FRIDAY, 20 NOVEMBER 2020
SUBJECT: Liberal raid on superannuation.
DANICA DE GIORGIO, HOST: Joining me now live is the Shadow Assistant Treasurer Stephen Jones. Stephen, appreciate your time. The review itself is has found that the current super contribution rate of 9.5 percent would allow for higher living standards, and that working income would be around two percent higher in the long run. It doesn't appear that the Government will be making a decision on legislated rises until next year. Labor has been calling for this increase to go ahead but this report states that that could be a problem.
STEPHEN JONES, SHADOW ASSISTANT TREASURER: Let's just be very clear, the Government commissioned this report for one reason, and one reason alone, and that was to give them the platform to break an election promise. They went to the last election promising to keep workers superannuation intact. They then decided that they wanted to scrap that promise. They put together a group of people who they thought would deliver a friendly report, which would give them basis to cut superannuation and this report is done the job the Government has asked them to do. And let's be very frank, the report itself seems to acknowledge that the existing superannuation arrangements won't be sufficient to fund a dignified retirement, a situation made worse by the $35bn that has been removed from workers’ superannuation through the early release scheme. But here's the kicker; the report seems to suggest that if workers don't have enough money in retirement to fund their needs, they can sell their house. I mean, is that the best the Government can do? Put in place a cut to superannuation and say to workers if you haven't got enough money, then sell your house? Frankly not good enough. We won't be supporting it. We won't have a bar of it.
DE GIORGIO: Okay, but we've had similar sentiments from the RBA and the Grattan Institute recently in regards to pausing that rate. So why do you dispute those findings?
JONES: I'm glad you've asked. We've got a few people out there saying that somehow if we cut superannuation now then all of a sudden wages are going to miraculously rise by exactly the same amount. You know who has also promised this? John Howard promised it in the early part of 2006 to 2007. Didn't happen. Tony Abbott promised it. It didn't happen. They cut super, but wages didn't go up and the evidence actually doesn't support this claim. And if we look forward, I want you to consider this. Consider the situation of a nurse in New South Wales at the moment. The New South Wales Government has frozen nurses’ wages, police wages, all public sector wages. So if we cut superannuation next year, their wages aren’t going to go up because the Government has frozen them. All that happens is that worker will be worse off. And it's not just nurses, that's right throughout the economy. Yeah cut super but don't pretend the wages are going to go up because that is simply not true.
DE GIORGIO: What about in terms of voluntary contributions? The report found that it provides flexibility and puts a greater emphasis on Australians using voluntary savings. Do you think that that's appropriate?
JONES: We've supported voluntary contributions for superannuation, it enables people to put more money away for their retirement if they can afford it. Generally something that is accessed by wealthy Australians, not poor and middle-income Australians. It's not a substitute to a compulsory system, a universal system. I don't see why anybody should assume that an 18- to 25-year-old today is going to act any different to Stephen Jones did when he was 18 to 25 years of age. If I had to make a choice between a good night out and putting five bucks a week aside for my retirement savings, a good night out would win every week of the year. That's why we have a universal system, to ensure that we put a little bit of money aside to save for our retirement.
DE GIORGIO: Okay, so why don't you trust people then to voluntary contribute to their super and take the tax concession if that's what they choose to do?
JONES: No, I'm not against the voluntary arrangements. I do, I support them. I think voluntary on top of the universal compulsory contributions is useful and it’s suitable for many households. But it's not a substitute for a universal system. And can I just remind you of one thing. When we embarked on this process of universal superannuation, we knew the country faced a problem. Back then there was seven workers for every one retiree. That is, seven workers funding of pensions and retirement arrangements for every one retiree. Over the next 30 years, that number has dropped to one in four. So it's one in four today. That's for every retiree, we have four workers. And over the next two decades that's going to drop to one in three. So if we're going to have a sustainable pension system, or a sustainable retirement income system, into the future we need to ensure that individual workers are making us small contribution every week to fund their retirement, to take pressure off pension payments down the track. It's already working. You know, the superannuation system pays about $80bn worth of pension payments and superannuation payments every year. That’s already twice what the Commonwealth pays in pension payments. Why would we want to wreck a system that is working?
DE GIORGIO: Has superannuation, though, taken the pressure off the aged pension?
JONES: Yes, it has for this reason: We knew you back then that the increase in the pension wasn't and couldn't keep pace with people's expectations of what they were going to need in retirement. Cost of living goes up. People's expectation of what is necessary for a dignified retirement is a lot different today than it was in 1950 and 1960 and will be a lot different in 2040, 2050. So we had a choice. We could increase the burden on taxpayers by increasing pension payments, and significantly increasing pension payments. Or we could have a universal system of superannuation that enable people to put a little bit of money themselves aside so that they could do the extra things in retirement. Go on a holiday. Buy a new car. Look after the grandkids, all of these sorts of things. It's working.
DE GIORGIO: Okay just finally, the Treasurer Josh Frydenberg has criticised Labor, saying that they've dismissed the report when they haven't actually read the report. What's your response to that?
JONES: Here's the bloke who deserves a bit of a serve from you guys. Here's a guy who's been doing press conferences for the last 24 hours on a report that he wouldn't give any of you. So he's going out there making statements about what's in a report and he hasn't given it to one single press gallery journalist. And yet he has the hide to come back and criticise Labor. Well, we've seen the few excerpts that he's given to the press gallery journalists, but we haven't seen until 11 o'clock today the full report. So for the Treasurer to be out there making these claims, is this is Josh Frydenberg hypocrisy on steroids. He needs to have a bit of a relax and a lie down. This debate’s got a long way to go. We won't be having a bar of his plan to cut superannuation.