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Thursday, 26 September 2002
Page: 5021

Senator IAN CAMPBELL (Parliamentary Secretary to the Treasurer) (4:10 PM) —For fairly obvious reasons, the government finds significant fault in the proposal and the motion put forward by Senator Sherry. I will seek to convince the Senate why Senator Sherry's proposals and assertions about the government's policy in relation to superannuation are flawed. I would not accuse Senator Sherry of deliberately doing so but they are in fact quite misleading.

For example, it is a fact that in relation to taxation the government's proposals, which we have sought to implement, have given significant tax advantages to people on lower incomes. I sought to take a lead on this in relation to financial planning advice. Senator Sherry chose to ignore the fact that I suggested that it would be very good for Australia for people on very low incomes and for the profession of financial planners if financial planners provided services and advice to those people. I suggested that it would be particularly good for people who rely solely on welfare benefits to avail themselves of good quality advice on how to manage what are often very limited incomes and, although I know it would be a struggle for many low-income earners, for them to have a savings program, where possible.

For superannuation contributions made by those low-income earners, as part of its package on superannuation taxes, the government has agreed to create a co-contribution of up to $1,000 per annum in place of a $100 rebate. This is a 100 per cent return on contributions made by people who earn less than $20,000. So for people on very low incomes, the government is effectively going to match them dollar for dollar. To seek to pass off as fact that the government does not seek to help anyone other than those earning more than $90,000 a year, who are a very tiny minority of the income spectrum in Australia, is entirely unfair because it is untrue.

As part of our proposals, we will be allowing couples to split their superannuation contributions, which will enable couples to access two tax-free thresholds and reasonable benefits limits. This is a very significant benefit for couples. We will also allow superannuation contributions to be made on behalf of children. This will provide children with a head start in financing their own retirement. Reducing the superannuation and termination payment surcharge rates by one-tenth of their current level over each of the next three years is a significant benefit.

It is always amusing to hear Labor talk about cutting taxes. If we look back through Australia's economic history, we see that they were the greatest increasers of taxes in Australian history. They put up spending to historically high levels as a proportion of GDP and in real terms and, of course, borrowed and taxed at historically high levels. The Keating and Hawke governments increased taxes at a greater rate than even the Whitlam government, which was world renowned as one of the great spending and taxing governments in the history of the free world. Mr Keating's government even beat Mr Whitlam's record, and the people of Australia should never forget that. So when you hear Labor talking about taxes, do not read their lips, look at their actions.

In relation to superannuation choice, Labor have got themselves into an incredible pickle because of the massive domination of the Australian Labor Party by the union movement. The union movement has a significant hold over a number of the super funds. As part of the creation of compulsory superannuation in Australia, the then Labor government, who were controlled by the union movement, set up a structure which ensured that unions would dominate a large section of the super industry. What is happening now, when investment returns have gone down due to significant reductions in the value of equity markets—reductions of over 50 per cent in many of the European marketplaces in the past year or so and reductions in the Australian market of nowhere near that size—is that people are getting their superannuation statements. I think that you, Mr Acting Deputy President, would have spoken to people during your travels and in consultations. People these days are saying, `Gee, I got my superannuation statement recently and I've gone backwards this year. The thousands of dollars that I had there on 30 June last year are now thousands of dollars minus X this year.' For many Australians that will be an alarming thing.

People are able to look around when they are, say, buying a house or investing in shares. If they want to invest in Telstra, the Commonwealth Bank, BHP or other shares, they can look at the performance of the company, they can make an assessment about its corporate governance and its investment return—the quality of the return and the security of the return—and they can make an investment decision. They can look at what suburb they buy a house in; they can decide to buy a house in the inner suburbs of Brisbane, where you live, Mr Acting Deputy President Bartlett, or in the outer suburbs or out in the country. They can make decisions on investment property and how much money they put into it. They can make all of those decisions and make assessments about these issues. They can analyse the quality of the return they get and make investment decisions about whether to divest, reinvest or whatever.

But when it comes to superannuation under the Labor Party's model, we do not give people those sorts of choices. They are locked into a superannuation fund, often against their will. It is a requirement to be in it and the fund is chosen for them. Regardless of the investment return or the level of fees and charges that are charged by that fund, regardless of the quality of the administration of that fund, the citizen has no right to choose. The Australian Labor Party—in the past, with the support of the Australian Democrats—have locked people into superannuation funds. More and more Australians are asking themselves this question every day: `Why are we being locked into this fund; why can't we choose a fund which performs better, which has better management, which has lower fees, which has better disclosure, which has better corporate governance or which invests in the sorts of investments—for example, ethical investments— we want to invest in?' It is a very good question.

