Thanks very much. Can I firstly thank [indistinct] for the very powerful welcome to country earlier on, and can I also acknowledge the traditional owners of the land on which we meet and pay respects to elders past, present and emerging.
Could I acknowledge the work of Mary and also Gary Dransfield and the board and all the staff at ASFA. As the Treasurer indicated, I want to acknowledge the importance of this conference and all the hard work that the whole ASFA team would have put into this conference, but also the key role that ASFA plays as an advocate and a thought leader year‑round and over a long period of time. So thank you to Mary and to your whole team, all who work with you, too.
Can I also acknowledge all of the other people in this room. I know that there are leaders from right across the sector. We’ve got leaders from funds, from regulators, from other parts of the broad financial services sector. When I was talking to my 11‑year‑old daughter this morning about my day, I give her a call at 7:30 each day to try and make sure she is awake, so she asked what I was doing. And I told her the first event was me talking to a thousand people from super sector. So she did point out to me that that’s far less than a Taylor Swift concert, but, nonetheless, I indicated to her that that’s my biggest crowd. So, again, this is impressive.
But it also made me reflect on the fact that having a thousand people in this room reflects the size and the importance of the superannuation sector and in a sense it’s a reflection of the broader importance of the issues that we’re talking about. And in making acknowledgements, I just wanted to say right from the start that to each and every one of you in this room, what you do is extremely important – extremely important for people’s retirement [indistinct] but important for our broader social cohesion and health.
And I just want to stress that the super sector for a long time has been [indistinct], I believe, to a broader social safety net, but I think the size of this room and the importance of the achievements that the sector and the government achieved over recent years reinforces the importance of super.
I talk to people in my electorate regularly, people who come from a community that has a great deal of social connection, people who have very strong set bonds with each other, people in the past in my electorate who came to Australia after World War II, people who aren’t wealthy, but people who have built up super. And I can see every day the difference that it makes to them. People who are older because of when they came to Australia, the fact that they have worked in Australia for decades, but super for them now does provide them more dignity in retirement.
Super adds to the amount of money that they and their family has on top of the pension. Super allows them perhaps the ability to travel back to where they came from to visit family and friends if they choose to. In very concrete ways in their lives, I see the benefits of superannuation. And then to think of the fact that the generations coming after them will have had much higher rates of super for longer period of their career, it pleases me to see that the super sector, which is already delivering so much, will deliver even more for generations to come.
So I just wanted to reinforce to everybody in this room that I see what you do as extremely important and impactful. I see it every day, and we often focus on broader numbers and statistics, which I love and are important, but I think it’s also important to go back to the primary purpose for why we’re here – which is to provide individuals and families with that support, that dignity, and I see it, as I’m sure you all do.
I also wanted to reiterate the words of the Treasurer in that I’m going to make some observations about some live issues on the agenda. But I think it’s worth occasionally just taking a breath and looking at some of the things that we’ve all achieved together. Super has always been a contested area for consensus. And certainly in my 7 years in parliament there have been some areas that have been the focus of quite intense debate, such as preservation and some tax issues.
But in the midst of all that there have been really important reforms over the last decade. And, in particular, over the last 12 to 18 months. And I want to reiterate the words of the Treasurer in saying that that’s a really important thing to acknowledge.
As he pointed out was the objective of super – which for me is a really important regulatory marker – is the fact that we’ve achieved 12 per cent in the super guarantee, which is the culmination of a very long period of effort – decades of effort – by many people in this room and successive governments. But that’s an incredibly important structural achievement.
As Mary pointed out, there’s the very important payday super reforms which ASFA was instrumental in advocating for and that many others in this room. A really important reform. The last estimates I’ve seen from the ATO was $6 billion a year not going into people’s accounts which should. And to make substantial progress on that will make a significant difference to some of the most vulnerable people in our society.
And then again as Mary informed about LISTO which was a significant reform for some of the most vulnerable people in our society – 3 million people will now benefit – an additional 1.3 million people as a result of changes that we recently proposed.
So, look, that’s a really important suite of reforms that have been either achieved or that are in parliament and I’m confident will get through. And that’s something that I think is really worth acknowledging. And as the Treasurer indicated, I want to acknowledge the fact that the government wouldn’t have been able to achieve those without the advocacy and leadership of people in this room.
Again, to build on Mary’s contribution and the theme of the conference, I think we are at an important juncture in the system. Again a couple of statistics which everybody in this room knows, just laying them out for context, the system is huge – $4.3 trillion – and within that system a significant number of people are either at retirement or approaching retirement over the next decade. Something in the order of 2 and a half million people. And putting that in context, that’s the population of the cities of either Brisbane or Perth.
