BILLS: Superannuation

 In Economy & Jobs, Parliament, Senate Speeches

Senator RENNICK (Queensland) (22:35, 16 June 2021): It’s great to be here tonight to talk about this legislation. I’m not going to lie to you: it’s still ultimately lipstick on a pig. There isn’t a plastic surgeon in the world that can bring this dead, stinking carcass called superannuation and make it look attractive—I can assure you of that. I will tell you why: it’s because superannuation is a lie.

If you look at the statistics that come out every month, these are the latest. The median balance for women aged 55 to 64 is $118,000. That’s the median balance after 28 years. For men it’s $183,000. Most of these 55- to 64-year-olds would have had 30 years of superannuation, albeit the early years were at a lower rate, but that’s still less than half to get to the cut-off for the full pension. Long story short: 50 per cent of the people in this country are still never going to come off the pension. We drop $40 billion a year in lost tax revenue that goes to the wealthy—it’s only the top 10 to 20 per cent of the people who get these taxation concessions. They don’t need the incentives. They’re already wealthy as it is. For 13 million workers in the country, that’s 3,000 bucks a pop to basically subsidise the wealthy.

On top of that you’ve got another $40 billion in fees shuffling around with all these different rules, stapling and benchmarking—paperwork doing this and paperwork doing that. We’ve become a nation of paper shufflers. Instead of focusing on asset creation, we’ve now got everyone trading assets and liabilities instead of actually producing goods and services. That’s all gone offshore. We’ve just driven up the price of assets through superannuation. There’s that much money in super now—$3 trillion in super. That’s more than what the stock market is worth, so $600 billion of it has had to go offshore.

To make these things look better than they really are, there’s a bit of a deal going around with all of the investment funds in the world that, if you invest in another country, you don’t have to pay tax. We’ve a classic one here: section 855 in the 1997 act basically says that if you’re a foreigner and you invest in non-real assets, and you own less than 10 per cent, you don’t have to pay capital gains tax on it. That’s to appease them. We have foreign funds investing here and our funds invest offshore. They all give each other tax breaks, and basically there’s base erosion and profit shifting, where all the wealthy fund managers make all the money and pay themselves bonuses because they don’t have to pay tax. The workers are the ones who have to pay for it—this is the sad reality. The number of people who are still on the full pension has not moved since 1992, and the number of people on the part pension has reduced from about 28 per cent to 22 per cent, but about four per cent of that is from when they changed the pension thresholds back in 2017. All of this paper shuffling and all of these tax concessions achieve nothing.

Right now we could be in here talking about an infrastructure bank, doing something around finance and fixing up monetary policy in this country, but, no, we’re talking about the superannuation that only looks after the rivers of gold for both the union funds and the banks. I want to be clear about this: I’m agnostic; I was never in favour of superannuation from the get go. I can remember when the August 1991 budget first came in, because it was my first year of working. I can remember thinking, ‘Why is someone going to take three per cent of my income and give it to someone I’ve never met to manage it?’ I had just finished a Bachelor of Commerce the year before and had a HECS debt, where I got brainwashed—I had to pay to be brainwashed, because I was taught about efficient market hypothesis and things like that, but that’s a story for another day—and then suddenly I was told that I wouldn’t get to manage my own savings and that they were going to give it to someone I’d never met. And—guess what?—there was no guarantee I was ever going to get it back. That’s what I love about the finance industry. If I took my car to a mechanic and it came back with two wheels on it, I’d probably have a pretty good case to go to the Ombudsman and say, ‘Listen, I think I’ve been gypped.’ But with fund managers there’s no guarantee you’re ever going to get your capital back. They get a guaranteed fee, and if they do well they’ll pay themselves a bonus. But if they lose the money it suddenly becomes a relative thing: ‘We only lost 15 per cent, and the market went down 20 per cent.’

Why don’t you let people just put it in their house, subject to capital gains tax on housing above $2 million, at least for the people who don’t have an active interest in their superannuation—and there are a lot of those people. That’s one of the complaints over here about stapling. I tell you what they do care about: owning their own house. They get that much. What most people—the common man and the battler—do understand is real assets. They don’t live in the land of the blowhards. There are two types of people in this country: the battlers and the blowhards. Labor sit here and complain about the battlers being shafted, but if they’re serious about that they should let the battlers keep their own money. For most people, it’s not 10 per cent of their income; it could be 100 per cent of their disposable income, if not more. Someone on $50,000 has to pay about $6,000 or $7,000 in tax, so their cost of living is $40,000. Why are we ripping out $4,000 a year in super to give it to someone these guys don’t really care about when they need it now? They need it now just to make ends meet.

There is no such thing as universal superannuation. The universal retirement scheme in this country is called the pension. It’s been around for a lot longer than superannuation and it works fine. Get rid of the $40 billion in tax concessions. You could take half of that and give it back to the workers so they’d pick up an extra $2,000 a year, and put the other $20 billion into increasing the pension by 20 or 30 per cent. The pension for the bottom 72 per cent of people costs $52 billion. We give $40 billion in tax concessions to the top 10 or 20 per cent of people and we give $52 billion to the bottom 72 per cent of the people, but they’re the ones who need it most. If you want a universal pension that’s going to look after stay-at-home mothers, the unemployed, people with disabilities and women, why don’t you do that? The logic: it’s 10 per cent of your income, so if you’re on a low income you only pay a small amount into super, so the benefits of super are much smaller. It is a completely inequitable scheme.

