PARLIAMENT HOUSE, CANBERRA
MONDAY, 12 OCTOBER 2020
SUBJECTS: The Government’s superannuation stuff-up; unemployment; regional media; Queensland election
STEPHEN JONES, SHADOW ASSISTANT TREASURER: Well, good morning everyone, good to be with you. When Labor created universal superannuation, we did it because we wanted to ensure that we built a pool of domestic savings which was available for investment to grow our economy and to grow jobs. We didn't do it because we wanted to replace a meagre government-funded pension with an equally meagre privately funded one. It's done well over the years. It's well-regarded by international standards. In fact, it's in one of the top two or three pension funds around the world. It's not perfect. A series of reviews initiated by government have found that there's a huge gap between the highest and the lowest performing funds. That gap can be costing an average worker as much as $600,000 in lost retirement savings. The productivity commission has found that the fees and charges and can be costing an average worker as much as $100,000 a year in retirement savings. When the government announced in his budget papers that was going to address these issues, Labor met it with some enthusiasm. We wanted to ensure that there was no safe harbour for an underperforming fund. We're on board for that project. Unfortunately, as with so many things with this government, there is a huge gap between the promise and the follow-up. When we looked at the detail, we just did not match up.
Let's deal with each of the issues. The government says that it wants to attack the under-performance of funds by putting in place a national benchmark. He wants to address the under-performance of funds by measuring all of the fees and charges. It says that wants to introduce more transparency. All of that sounds good on face value, but then when you dig into the detail, it doesn't stack up. Let's look at the fees. There are two sorts of fees that are charged by a superannuation fund. There's the investment fees and the administration fees. The productivity commission has shown that funds are actually able to move some of those costs and charges between the two of those fees. Because of this we found it extraordinary that the government is only going to benchmark the investment fees and ignore the administration fees. This just doesn't stack up. The productivity commission has found that the difference between a fund charging the medium-level fees and a fund charging the highest-level administration fees can be as much can be as much as $100,000 a year for a worker on $50,000. Sorry, let me take that back. The productivity commission has found that the gap between a high and a low charging fund on Administration fees can be as much as $100,000 lost in retirement savings. That's a massive amount and yet the government is saying it's going to ignore that part of the fee structure.
Let's look at the role of superannuation as patient capital. One of the great benefits of Australia's three trillion-dollar pool of domestic savings through superannuation is that superannuation funds are able to invest for the long-term in infrastructure, in directly investing in companies to grow jobs and boost the economy. Now more than ever, we need our superannuation funds to be partnering with business and government to grow jobs and grow the economy. It is absolutely extraordinary than in these circumstances, the Government has set up a measurement system which will discourage our superannuation funds from directly investing in infrastructure and directly investing in start-ups. We are going to have the extraordinary situation where there might be more incentives for the sovereign wealth fund or the pension fund of other countries to invest in Australian infrastructure than for Australian workers’ own superannuation funds to do the same thing. At a time when we need to marshal all of the forces towards jobs and growth, it's crazy that the government is contemplating introducing a measure which will discourage our superannuation funds from directly investing in infrastructure and start-ups. There's a final thing I want to touch on. The government says that it wants to staple workers to a superannuation fund for life. The objective of this is to ensure that we get rid of all of these multiple accounts. We're on board for this, but the government needs to ensure that it gets the sequencing of changes right. When the Royal Commission and the Productivity Commission has found the difference from a low performing fund to a high-performing fund can be as much as six hundred thousand dollars in Lost retirement savings, if the government decides to staple workers to a dud fund, they are sentencing that worker to poverty in retirement. They must get this right. Happy to take any questions.
JOURNALIST: Stephen, can we consider these outside of the context of I guess just keeping the debate around where super goes, employment contributions to 12%. Is this some kind of the change of the budget is like is some kind of smoke sceen or something like that? Like maybe we’re not going to update your super guarantee to 12% but we’re going to introduce these other changes? Can we consider this outside of that context?
JONES: I took some heart from the fact that all of that campaigning leading up to the budget by the Government, the Government and MPS, to knock off the SGL increases seems to have been put aside. They seem to have got a memo from Australia that Australians value their superannuation and they can focus on the performance issues. We welcome a focus on performance issues. But what the government is proposing is only going to look at half of the fees and the measures put in place could actually do as much harm as benefit.
JOURNALIST: Do you think that’s off the table then, this idea they might go ahead with the increase?
JONES: I hope the government has got the memo from Australia the Australians value their superannuation and it's absolutely untenable for the government to be cutting workers’ superannuation while politicians are taking home 15.5%.
JOURNALIST: They have made it clear though that that wouldn’t be in the budget that they don’t have to make a decision on that straight away. So do you think that’s still a possibility?
