Minister for Financial Services & Superannuation
14 September 2010 - 1 July 2013
Interview with Michael Rowland
ABC TV News Breakfast
22 March 2012
SUBJECTS: Superannuation reform
Let's go back to one of those top stories now and as Bev just mentioned, Holden has committed to staying in Australia for another decade after securing a subsidies leg up from the federal and state and South Australian governments. For more, we're joined by the Employment Minister, Bill Shorten from Canberra. Thanks for your time Mr Shorten.
Some figures have been mentioned this morning. Holden is seeking something like two hundred million dollars. What can you tell us about the amount of money involved in this announcement today?
I can tell you that the Prime Minister and the relevant minister and the head of Holden will be making an announcement today. So I'm not going to steal their thunder.
But what I can reassure people is that the car making industry, which is such a big multiplier of jobs, especially in small business, which is the employer of people with skills, which we need throughout the Australian economy, that the Labor Government is pro the Australian car industry and I can also tell you this morning that the Abbott opposition, as is in their DNA, are against supporting the car industry. They haven't supported our three hundred million dollar plan to help transform the steel industry. So, these days when people say there's no difference between the major parties, on manufacturing there is a country mile of difference. We're pro manufacturing. The other mob just think that that's something that happens in China.
We'll move onto another issue Mr Shorten. You've written in The Australian this morning about super.
Are workers going to have to give up their wage increases so the businesses can afford to pay the increase?
No. What happens is that superannuation will be part of a worker's pay increase. This is not a tax on business. The reality is that we want to make sure that Australians don't work hard their whole life and retire with only enough money to buy a can of baked beans and some toast for their meal each day. We want to make sure that if you work hard your whole life you have enough money in retirement.
So what's happened is that the Government is using some of the proceeds of the mining rent resource tax to subsidise or to give special tax concessions to people who have got more money to put into superannuation. So we're doing our bit. Superannuation, because it's compulsory, is taxed at a lower rate than if you just got it paid in your pay packet each week. So if it's going to be compulsory, we're taxing it concessionally and this Government's economically responsible.
We can afford the tax concession. In fact, for people under thirty-seven thousand dollars, they currently pay fifteen cents tax on every dollar that goes into super. We're abolishing it. So if you are low paid, the money which is going into super will pay no tax on super and the argument then goes that business say oh well, that's good you're giving the tax concession, but we've got to pay it.
The truth of the matter is the unmistakable march of history over the last twenty years is that when there's been increases in superannuation it's been put into part of the total remunerational pay increase of workers. So when you're getting super, you're not getting less pay. It's a deferred pay rise and the reward for a small part of your pay, being a deferred pay rise is you pay less tax on it.
Are you going to come up against problems if unions refuse to moderate their pay claims in the next seven years?
Well, I'm not surprised if unions are pushing for pay rises for workers. The truth of the matter is that by and large, if you are in a unionised worksite you get paid a little better than if you are in a non-unionised worksite. That's what unions do and I'm not surprised if some employers say well, we're going to give as little pay rise as possible. These things happen in bargaining and in negotiations.
But what I have is the sensible history that when superannuation went up from three per cent to nine per cent, business profits as a share of the economy were steady and improved. The cost of labour or the cost of employing people actually fell over that time and real wages increased steadily. The only way this could be a tax on business is if you never ever, ever for the next seven years plan to ever see your workers get more than they're getting in 2012.
Now, ever since the convict era, wages have progressively gone up over seven years. What we're doing is making sure that a modest portion of it goes into compulsory savings. The reward for that is it's concessionally taxed and by the way, Australia is one of the few nations where our savings are bigger than our annual GDP.
So what we've done through superannuation and what we will continue to do is be the nation builders of Australia. Better retirement outcomes for people, more money available to invest in Australian companies. I just wish that this move from nine per cent to twelve per cent had happened twenty years ago, so some of the older viewers, who might be watching this this morning, who are looking at retirement, would have more money saved than they otherwise would.
What do you make of Andrew Robb's comments that it's going to knock the stuffing out of employers and that's a quote from him?
Well, I don't think he's right. If he was right, when the superannuation went up from three per cent to nine per cent, we'd have had an increase in unemployment. It went down. If Mr Robb was right then why did unit labour costs fall? If Mr Robb was right and said superannuation's dreadful, why do are they themselves in the opposite side happy to collect fifteen per cent or defined benefit?
I want Australians not to retire poor. You know, this argument that but for superannuation we'd have a different economic outlook, there is no free lunch in life and society. We're living longer than ever before. What are people going to live on when they retire? Too many superannuation accounts now are still too low. So, this argument that if we don't pay super, we'll have some sort of nirvana of economic enterprise isn't borne out by the facts. Because if we don't have super when we're - if we don't - not everyone is as rich as some of the supporters of the Liberal Party and if we don't have superannuation, what are people going to live on when they retire?
Yeah. Okay, Mr Shorten thanks for your time this morning.
Thanks very much.