Why is it that we trust people to make investments in the stock market or in property or to make other forms of investment but, when it comes to superannuation, we say, `We'll treat you like a bunch of ning-nongs; we won't let you choose; and if you're in a fund that is performing badly and is losing you money, sorry, but you can't leave'? There are many Australians who have lost thousands of dollars off their net worth because they have been locked into a particular fund. The Australian Labor Party, with the support of the Australian Democrats, have said, `We're not going to give you that choice, even if you are stuck in a fund that has your investment returns heading south. We won't let you out. We'll lock you in for life.' Labor have themselves in a serious quandary on this. They went to the IFSA conference recently and announced that they had done a backflip on choice, that they would support choice. It lasted about a day. When you read the fine print, you saw that they had come up with a policy on choice that basically was a joke. Even ASFA, the Association of Superannuation Funds, came out and slammed it as a very silly, stupid and unworkable policy.

It is very important that people do have these choices. If you have no choice, if investors cannot make a choice about superannuation, the process of democracy that should occur in our economic system, allowing people to vote with their feet in relation to investments, will diminish the quality of the governance of those funds. If the managers of the super funds know that the investors are locked in regardless of their performance, what incentive is there for the super fund managers to actually do their job? Virtually none. But it suits the Australian Labor Party to support their friends in the union funds and to lock people in. That is the Achilles heel of Labor on superannuation policy. At a time when many rank and file members of the Australian Labor Party are getting their super statements, they need to ask themselves: `Why are our parliamentary members of the Labor Party'—most of whom come from a strong union background, including former secretaries of unions and so forth—`favouring the interests of their friends in the union funds ahead of my interests as a rank and file member of the Labor Party?' The question they are asking is about the governance of the Labor Party. I say to the Australian Labor Party: look at the way you govern yourselves and fix that before you start getting too serious about telling the rest of the world how to run corporations.

That takes me to the issue of disclosure, and Senator Sherry has referred to the disclosure regime in part 5. Disclosure is absolutely vital to having a good savings and investment environment in Australia. A quality savings and investment policy must ensure that superannuation policies and the policies behind other investments, such as managed investments and equities and even bank products, have high-quality, reliable disclosure. This government has brought in a very high-quality disclosure regime under the Financial Services Reform Act and under the regulations that flow from that act.

You only need to look once again not at Labor's rhetoric on disclosure but at their actions in this parliament. What did they do in these very sittings? They disallowed one of the most internationally recognised comprehensive and sound regulations in relation to disclosure. It was a regulation which would require industry funds and other super funds to comply with a range of very important disclosure measures, ensuring that the superannuation investors had displayed to them in very clear terms all the fees, charges and the ongoing management charge that related to their investment so that they had a quality set of information to make their decisions on. What was Labor's action? It was to come in here and knock that regulation out. It was an act of vandalism against quality disclosure.

Labor said that this ongoing management charge was some sort of bogeyman, that it was no good, that it did not work and that it should have entry and exit fees in it. What happened yesterday? The Australian Securities and Investment Commission, a world renowned quality securities and investments regulator, issued a report by Professor Ian Ramsay that supported the ongoing management charge and made it absolutely clear that the ongoing management charge should not include entry and exit fees. That totally contradicts the Australian Labor Party's flawed policy and reinforces the point that I made at the beginning of my contribution to this debate—that is, that Senator Sherry's motion is flawed, it is contradictory and it is wrong.

This is a true reflection of the state of policy within the Australian Labor Party. It is very unusual for them to have any policies. They usually bring out policies just after elections rather than just before them. But they do have a number of policies in the superannuation area. They have three spokesmen who go around making statements on it: Senator Sherry comes up with policies which usually get belted around by just about everybody; Senator Conroy comes into the debate from time to time and usually contradicts Senator Sherry, and from time to time former Senator Bob McMullan—now the spokesman on Treasury issues—comes into the debate and further confuses the matter. They are all over the place on superannuation. The cause of that is quite clear. The cause is that they are controlled and dominated by union influences and, until that union influence over their policies is cut off and extinguished, you will not get a sensible policy on super out of this mob opposite.

The government believes that it has a very sound savings and investment policy to ensure that Australian citizens are able to save in a secure, economic environment for their retirement. By contrast, Labor has nothing to offer but cheap political shots and opportunism, usually on behalf of their mates in the trade union movement.