Treasury Laws Amendment (Reuniting More Superannuation) Bill 2020
Senator RENNICK (Queensland) (25 February 2021, 09:31): It’s a great pleasure to get a chance to speak again on the Treasury Laws Amendment (Reuniting More Superannuation) Bill 2020.
An honourable senator interjecting—
The PRESIDENT: Order! Can we start Thursday morning quietly please—
Senator Ayres interjecting—
The PRESIDENT: with a bit of compliance to order, Senator Ayres.
Senator RENNICK: ‘Death Tax Timmy’ keeps interjecting. You’ll need to tone it down a bit, mate. As I said last night, the superannuation industry really is like the 1930s Chicago gangland gangster wars. We’ve got a bunch of crooks out there running around, gouging $40 billion out of the Australian economy and the Australian worker every year, and it’s about time we stood up to that. It reminds me of a scene in The Untouchables. Sean Connery was playing the role of retired cop Jim Malone, who was out to get Al Capone—who could easily be played by Senator Tim Ayres, actually. Just before the scene where he gets gunned down, he says to the criminal gangster, ‘Isn’t that just like a wop—you bring a knife to a gunfight.’ He tells him to get out, and, of course, just as he’s about to get out, he gets gunned down.
This legislation is a bit like bringing a knife to a gunfight, in the sense that it doesn’t really go far enough in cracking down on the superannuation industry. We’ve got $3 trillion out there sloshing around in the ivory towers of Sydney and Melbourne, lining the pockets of the wealthy and the blowhards, while the battlers out there in the regions and the metropolitan suburbs of the cities are basically losing 10 per cent of their income every week. I’ll have a go at my own party here. We think we believe in free markets, but markets are actually predicated on the risk-reward paradigm. This is the problem with superannuation—there is no risk-reward paradigm; there is no downside risk for fund managers. Basically, fund managers can lose the entire lot of someone’s superannuation and not be held liable for the loss of capital. If we’re going to get serious about increasing productivity in this country, we need to get serious about matching risk and reward. That’s certainly not the case with superannuation, which, in my view, doesn’t really help anyone other than the wealthy end of town.
Superannuation also provides up to almost $40 billion in tax concessions. Of course, most of those tax concessions also go to the wealthy end of town. I’ll quote you some numbers. It’s estimated to be about $40 billion in tax concessions. There are 13 million workers in Australia. If we were to give them a $3,000 tax cut, that would cost $39 billion. A $3,000 tax cut, from the bottom up, could basically lift the tax-free threshold from $18,200 to, off the top of my head, a bit over $30,000. Most of that money would be pumped back into the economy. You could probably get the tax-free threshold up to $35,000 or $40,000. That would be a great way to incentivise people to get back to work. I think we have a crazy system in this country. We give businesses a tax deduction for the cost of doing business but we don’t give PAYG workers a tax deduction for the cost of living. It’s silly, in my view, to be taxing low-income earners earning below $35,000 to $40,000 for their cost of living if we just have to give it back to them through social security. Why not let low-income earners keep that money in the first place, especially if we can give all these tax concessions to superannuation? You have to earn the money in the first place before you even pay superannuation. It would be better to actually let people earn that money in the first instance.
If you add up the $40 billion in fees and the $40 billion in tax concessions, the cost of this superannuation comes to about $80 billion. The cost of the pension is $52 billion. You’ve got to ask yourself: are we spending $80 billion to avoid paying out more of the pension? Really, I think we’d be better off raising the pension, getting rid of superannuation tax concessions, raising low-income tax thresholds and cutting the tax rate for low-income earners. That would enable everyone to have a better safety net when they retire, rather than having this: ‘Anything goes. Pick your super fund and, if your super fund does a good job, you might get your money back, but, if it does a bad job, you don’t get your money back.’
What I love about super funds is that they’re allowed to short shares! I will give credit where it is due: AustralianSuper and QSuper have stopped short selling shares, and that’s a very good thing. I urge all other superannuation fund managers to stop shorting shares. I am lobbying the Treasurer on this. I think shorting is a heinous practice. Fund managers have a fiduciary duty to protect the interests of their clients, and shorting shares creates a lottery. If the day you come to retire and have to cash out your super to pay off your home loan is the same day a super fund happens to shorts shares because, at the same time, a fund manager has to retire and cash out to pay for his house because he hasn’t been able to pay for his house throughout the course of his lifetime because he has had to put 10 per cent of his earnings, which could be 100 per cent of his savings, into super rather than his house, you would lose out. This shorting practice is an example of how superannuation funds aren’t protecting the interests of their members. It is a heinous practice, and it should be abolished.
