Sally Sara:
Well, turning to federal politics, and One Nation spent the first day of the parliamentary sitting week defending its superannuation policy. The proposal would allow renters and mortgage borrowers to carve out a quarter of their 12 per cent super payments for up to 3 years. Industry peak body, the Association of Superannuation Funds of Australia, has labelled the proposal ‘economically disastrous,’ saying it would push up inflation while making people poorer in retirement.
Daniel Mulino is the Assistant federal Treasurer and the Minister for Financial Affairs. I spoke to him a short time ago.
Daniel Mulino, welcome back to Radio National Breakfast.
Daniel Mulino:
Thanks very much for having me on.
Sara:
A few issues to get through this morning. But before we get to superannuation, the Centre for Public Integrity has found that three‑quarters of an invitation‑only half‑a‑billion‑dollar grants program was directed to safe Labor seats and marginal seats that the party wanted to win at the 2025 election. Former Justice Anthony Whealy says the government needs to justify the process it has used. Are you confident that there’s been no misuse of taxpayer money in this program, the Major and Local Community Infrastructure Program?
Mulino:
So my understanding is that this is long‑standing practice, consistent with long‑standing practice, where grants programs will be stood up in order to deliver election commitments and that there are protections as part of that that applicants will be required to prove public benefit. But that really this is about making sure that governments, when they make commitments during an election, have a process after the election for delivering those commitments in a timely way.
Sara:
Why was it invitation only rather than having it open?
Mulino:
Well, I think it’s because this is a process which is there to deliver these specific election commitments, and so there has to be a demonstration of public benefit. And there are processes, for example, whereby the minister won’t approve any programs in their own electorate –
Sara:
But that’s the approval; this is who it’s open to. Why not have it open rather than invitation only?
Mulino:
Well, because it is a specific kind of grants program which is designed to deliver election commitments, and that’s something which is specifically set up after an election in order to allow governments to basically follow through on what they’ve promised to do.
Sara:
So it looks from this investigation that $3.20 was spent in notionally Labor‑held seats for every $1 spent in a non‑Labor seat. Is this sports rorts all over again?
Mulino:
No, no, as I said, this is long‑standing practice. My understanding is –
Sara:
What does that mean?
Mulino:
– governments have done this for a long time with certain protections around it, which is a way for governments to deliver their commitments after an election. So if you’re setting up a grants program to fulfil a certain specific policy goal, then you would set it up in such a way that there might be selection criteria and have it set up in different ways –
Sara:
Which other programs have been invitation only?
Mulino:
I don’t have the details, but my understanding is that –
Sara:
But this is something that happens all the time, doesn’t it?
Mulino:
– that after elections, that grants programs are stood up which allow governments to deliver their promises. And that this is a particular kind of situation, as I said, that is common for governments to undertake in order to deliver those commitments.
Sara:
So how do you explain the fact that more than 70 per cent was spent in notionally Labor‑held seats?
Mulino:
So each government, as they enter into government after an election, will have made certain commitments in different policy areas, and in this particular area –
Sara:
So why commit to spend 70 per cent in Labor seats?
Mulino:
Well, this is the decisions that were made in the lead‑up to the election; these are programs that were committed to in this particular policy area, and it’s important that governments follow through on their commitments.
I think people rightly would expect that if a commitment was made in an election that the government would follow through after the election and put in place processes where they can deliver.
Sara:
From your experience, how common is it to have an invitation‑only structure?
Mulino:
So my understanding is that this is the structure that is used in this particular context where it’s to deliver specific commitments that were made during an election. So that’s the context in which –
Sara:
So invitation only happens quite frequently?
Mulino:
Well, look, I don’t have the background on how frequently it’s used or not.
Sara:
But you’re the Assistant Treasurer; you know how these things work, right?
Mulino:
Yeah, but so my understanding is that it’s used when it comes to election commitments.
Sara:
Let’s move on to superannuation, One Nation’s superannuation proposal. In your view, what would this policy mean for inflation in Australia?
Mulino:
Well, could I, before answering that specifically, just take a step back, and I think this is a serious unwinding of our super system, which is one of the best retirement income systems in the world. We took decades to get to 12 per cent, and what One Nation is proposing here is to unwind that in a serious way. We got to the 9 per cent superannuation guarantee in 2002. They’re going to take us back decades in terms of how superannuation provides for security and dignity in retirement. What we’ve done is to provide people over successive budgets with increases in their wages and tax cuts that is responsible and consistent with responsible fiscal policy and being aligned with the Reserve Bank.
