ALAN KOHLER:
Shorten, setting up custodians with a charter goes some way towards depoliticising superannuation, but how far do you want to go with that?
BILL SHORTEN:
What I wanted to do today is start to put beyond doubt that we need to make superannuation a topic above politics.
One Parliament cannot bind the next Parliament. But what we have come up with is a proposal we create a charter of superannuation principles, one which any citizen in the nation can see.
Then we would have a charter group to draft that and then custodians to assess all future superannuation policies upon completion of the charter, assess them against the principles of the charter.
And some of the principles, I think, should include a commitment not to change things overnight. They should include a commitment to think about longevity, to get the right sort of agreed numbers on what the system is costing and what people will need for retirement.
We get these custodians, and then they can assess – it doesn't matter if you are Liberal or Labor, or whoever the Government, we need to get some independent people assessing proposals before they go – while they are in the Parliament before they go to Parliament.
KOHLER:
What will be in the charter?
SHORTEN:
That's got to be worked up but I mentioned some of the principles. It should go to longevity, it should go to adequacy, it should be about the importance of achieving adequate retirement incomes for people.
KOHLER:
Can all this be entirely independent, like the Reserve Bank say?
SHORTEN:
Well you know one Parliament can't bind another Parliament, but what we do know is we could create a body which is resourced, which has eminent Australians, which presents its findings to the Parliament and not just to the Government.
That will create a high degree I think of moral authority – and the fact that it would have the ability to report annually and to report to the Parliament, that is the first significant step we have ever seen in superannuation policy in the history of superannuation to take it out just of the hands of the Government of the day.
KOHLER:
Peter Costello's reform had the great advantage of being simple. You pay tax on the way into super, and you pay tax on the income in super, then it was tax free coming out. You've just made it much more complicated.
SHORTEN:
The Costello actions that you refer to were certainly simple but they were so extremely generous in concession that they're not sustainable and I, or someone who comes after me, will have to deal with this issue.
But the point about it is, no matter what your wealth in society you're still getting a tax concession. Our focus as a government, though, is to make sure as many people as possible can get the opportunity to one day have to worry about the tax you pay after $100,000 in earnings in the fund.
By the way, we're going to index that amount up as well. So I think that what we are doing is just ruling a line under an extremely generous part of Australian superannuation history – and by the way, Treasury estimates show that there's only 16,000 Australians who would be affected by these changes if they had $2 million and they were generating a 5 per cent return.
It is time we just tell the truth to each other as a nation. Everyone deserves support in retirement, everyone should get something but what I do believe is that once you are sufficiently comfortable, you don't need as much help from the rest of us as the rest of us need to give to each other.
KOHLER:
You're applying the tax on income in retirement, but you're not requiring superannuation payouts to be taken as income, as other countries do – why not?
SHORTEN:
What we're saying is, it's earnings within the pension. This would be a tax on earnings within the pension phase of your superannuation. We think it's still quite a simple system. The ATO will be capable of, if there's more than one account, of working it through.
The other thing I should say is that in superannuation everyone's got a theory about what should be done. For myself, I'm a conservative personality when it comes to superannuation. I want to see the middle-class of Australia, the people who don't want to rely on the aged pension, the people who earn average weekly wages and north of that, be encouraged to save for their retirement.
KOHLER:
Yes but Canada requires all of the retirement payouts to be entirely taken as annuities. Other countries such as the UK require part of it to be taken. And experts in Australia are calling for that to happen here. Why don't you do it?
SHORTEN:
You're saying why didn't we go further in changes? Well, that's what you're effectively saying.
First of all, we are going to propose that deferred life annuities get the same treatment as other superannuation pensions, so that's a big step forward, that is a big step forward. The Government doesn't want to startle the horses, it is important people have confidence in superannuation.
I'm taking the hard decision, as is the Government, to fix up the overly generous Costello anomaly. This is a sensible, modest change which says to people who are comfortable in retirement 'You'll still have a concession but this government's priority, the Labor Government's priority, is to get as many people as possible up into a greater level of comfort than they currently have'.
KOHLER:
Thanks for joining us, Bill Shorten.
SHORTEN:
Thanks, Alan.