It has been almost 30 years now since Paul Keating brought in superannuation. If we look at the number of people on the pension, including the part pension, it has dropped by only a couple of per cent in that time. You’ve got to ask yourself: what is the point of giving away $80 billion in tax concessions and fees, which is only lining the pockets of the wealthy and white-collar fund managers in their ivory palaces in the city and hasn’t done the job it is supposed to do? It hasn’t really reduced the reliance on the pension. What’s worse is that, since 1992, the number of people retiring with a mortgage has increased from 10 per cent to 40 per cent. That is clear evidence that superannuation is actually making it much more difficult for people to pay off their homes. There is no greater way to retire—no better way to retire—than to have your own home. At least, if you’ve got a roof over your head, you know you have some security in retirement, unlike the stock market, which is extremely volatile. If you look at the last 12 months, it has been bouncing around like a buoy on the ocean. It’s not effective and it certainly doesn’t provide a lot of security.
The other thing about superannuation—and I think this is a really important pointer to why the pension is a much better way to protect and provide a safety net in retirement—is that it is not universal. It’s not there for stay-at-home parents. It’s not there for people on the disability pension or people who get unemployment benefits. It doesn’t help out volunteers. If you want superannuation, we’ve got to get everyone back to work. What concerns me is: if everyone goes back to work, who’s going to man the school tuckshops? Who’s going to do all the volunteer work in the community that has to happen 24 hours a day, seven days a week? It’s one of those things. I know, from when I took four years off and helped raise my children, that there’s a lot of community organisations out there that do a lot of good work throughout the week. This idea that we have to get everyone back into the workforce is going to destroy our volunteer community. There’s a lot to be said for having a universal pension which covers everyone, including those on a disability pension and stay-at-home parents. I think that’s something worth considering. However, this bill is a step in the right direction. I would like to go a lot further. It’s like taking a knife to a gun fight. Personally, I would like to bring a bazooka and a few other things.
I think it’s worth discussing some aspects of this bill which are worth doing. This bill seeks to increase the accountability of underperforming super funds. It also takes aims at ERFs, which historically have served the purpose of temporary holding funds designed for lost, small or inactive superannuation accounts. This racket has been going on way too long. We have multiple accounts and we don’t have portability in the superannuation industry. Why it has taken this long to fix it up is beyond me. It has just added more to the superannuation fund managers’ rivers of gold at the expense of hardworking Australians. That is certainly one good thing about this bill.
But, ultimately, we’ve got to ask ourselves whether we want to continue the superannuation facade in this country or provide a true safety net for those in retirement through a universal pension which is guaranteed—unlike superannuation, which isn’t capital guaranteed. It also raises the issue of whether superannuation is actually legitimate under the Constitution; people haven’t ever been given the option of choosing whether they want to lose their hard-earned earnings. That’s really one aspect of superannuation where we should look at New Zealand—and I know the Left love to quote New Zealand. New Zealand had a referendum on compulsory superannuation and they voted it down 92 per cent to eight per cent. We have had property rights destroyed here; people’s wages have been taken from them without their permission. I make no secret of it: I strongly encourage a discussion on it. Personally, I would like to see a referendum on whether superannuation should be compulsory. It should be optional. People should have a choice as to how they spend it, especially if they want to pay off their home loan or their HECS debt.
When we send our kids to university they rack up tens of thousands of dollars in HECS debts. Then they come out and work and, if they earn $100, they pay $30 tax and it might cost them $50 to live. They might be lucky to save $10 or 20 out of that $100 and then they will lose most of that to a superannuation fund while their HECS debt keeps accumulating. At the end of the day, we have to put the horse before the cart: pay off your HECS debt, own your house and set yourself up for a good family life when you have your own children. When your children have grown older, you can focus on your retirement knowing you have a strong and secure safety net in the form of the universal pension.
This bill is a step in the right direction. We still have a long way to go, but I commend the bill to the Senate.