I want to go on about this directions power. I was quoted in the Fin Review as saying I don’t support the directions power because that would be hypocritical. The reason it would be hypocritical for me to support it is that I believe in choice, personal responsibility and the importance for people to learn how to save their own money. There’s this idea that people will never get the chance to invest if superannuation isn’t an option. I tell you what: I was saving and had my nose to the grindstone a long time before superannuation was invented. It is completely hypocritical for Labor to come in here and get all upset because, ‘How dare the government tell superannuation funds what to do!’ I don’t necessarily disagree with that, but how dare the government take 10 per cent of people’s income, without ever asking them, and force them to give it to someone they’ve never met.

Why can’t we do what New Zealand did? New Zealand had a referendum on whether superannuation should be compulsory. You know what they voted? They voted against it 92 per cent to eight per cent. As for Senator O’Neill saying we’re not the true liberals, I’m a true liberal because I think people should have the choice as to whether they want to invest in superannuation. It’s their money. It’s not the rivers of gold. It doesn’t belong to the union funds or the banks.

I did a masters of finance. There was one subject on superannuation, and I failed the assignment—luckily I still passed the exam—because I slagged off superannuation. I called out the banks in the 1990s because effectively they lost their deposit base, so CBA had to go and buy Colonial Mutual, NAB had to buy National Mutual, Westpac went and bought Bankers Trust and ANZ did a joint venture with ING. They were clipping the ticket with their rivers of gold. They’d have $500,000 in a mortgage over here and they’d clip the ticket on that, and then they’d have the deposit base over here through super and they’d clip the ticket on that, and they’d have financial planners and all this sort of stuff. Just before CBA got done over with the banking royal commission, their rate of return on their fund investment division was 66 per cent. That’s an incredible return on equity. It just goes to show what a racket superannuation is. It’s nothing but rivers of gold for the blowhards: banks, unions and whatever—I don’t care. But it’s time that we cracked down on this.

As for somehow claiming that we’re not supporting investment in Australian assets: there’s already $600 billion invested offshore with superannuation. I’ve got the clip where Bob Hawke said that superannuation was going to be used to invest in Australian manufacturing. Well, that never happened, did it? Nor would it, because of the Button plan and the Dawkins plan. The Button plan destroyed manufacturing and the Dawkins plan destroyed higher education, turning our kids into commodities. Everything in this country now has been turned into a commodity. There’s nothing about personal responsibility and letting the individual control things. No: we have to monetarise everything and it’s our kids who have suffered the most, whether through child care or universities. They’re just treated like a transaction and it’s completely wrong.

But there’s a third side to superannuation which never gets discussed. It’s the biggest black hole in this country: the $335 billion contingent liability for the non-military defined-benefit scheme for Canberra public servants. That’s for 160,000 retired public servants and it works out at $2 million a pop. The liability for the top 40,000 of those people is $137 billion, which works out at $3½ million per retiree. If you’re on more than $75,000 in retirement, based as an indexation of your final salary, then you must have been on a big final salary.

Can somebody tell me why public servants in this country aren’t asset-tested or means-tested on their assets and income like people are in the private sector? If we want to talk about equality, I often get blowback about it and I’m told, ‘We can’t do anything about it because we can’t go around breaking contracts.’ There never was a contract. In order to have a contract you have to have an offer, an acceptance and terms and conditions. There was never an offer from the politicians in this country, on behalf of retired public servants, that they were going to pay themselves a gold-plated pension scheme. And there was certainly never an acceptance by the people or terms and conditions laid out as to just how expensive it was going to be. It’s $345 billion, plus the military one, which is about $160 billion—I don’t want to touch that, because these guys potentially put their lives on the line and their families get moved around a lot; we can match that off with the Future Fund. But that needs to be means-tested.

I’ll mention this to Senator Hume. She brought in the 450 thing to make sure that everyone gets an equal break. But if you think that low-income earners were getting screwed because they weren’t getting $45 extra a month in superannuation, I can tell you that we’re all being screwed. That $345 billion for 25 million people works out at about 15,000 bucks a pop, which each and every one of us are paying, for the defined-benefits scheme superannuation. I say that we need to bring this lot into it as well, because the bureaucrats are milking us dry.

I’ll finish on a couple of other comments that were made by people on the other side. It was interesting that Senator Green would come in here if she didn’t know anything about 293. If you know anything about super, you know that section 293 came in as an afterthought. That was because, effectively, wealthy people who would normally pay 45c in the dollar only paid 15c when they contributed into superannuation. So they saved 30c upfront. Then, once their money was in there, they only paid 15c on that. But it gets even better: if you make a capital gain, you get a one-third discount and you only pay 10 per cent on your capital gain. So if you have assets and things in there you get a whopping big deduction. I recommend that Senator Green go away and do a little bit of study about the tax concessions for superannuation.

Another point to note here is that Labor always says—and Senator Watt did this afternoon—that superannuation is going to guarantee a decent retirement. It’s not going to guarantee a decent retirement for low-income earners. The only thing that can do that is a universal pension that doesn’t discriminate on the income that you’ve earned throughout your life. This pension is paid to you and only means-tested on your income once you retire.

If we want to talk about equality in this country, why should someone who busted their guts—whether they were a cleaner or all those sorts of people; the higher up the ladder you go the easier it gets. I’m telling you now that it’s the people on low incomes who work the hardest in this country. They probably drive further to work every day to get there and back again, and if they get a flat tyre and have to pay 400 bucks for a tyre that will hurt their budget a lot. But if we want to be serious about protecting the battlers in this country, it’s time to kill superannuation stone, cold dead.

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