Assistant Treasurer and Minister for Financial Services & Superannuation
14 September 2010 - 14 December 2011
Speech to the
Association of Superannuation Funds of Australia Conference
10 November 2011
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Good morning everyone, it's a pleasure to be here. I'd like to acknowledge the traditional owners of the land upon which we meet as well.
I think there's 20 minutes of question and answer where we can get into a lot of the detail. What I wanted to do, talking to you as leaders of the superannuation industry, is talk to you about the big picture in my opening few minutes and then by all means lets replay the war of the roses and the usual scuffles between industry and retail funds and all the stuff the industry needs to move beyond. But let's talk about legislative timetable, let's talk about what Bob Katter is thinking about superannuation but let's do that in question and answer. I can't miss this opportunity to talk to you about the big picture.
And what I want to put to you is this proposition that a great nation stays a great nation because it makes great decisions at the right time in history. And I submit to you that the public debate about compulsory national savings is a great decision to be made at the right time in history, to ensure that Australia in the 21st century continues the momentum that we currently enjoy.
I do not share the naysayers and some of the conservative commentators view about where this nation is at the moment. I was jotting down what I think are eight reasons about why we should be optimistic and not fearful of the future.
One reason which comes to mind almost immediately is our public debt.
When you have a look at the world weighted average for public debt of other nations in the world, the world weighted average is 88 per cent of GDP.
Our Commonwealth public sector debt in Australia is just over seven per cent. In Japan, the public debt of that great nation is 226 per cent. In the United States it's hitting 100 per cent. Here we are in Australia with very low exposure to public debt, especially at the national level. And here we are therefore slightly more insulated then nearly every other nation in the world. But that's just the first reason to be optimistic.
Let's have a look at our location. What the famous historian Geoffrey Blainey once analysed as the tyranny of distance has become what a more recent BBC correspondent has described as the advantage of adjacency. We are on the fringe of the fastest growing region in the world. And you know the numbers: Six per cent growth expected in population across Asia annually. You look at the fact that in 2030 there will be three billion citizens of Asia who are in the middle class.
And if you have a look there for the 3rd reason to be optimistic; 80 per cent of our export trade is with Asia. So we are part of the Asia Pacific region, our trade is with the Asia Pacific and our public debt is good, but also in this country, when you read the newspapers, you'd think that somehow our industry is creaky and inefficient.
It can always be improved. But have a look, we have a thoroughly modern economy, nine per cent of our industry I concede is in mining, but in the medium term that is going to continue. Even if prices come off volumes will increase.
Manufacturing, which is very important but tends to be influenced by events in the world economy, is at about 8.5 per cent of the Australian economy. We are not as exposed as we would have been in 1960 when we had 30 per cent of our economy based in manufacturing. Agriculture could probably afford to lift its 2.5 per cent, again somewhat affected by what happens in the rest of the world, yet our exposure is probably too small.
But we've also got a growing population. Nations on average are growing at 1.3 per cent. Over the last decade our nation has grown at 1.5 per cent. This is a sign of a vigorous rejuvenating culture. People want to live here, our population is growing. This is a source of optimism.
But using that word culture, I don't think we always use it a lot in the superannuation industry. I think the Australian mindset is a lot healthier than a lot of others around the world. I'm a big fan of America but since World War II they've had to be the world policeman. So I think partly, and perhaps there are many reasons for this next statement, that may be one of them. Their mood seems to oscillate between great optimism and great pessimism, partly because of fear of security threats and the terrible events of 9/11.
But if you have a look at Europe. Look at the English, any survey of the English mindset (my dad was a British migrant) shows that it's very hard in any day in any year in the last six decades to find more than half of the English happy. But when you look at Australia, for 65 per cent of the time Australians are happy.
So what does that tell you? It's another source of being positive about our culture. We're not jingoistic and my point isn't a jingoistic point but Australians are generally, in the long run, confident about the future.
And I want to come to the political scene. Did you know that since 1788 there have been 72 leaders of Australia, so I'm including the colonial governors, and on balance only one in every four would have been by common agreement. not so good.
Two in every four: reasonable, and one in every four, quite outstanding. But we have a system of political stability in this country, which is actually far more certain than nearly any other part of the world that we know. We generally run for two and a half to three years federally; we generally run between three and four years at the state level around the nation.
We have a political stability which other nations would envy. If none of these reasons are sources for optimism, those seven I've given you, let me remind you of some of the progress this great nation of ours has made so far. In 1960, with a population of roughly ten million people, we had 50 thousand students at university.