A number of economists have come out, to your point, and said that if you were to undertake a policy such as this, unwinding superannuation to give people more money in disposable income quickly, that it may well have an inflationary impact. What I would say is it’s very clear that One Nation hasn’t modelled either that aspect of it or the impact that it will have on people’s ultimate balances. SMC undertook modelling which suggested that for a person who’s 30 years old on the median income, they would lose $25,000 in their balances by the time they retire, and 50,000 for a couple.
When One Nation has been asked about this, they haven’t thought this aspect of it through at all.
Sara:
What would it mean for pensions later on?
Mulino:
Well, this is exactly one of the points: that superannuation is there for people to have a more dignified retirement. It’s a key pillar of our system; it means that people will be more self‑reliant, will have more certainty in their retirement. What One Nation is actually asking people to do is to steal from their own future in order to boost their incomes now. It’s a very irresponsible approach.
What we’ve done instead is to boost people’s wages through the award, through increasing the minimum wage, and at every step of that process we’ve been opposed by One Nation and the Opposition.
We’ve also put in place 5 tax cuts through 3 different mechanisms, again all of those opposed or not supported by those opposite. So that’s the better way to help people with what I understand are cost‑of‑living pressures.
Sara:
Yesterday the Shadow Housing Minister, Andrew Bragg, told News24 the Opposition is ‘reviewing the intersection of the retirement and housing policies’. He had this to say about One Nation’s super proposal.
[Excerpt]
Andrew Bragg:
Anything that’s going to help Australians with their cost of living right now is going to be worth looking at. But I make the point that it doesn’t address the long‑term structural challenge here, which is that we see a doubling of retired renters over the next couple of decades. That’s a trend we want to kill because we want people to be in their own house when they are retired.
[End of excerpt]
Sara:
What do you think of that?
Mulino:
Well, what I would say is that Andrew Bragg and the Opposition and One Nation are the defenders of the status quo when it comes to the housing system and not changing tax settings which have created huge distortions. We’ve seen house prices double relative to incomes over the last 20 years. We’re doing something about that and the Opposition are defending the status quo.
We are trying to add to housing supply through the Housing Australia Future Fund; we are supporting first‑home buyers through the 5 per cent home deposit. So at every step of the way we’re trying to deal with these structural issues, trying to get people shifting from renting to owning their own home, and that will take pressure off rents. Every single area of this policy reform agenda is being opposed by the Opposition and One Nation.
Sara:
Are you confident that Treasury has got its modelling right when it comes to your capital gains tax and negative gearing and what it will do to house prices?
Mulino:
So the Treasury modelling indicated that it was likely that over the first couple of years the policies would see more people moving into owning their own home. And we’ve modelled that over the medium term or over 10 years, 75,000 people will shift from renting to owning their own home. But that over the first couple of years there would be a slight moderation in home prices, around 2 per cent a year. And what we’re seeing is that house prices at the moment are being affected by a whole range of factors, including international uncertainty, interest rates, but also a lot of commentary and speculation about interest rates, and this might cause some people to hold off on transactions.
So there’s a whole range of factors. We have seen house prices nationally since the Budget come off about 3 per cent. So some of the speculation in the media would have one believe that it was much more significant than that. What I’m seeing at the moment is that there is in fact a shift in home loan applications and other behaviour towards people owning their own home and towards owner occupiers, and we need to give these policies a bit more time to play out.
Sara:
Just finally, the ABC is reporting Australia and Solomon Islands have reached an in‑principle agreement on a landmark new treaty with the federal government promising to tip more than $980 million in additional funding into the Pacific nations as it tries to lock in the pact. Can you confirm that?
Mulino:
I’m not going to speculate on discussions, but what I would say is that we have invested significantly in our relationships in the region. These are incredibly important relationships –
Sara:
Will there be any announcements for that?
Mulino:
– this is our region. And when we came to our relationship with many Pacific island nations was weakened by the fact that the previous government didn’t put effort into those relationships and in fact was denying human actions contributed to climate change. So we’ve invested across a number of countries, and the Solomon Islands is a country that we are really engaging with deeply. I’ll leave the Minister to talk about the specifics of this one, but I think this is a region where it’s really appropriate that the Prime Minister, the Foreign Affairs Minister and other ministers have been engaging in great depth with our neighbours.
Sara:
Daniel Mulino, thank you very much for coming in this morning.
Mulino:
Thanks very much, Sally.