JONES: There was speculation leading right up to the last week that the Government would back flip on its promise to implement the superannuation guarantee levy increases. I hope that they've got the memo. We will still fight any attempt by the government to axe workers’ superannuation.
JOURNALIST: I thought the Prime Minister or the Treasurer would think about it close to July 1? I didn’t think there was anything definite. My question was going to be don’t you think it’s odd that the Treasurer can talk about that fully committed to tax cuts in 2024, when not only people but businesses don’t know whether the guarantee is going to go ahead next year?
JONES: Look, it’s a very modest increase. Point five percent from July next year and another point five percent from July the year after, so on through ‘til 2025. We think it's extraordinary that the Government halfway through its term of office won't commit to the promise it made before the last election. The Government, the Prime Minister should come out this week and say it wasn't in the budget because we don't intend to do it. We are going to keep our election commitment.
JOURNALIST: Can I just ask about Job Seeker? The supplement is due to end at the end of the year. What rate would you like to see the permanent level of the base rate at, long term?
JONES: Clearly $40 a day is not enough. And bouncing a million workers, that number set to grow by 160,000 workers by Christmas, bouncing those workers back to $40 a day would be cruel and unusual punishment. It's up for the government to tell us what it proposes to do with those workers. They had the opportunity in the budget papers. Clearly the budget was a first draft because at the time they were putting the budget together, they fully intended to update that critical number between now and Christmas. As it stands, as far as we know the government intends to dump those workers back to $40 a day by Christmas. We'll look at what the government decides to do but clearly $40 a day is not enough.
JOURNALIST: Josh Frydenberg said they were waiting for I guess updated economic figures and I guess looking at trend and how long people were staying in unemployment toward the end of the year. Would you back that sort of proposal or that strategy, that way of thinking? Or do you think that certainty should be given to people now not the end of the year?
JONES: Look as a matter of principle if $40 a day is not sufficient to keep you out of poverty, it's not sufficient to keep you out of poverty whether there is 500,000 or a million people on the benefit. It's not sufficient to keep you out of poverty, and that should be the benchmark. It is true that workers are now going to be on unemployment benefits longer than they were before. That is in part because of the decisions of the government. I mean in fact, we've got a trillion dollars a trillion dollars in debt, nothing to show for it. No significant new infrastructure project has been announced in this budget and some of the spending simply just doesn't stack up.
JOURNALIST: Just in regards to the Queensland election, the Deputy Premier Steven Miles accused the Prime Minister of taking a week off in Queensland and masterminding the election campaign. The Prime Minister in turn suggested in turn he’s being juvenile and needs to grow up. Does Steven Miles the Deputy Premier, does he need to grow up?
JONES: Frankly a Prime Minister who is trying to set himself up as the father of the nation and the chair of the national cabinet going around taking potshots at state leaders is ridiculous. 160,000 workers are about to lose their job between now and Christmas, and he is more focused on the Queensland election and having pot shots at State politicians than his real job of getting people back into work. I think it's outrageous.
JOURNALIST: One more Stephen. On a different topic, Kevin Rudd’s petition for a Royal Commission into the media has got 86,000 submissions over the weekend. Would you back Mr Rudd’s proposal? Would you think any of your federal Labor colleagues might support it more formally in the Parliament?
JONES: Look the petition I am going to sign about media is the “Keep It Regional” and boost regional media campaign, that is being run by all the regional media outlets. As a proud bloke from the Illawarra, Wollongong in New South Wales, we've got great local media made up of Win TV, The Illawarra Mercury, a whole bunch of regional radio stations. They've been doing it tough over the last couple of years, particularly tough during the pandemic. I am 100% backing their petition and their campaign to boost media because I think places like Canberra need to hear more about the stories from regional Australia than just the capital cities. I support a diverse media with a diversity of opinions. It keeps politicians honest and ensures people right throughout the country get a good understanding of what's going on right throughout the country not just in Parliament House not just in the capital cities.
JOURNALIST: So that’s a no to Mr Rudd?
JONES: I always welcome my conversation with Kevin, and I welcome the fact that he is passionate about having a diverse media landscape here in Australia.
JOURNALIST: Very briefly on the superannuation changes. Do you think they are they’re poorly designed or is it reflecting the government's intention? Are they doing a half job in these changes? Is it a stuff up, or are they doing it by plan?
JONES: On the face of it, this looks like a monumental stuff-up. The Government said that they are for performance, but they are ignoring half the fees that are charged within the industry. They say they want to grow jobs in the economy but they are hampering the capacity of superannuation to be a partner with government and business in getting jobs and the economy moving again. It just seems it's another example of the government making a big announcement, but there's nothing in the follow-through. Thanks very much.