Our population's increased just by over half, we're coasting towards 23 million people, but our university population's 1.2 million. Australian's are educating themselves faster than our population is growing.
We'll pick what I think is the ultimate success of any set of national indicators, our life expectancy. In 1960, Australian men were living to 67 on average, now it's 81 and climbing. And women are living even longer to 85 now, so our life expectancy's increasing.
Perhaps a third of the trifecta of reasons around our success, our historical success, is being a reason to be positive about the future, is that in 1960 we were spending four and a half percent of our GDP on health. Now it's 9 percent. But that number makes me optimistic, because what it means is that we're living lives which are more able, and subject to less pain.
Now of course, having said that great nations become great nations because of great decisions, and having said to you that I believe that any valid and moderate and middle of the road analysis of the progress of this nation shows we have reasons to be optimistic about the future, we cannot take our future for granted.
The world does not owe Australia a living. That is why there are important decisions that have to be made. Every generation of Australians has the privilege to be the inheritors of the work that has been done before us, and every generation of Australians has an obligation to pass on the reins of our society to our children and our grand children better than we found it, just like previous generations carried out their DNA-inspired role to our generation.
So in this generation, it falls in part to the leaders of the superannuation industry to leave the place better than we found it. And we have such an opportunity and such a decision point to be made now.
I said in introducing the bill to increase superannuation from nine to 12 percent, that timidity can lose you the skirmish, the skirmish can lose you the battle, the loss of the battle can lose you the war. We have an opportunity to help continue the journey to make this a great country by lifting compulsory, national savings.
There are not many things that Australia is fourth in the world at. But we are, in terms of the size of the funds, of pension funds under private management in Australia, and for that I am grateful for the work that all of you do. But we have a decision to be made in the last part of this year, in the first part of next year: do we want to increase our national savings pool by over half a trillion dollars by 2035?
Do we want to be able to talk to our children and grandchildren and say 'do you remember when this nation made its ongoing decision to be a great nation by increasing our savings pool?'
The economic history of Australia shows that Australians are notoriously, on average, not good savers. Having said I had an English parent, I've got some Irish forbearers and someone said it was the happy go lucky attributes of the Irish. And I'm not into that.
What I do think is that compulsory savings is an important national decision. We have an opportunity to lift our savings so that the call on the age pension diminishes over time. We have an opportunity to create more deep and liquid equities in capital markets in Australia, to provide the necessary sinews and resources for infrastructure investment.
But this year and next year, in the first part in the Senate next year and hopefully this year in the Parliament, we have an opportunity to restore the brand of national savings in superannuation, to build confidence as the equity markets are volatile.
We have an opportunity through the various forms of MySuper and Stronger Super and the reforms to financial planning, to build up confidence that people have in the financial sector, and the performance of their savings. But we are the generation who will make the decision to put Australia in the box seat globally, to have the best national savings system in the world.
There are many other hard decisions which this government has to make and we have to make as a people.
But this decision of national savings you can help make.
The manner in which you communicate with the members of your funds; the manner in which we engage in the public discourse; the manner in which we attack the lazy decision-making of the opposition on this issue.
I don't mind how you vote. But I do mind that we have an opposition who says no, and are going to vote against increasing compulsory national savings from nine to 12 percent. That is not a great decision. That is not the path for a great nation.
I do object that we have in politics at the moment, a political party sitting opposite where we sit, who says 'sure, we don't want to discriminate against older workers, but we're not gonna vote to abolish the cap, on the age cap so people working beyond 70 can get superannuation'.
And it is not a great decision for a great nation, for a great future, to say that providing tax concessions to 3.6 million of the lowest paid Australians, to provide tax concessions so they pay no tax on their superannuation. It is not a great decision to oppose, comfortable, secure retirement adequacy for these people.
I want to conclude my remarks with this observation. You have done well in the last twenty years of building up compulsory superannuation and savings. It has not been easy and there have been many arguments, and on many issues there have been fissures and fractures. But what I would say to you is have a think of that list of reasons to be optimistic about our future.
And also have a think about the proposition that people before us made the decision to lift superannuation from 0 to three percent. And that other people made the decision to lift it from three to nine percent.
It is now our turn to fulfil our part of the bargain with those who've come before us and those who will come after us, to make sure that this nation keeps being a great nation and making great decisions, by engaging in a positive political discussions, which says we want all Australians to be able to retire with some measure of decency after working their whole life.
Thanks very much.