Senator PRATT (2:39 PM) —My question is to the Minister for Superannuation and Corporate Law, Senator Sherry. Can the minister update the Senate on the impact of the current global financial crisis on Australian superannuation accounts?

Senator SHERRY (Minister for Superannuation and Corporate Law) —I thank Senator Pratt for her question. I know this is an issue on which many millions of Australians, having received their superannuation fund statements in recent months, are focused and about which they are concerned. As I have indicated in this chamber on a number of occasions, events in global financial markets caused by the US subprime crisis have added significantly to uncertainty and to volatility in global markets, the share market in particular. I and this government certainly understand the concern and worry of Australians with respect to their superannuation savings and the volatility that has been seen in recent times, whether or not their superannuation is in a fund as a result of compulsory contributions or voluntary contributions, which many Australians make. But I stress that superannuation is a very long-term investment. In these circumstances people do need to remain calm. This is a very important aspect of the superannuation system. In a mature system an individual, up to the point of retirement, would normally expect to be a member of that system for 35 to 40 years. And, even when they have reached the point of retirement, the majority of Australians will still be in the superannuation system, depending on actuarial point of death, for another 20-plus years. So, they are going to be in the system for 35 to 40 years and another 20 years after retirement.

The pool of funds in our superannuation system has grown strongly. As at the end of June this year it stood at $1.17 trillion. That pool of savings is in itself a major strength in these turbulent financial times. And that asset figure of $1.17 trillion is double the asset figure of five years ago. One dollar invested in superannuation 10 years ago would today be worth $2.07. So, even with the recent market adjustments downwards, a $1 investment in superannuation 10 years ago is worth $2.07 today. Let us take a 20-year return. If moneys were placed in a superannuation fund as at 30 June 1988, more than 20 years ago, a $1 post-tax contribution to superannuation is estimated to be worth today around $5.50. That illustrates the growth over time of superannuation investments.

I know that as at last Friday, for example, the Australian share market had dropped approximately 37 per cent since its high of 6,854 in November last year. Other world markets have experienced similar, if not bigger, percentage falls. What is important is to look at history and what has happened when a market has fallen. We do know historically that markets have recovered from major corrections. They recover over time; it depends on the circumstances. After 9/11 in 2001 the market suffered a 16 per cent fall over the period of a week. Within approximately three months that market had recovered. During the Asian currency crisis in 1997 the market fell by 21 per cent. But, again, the markets recovered— (Time expired)