SKY NEWS AFTERNOON AGENDA
MONDAY, 25 MAY 2020
SUBJECTS: Young people being forced to raid their retirement savings; JobKeeper bungle; economic recovery and reopening borders.
KIERAN GILBERT, HOST: New treasury data has revealed more than 450,000 Australians under the age of 30 have accessed their superannuation. This is part of that deal which allows workers to access $10,000 this financial year and a further $10 000 next. Of the almost 1.4 million people to have accessed that amount of superannuation, the largest age bracket is 26 to 30 year olds, 268,000 Australians in that group have withdrawn on average $8,500. 172,000 age 21 to 25 of also accessed their super early. As you can see there the younger demographic very much accessing this particular arrangement that the Federal Government has put in place as part of the COVID recovery. We'll get some analysis on this shortly with Warren Hogan the former ANZ Chief Economist, but first, let's go to the Shadow Assistant Treasurer Stephen Jones for his thoughts on this. Stephen Jones the fact that this is proving popular and with that age demographic doesn't it show given, you know, we are in an extraordinary crisis, isn't it time to make extraordinary access like this to superannuation given the demand we see there in that graph?
STEPHEN JONES MP, SHADOW ASSISTANT TREASURER: The takeout from that graph, Kieran, is simply this; that the Government's JobKeeper program is too slow, too narrow. There are literally thousands and thousands of young Australians who are excluded from it because they're casuals in short-term employment, because they didn't meet the criteria and they've had to access their own superannuation, in many instances cleaning out their own account, and the net result for these young Australians, is that they are going to have less or no money in retirement. So they're going to have a big hit to their retirement savings. The net result for the economy, for the budget as a whole, is that Australian taxpayers are going to have to pay more because the this generation is not going to have enough money in superannuation savings. So everyone's going to pay more as a result of this.
GILBERT: You said that they might have less or no income when they're retired, but they've got a long working life ahead of them. Can’t they catch up in terms of their superannuation?
JONES: They will definitely have less Kieran. What we know is that a 20 year old who takes out the full twenty thousand dollars this year is going to be anywhere between one hundred and one hundred and twenty thousand dollars worse off in their retirement savings. That's one hundred and twenty thousand dollars worse off in their retirement savings for withdrawing that $20,000 today. Because of the way compound interest works and because of the design of superannuation, it's so much harder to catch up once you've withdrawn that money, and if history shows anything they are less likely to make those contributions. So I think the other thing that's worth pointing out here is that Australians have contributed more from their own savings than the Commonwealth Government has through the JobKeeper and the one-off payments, in terms of economic stimulus. About 13.2 billion dollars people have had to draw down from their own savings accounts to help them through a tough time because the Government has bungled the introduction of the JobKeeper arrangements. I don't think that's anything to be proud of as a country.
GILBERT: But in relation to that comparison you make, you're right. It's comparable, the amount that people have access through their super, versus the amount that's been paid by the Government. But the flip side of that argument is; if they didn't allow access to super in this case that the borrowed debt would have been much greater.
JONES: Actually, we're going to pay one way or another Kieran. Interest rates have never been lower. If the Government needed to borrow money, now is the time to do it and when interest rates are effectively 0.25 percent, that is what the Government is borrowing money at the moment and likely to be borrowing money out for the the foreseeable future. It’s never been cheaper for government to do the right thing, to jump into support households, support individuals and to be investing in infrastructure. So that's the first thing. The second thing is; over the long-term taxpayers are going to have to pay more because these people are going to have less money in retirement savings. The next generation of taxpayers is going to have to come in and pay more to provide for the pensioners. Now, let's not forget we embarked on this superannuation journey because in the mid-1980s, we realised we had a demographic time bomb. We realised that the number of taxpayers to people on pensions was decreasing at a rapid rate. Many more people will be relying on tax income to pay for pensions in the future unless we put a break on that by helping Australians to provide for their own retirement. Superannuation, universal superannuation was born as a result of that and it's worked very well. It's worked incredibly well. We've got about three trillion dollars worth of savings put away in superannuation for retirement purposes. The whole system falls apart if we start treating this as a bank account and start draining the money out of there. It means those people won't have the money for retirement and it means that as Australian taxpayers, we're going to be paying more for the pension into the future. That's the direct result of what the Government has done as a result of this early access scheme.
GILBERT: One thing we won't be paying more for, at least in the current design, is JobKeeper. In fact a 60 billion dollar gap between the initial forecast and what the current projection is. As Daniel Andrews, the Labor Premier of Victoria, said this morning; the Federal Government revised the costings, it's a good thing that they revise them down. That doesn't happen very often you'd rather this than the opposite in terms of a blowout.
JONES: There's a couple of important things about this and if I could take some time to go through them. The first is that the Prime Minister was saying on Thursday last week that a hundred and thirty billion dollars was the amount necessary to for the Commonwealth to inject into the economy to stimulate it and to look after households. If that number was right on Thursday, how come it became wrong on Friday? He wasn't tying it to the number of people who are relying on income support. He said this is the amount of money that we need to be injecting into the economy as a percentage of GDP to be stimulating the economy, to be keeping the economy afloat. How's that changed overnight? Why is it no longer the right amount of money? So we say to the Government; take this as an opportunity to redesign some of the obvious flaws in the scheme, for example, far from spending more money, we think it's ridiculous that somebody is earning more money out of JobKeeper than they were pre-crisis. Some of that money should be redistributed to help those people who have been excluded from JobKeper for no good reason. I'm thinking of the casuals and itinerant workers who have been excluded because of the JobKeeper rules. The Government should use this, very embarrassing, absolutely an enormous embarrassment for Josh Frydenberg. The only thing that he can do to make it better is to redistribute that money which they themselves have said is absolutely necessary to stimulate the economy. Tighten up some of the rules and ensure that we can redistribute that some of that money towards both expanding the scheme towards the people are not getting it and maybe some money into infrastructure, as well.
GILBERT: It doesn't look like they're going to broaden it, they might extend it for industries like tourism. In the event that they do extend it for hard-hit industries, would you welcome it?
JONES: Absolutely, we welcome more support for the tourism industry, but here's going to be the problem; if they just extend the scheme to further cover the tourism industry beyond September, but they don't change the scope of the scheme, it's not going to do the help that is needed, because so many of those young people, the short-term casuals, will be excluded from getting access to the JobKeeper scheme, because the the existing rules which ban anyone has been working as a casual for less than 12 months. So just saying we're going to extend it beyond September for the tourism industry isn't going to be enough. You're going to have to do more to extend the scope to those workers who are currently excluded by the current unfair rules.
GILBERT: One of the very important elements to our economic recovery will be state-to-state travel and engagement. Would you urge the other states to get on board and relax some of those restrictions as the New South Wales Government is urging?
JONES: Look, I want to see travel to other parts of the country relaxed as soon as possible, as soon as it's safe to do so. I'm not going to say that I can give better advice to the Queensland or the Victorian Premiers than they're receiving from their own Chief Medical Officers. If their Chief Medical Officers are telling them that for health reasons, it's not safe to open up the borders just yet, then I'm just going to have to go with that. But I've got to say, there's a lot of people in New South Wales would like to head to Queensland, or to other parts of the country, where it's warmer over the winter break, particularly when they won't be taking an overseas trip. I think there's a lot of people who are saying, just like me, let's get these restrictions lifted as soon as it's safe to do so.
GILBERT: Stephen Jones appreciate your time. Thanks.
JONES: Great to be with you, Kieran.