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Wednesday, 16 August 1989
Page: 145

Senator BEAHAN —My question is also directed to the Minister for Finance in that capacity and also in his capacity as Minister representing the Treasurer. Has the Minister seen the Chanticleer column in today's Australian Financial Review expressing fears about the impact of proposed initiatives in the area of superannuation? Will the Government's policies affect Australia's superannuation industry in the ways set out in the article?

Senator WALSH —I have seen the article and it deals with two points. Firstly, it provides information on the results of the superannuation reforms that have already been put in place by the present Government since 1983 and analyses the effects of the initiatives that were announced last night. In the years when the present shadow Treasurer was advising the then Treasurer-that is, in the late 1970s and the earlier 1980s-virtually nothing was done to promote occupational superannuation as a vehicle for true long term private saving for the provision of retirement income.

Senator Button —Nothing was done, full stop. That is the problem.

Senator WALSH —Instead of that, Senator Button, what we had were cherry picker schemes, superannuation cover for a well paid minority, cashing out lump sums several times in a lifetime. In other words, it was not superannuation. It was deferred wages, concessionally taxed. Once the lump sum had been obtained the proceeds were either spent or hidden in low income assets in order to double dip. There has been a vast change since then. As Chanticleer says in today's article:

Since the Hawke Government started fixing up the retirement incomes system in 1983, the superannuation pool has increased from $17 billion to $105 billion.

Chanticleer goes on to argue that with the additional policy initiatives announced last night, that pool could grow from the present $105 billion to $500 billion within a decade. I quote from the article again:

It would mean that within about 15 years, the savings position of the nation will have been transformed to the point where foreign debt of the size we are all now so worried about will either disappear or become irrelevant.

And what's more it will be long-term savings-not short-term bank accounts as would be encouraged by such measures as providing tax relief on interest income.

I suppose that could be summed up in short by saying that Chanticleer prefers meat to feathers. Of course, Chanticleer's comment is not an isolated example because those with a true understanding of Australia's saving investment problems recognise that the retirement income's policy announced by the Government is the responsible and proper way to tackle the two problems of insufficient, inadequate domestic savings relative to the level of investment required, and the longer term Budget outlays problem of an ageing population.