It’s a very significant proportion of our population who are entering a phase where it’s very welcome for them that they’ll be entering retirement. But it’s also going to be a phase where they have to make some very difficult decisions. And I think some of the risks that I’ll point to later in my speech point to the fact that I think we do need to think through when people are making some of those decisions, firstly, how we can empower them better to make those decisions and, secondly, how do we put the right guardrails around the decision‑making so that people are appropriately protected.
I think that that that really raises the broader theme about the way in which the sector moves towards a greater emphasis on the retirement phase. I’ve been warned by many people to stop using the term ‘post retirement’, which technically does mean dead, I suppose. [Indistinct].
But if you think about that retirement phase and, in particular, for me one of the tricky elements is going to be that transition to retirement, which I think is already a complicated transition for many people. But I think you can expect it will become more complicated, more of a grey zone almost where people either taper out of full‑time work or maybe even get out of work. I think that as people transition to the retirement phase it does raise a number of questions both for the sector and for governments and regulators.
Again, I reiterate the Treasurer’s observations that there has been progress. We have achieved quite a bit when it comes to ASIC’s Moneysmart website which to me is an important tool for many hundreds and thousands to millions of people to obtain independent guidance. Another important related piece of reform which I’m sure many people in this room are focused on and probably will be the subject of some questions in the next session is the DBFO reforms. And I want to pay tribute to my predecessor, Stephen Jones, and all the work that he’s done in that space.
This is a very complicated set of reforms for reasons everybody in this room knows well. It’s also [indistinct] a set of reforms which, if anything, is now a little bit more nuanced given recent developments, and I’ll touch on that later. But I just want to stress to this room that I am committed to reforms, delivering reforms, which will enable people who can’t afford or for where it’s not appropriate for them to have full‑fee advice for them to receive appropriate guidance and advice.
So this is something that I remain committed to, the government remains committed to. We are working intently on this issue and we are moving towards the post‑draft‑legislation of the next set of legislation. But it is a complicated set of reforms, and I just wanted to flag that.
The other area that I wanted to flag was the work that the Treasurer is leading and that I’m working with him on in relation to the retirement phase. So there’s the development of the best principles framework, and that’s already seen extensive consultation completed. And also work that’s been undertaken in relation to data gathering in relation to retirement phase products. These are 2 very substantial steps forward in getting a better understanding of how we can move the system forward so that the retirement phase offerings by the private sector are stronger.
That’s important work which continues, and then there’s the member service standards work which I’m leading and which is now at quite an advanced stage. There’s been extensive consultation on that, and I do acknowledge and thank everybody in the room who’s participated in that. I see this as really important work. And in a sense, I think that what we’re moving forwards towards with this work is really ensuring that service standards are at an appropriate level and appropriately enforced level right across the financial services sector.
Superannuation funds, of course, now are dealing with millions of clients in many cases and dealing with them in a very heterogeneous range of circumstances. I think that the development of appropriate service standards and the enforcement of those standards is very important, as it is in banking and insurance and other areas of financial policy. So I think this is going to be very important.
I did want to touch on a couple of areas where strengthening systems that are in place is important. As Mary pointed out, cyber security is an area that is under active consideration by the sector and I applaud that. This is an extremely important area, and, in a sense for me, the cyber risks form part of a broader suite of risks, if you will, that the sector, as with other parts of financial services, are dealing.
Some of those risks share some characteristics with scams, with some of the investor risks that we saw with First Guardian and Shield [indistinct]. I simply point to that in saying that I think we need to constantly ensure that our systems are as robust and resilient to the every‑changing nature of risks that are emerging.
And so I do want to acknowledge that the superannuation cyber security collaboration coordination framework is very important because I think we need to make sure that the sector as a whole moves forward. I do also acknowledge that other parts of the sector are working on this, that SMC and FSC have also got work underway.
So as Mary said, we need the sector as a whole to work together. There’s a great deal of wisdom in this room, and government is really looking to the sector to work up solutions to this and bring them forward. So I do acknowledge all the work that Mary has been doing on this. She’s been very proactive, as has the broader ASFA team.
And then I just wanted to make some observations on Shield and First Guardian. It’s a distinct and separate set of risks, but they’re related in the sense they’re systemic and that they relate to very sophisticated actors trying to take advantage of vulnerable people. And they’re related in the sense that sometimes cyber breaches are being the precursor to subsequent scam or other investment actions down the track.
Shield and First Guardian are obviously very prominent at the moment in the public discourse and the media. They’re not the only collapses, they’re not the only instances of significant losses; they are the largest. But they do speak to, I think, some systemic issues that we will need to work through. I will just start by saying that I do acknowledge the losses that so many people have gone through. I know that people in this room interact with people after such circumstances. I certainly engage with many, many people who have lost significant amounts of money, and I understand the human dimension.
They write to me, I’ve met with a number of them in person, and I’ve read the transcripts of a number of the instances where aggressive originators reach out to people either through social media or other means who then have very lengthy conversations with people to try to get them to do things that were not in their interests. So there’s a human dimension to this which I’m very conscious of.
