion and it is due to report in February next year.
I might leave it there. It’s been really good to meet so many of you over the past three months. I know I still have a lot to learn and a lot of people to meet. As I said at the beginning the policy work is very dynamic. It is front and centre of the political debate. I know that, and I know that puts a lot of pressure working in the industry.
I also acknowledge the very significant steps the industry has taken to reform and to reflect and better meet the needs of consumers that we are here to serve.
I look forward to hopefully coming back another time. I look forward to outliving some of my predecessors – it’s not a very long life expectancy! I was just telling my table that I was health minister for 8 years and the life expectancy for a health minister is about 12 to 15 months so, I have got a bit of a track record of hanging around longer than others. I’m hoping I can keep that up because I really am genuinely impressed by the work that’s underway. I am interested in it, there’s a work to be done and there are a lot of issues I think to resolve and discussions to be had. It’s been a very intellectually stimulated, a little bit frightening, last four months or so but I feel that once the parliament rises I’ll have a great opportunity to reflect on and resolve the areas I want to focus on. I look forward to discussing that with you all next year.
Thank you very much.
FRIDAY, 18 NOVEMBER 2016
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.