I think it goes without saying but I think it is important to explicitly say that we need to have a system where people can have confidence that, in particular, in areas where there is strong government oversight and where there is government [indistinct] that people can feel confident that there is appropriate oversight of the system. That confidence in the system is absolutely critical.
I would also say that I think it’s important to acknowledge that there is something disturbing about some of the new things that we’ve seen. First Guardian and Shield stand out, but I think for me they’re not something that we can assume is a black swan event because they have enabled, it appears, some parties to profit significantly. I think that we should expect that there will be parties that will continue to try to find ways to undertake similar activity.
The 2 things that stand out to me about the First Guardian and Shield actions – and, again this is based upon what we know today; there are actions underway to determine the facts in a more detailed way – but it does appear that this is a multi‑layered attempt to try to manipulate people. There appear to be actions by originators. There appear to be actions by some advisers. And then, of course, there’s the role the actual product designers and managers have played, MISs in particular in First Guardian and Shield, and then the role that obviously platforms have played in [indistinct].
So it’s a complex ecosystem. And I’m using that word intentionally – it takes me back to the work of my predecessor in relation to scams. And I think we’re probably looking at a situation where we have to think in that way because we can’t think about regulating this area without thinking about all the different steps in the chain, I don’t believe. So that ecosystem approach I think is important to bear in mind.
The second thing I would suggest that’s important for us to bear in mind is that this is not a static environment. The old cliché of a general is not fighting the previous war. I do think we need to as much as possible think in a way that is forward looking and resilient to ways in which we might expect people to adjust their behaviour. There is something very sophisticated, I think, in both what we see here but also what we see in the scams – the use of AI and other techniques.
And I think what that says to me is that we need to think about a response that is as resilient as possible. Now, that’s not going to be possible to foresee every single possible mode of action, but I just flag that that other aspect of what we’re seeing – the fact that it’s dynamic – is also something that I think is important to bear in mind.
In terms of what’s happened to date, I won’t go through all the details, but I did just want to flag that ASIC, they have been focusing on protecting investor funds. And I think that’s been the right focus. We’ve seen the agreement with Macquarie which is a very good outcome, and there are further actions in relation to other platforms.
I’ve written to ASIC and I’ve written to APRA in relation to a number of regulatory issues, and there is, of course, the outcome in [indistinct] the CSLR. So I just foreshadow that that’s an active area of government consideration, and I commit to working closely with all parts of the sector to move forward. I totally understand that I need to work with people in the sector to develop up detailed proposals in an area as sophisticated as this.
I just wanted to touch on, very briefly, 2 future areas. One is that the broader government is engaged in work in relation to our engagement with South East Asia through its work with Nicholas Moore on the South East Asia’s economic strategy. I’m fully conscious that the sector is already looking globally, a significant amount of the sector’s funds are invested outside of Australia.
I simply wanted to flag that the government, through the work of the Minister for Trade, the Foreign Minister and recently the PM’s engagement with ASEAN, are very focused on government helping our broader economy engage with South East Asia. It will be the fourth largest economic region in the world in the not‑too‑distant future. And I know I’m preaching to the converted, that this room is very conscious of the benefits of diversified investing. But we are already partnering with the broader sector. There was a $175 million co‑investment with IFM Investors’ Asia‑Pacific Debt Fund, a US 50 million investment with Plenary. And I really just wanted to stress that government is keen to play a facilitative role.
The other forward‑looking area I wanted to flag is the area of regulation. I’m looking to work with this sector on better regulation in a generic sense but even starting with what I consider is potentially low‑hanging fruit around reducing the burden of data asks. We have many regulators in the financial services sector and for good reason. Each of them has their own function.
I’m very conscious that they need high‑quality data but also that sometimes we can save a lot of expense and red tape on the industry side if we better align both the timing of the asks but also the content of the asks. So, I’m very keen to work with the sector on that. And we’re going to be holding a roundtable with all the peaks and the regulators in the not‑too‑distant future to work on some case studies of where we might be able to explore reducing that red tape.
So I just wanted to finish by saying I think there’s lots on the agenda. I’ve highlighted a couple of areas of risk which already the sector is leading on, such as cyber and First Guardian and Shield and other collapses where we’re all going to need to work together.
But I do think it’s worth noting that we have a world‑leading system. We have a system that is routinely ranked in the top handful, and there’s so much that’s been achieved, I did want to acknowledge that. That’s really important for us to take stock off, but that there are areas to strengthen – the retirement phase and areas of regulatory [indistinct].
I’m really keen on all of those issues to work closely with the 1,086 people in this room and the sector more broadly, and I thank you for all that you’ve already provided and guidance and advocacy in my early stages in the portfolio. Thank you very much.