CORTE:
Now, of course it was a big day for the financial industry to with regards to the super scheme. The emergency access to super scheme which officially launches today. Looks like on last numbers, I can see 900,000 people have told the ATO. They want to make an emergency withdrawal from their superannuation account we've got about a three trillion dollar industry here in Australia. And some of the funds are saying, we'll expect about $50bn of that to be taken out early under these emergency measures. Well Senator Jane Hume is the Assistant Minister for Superannuation and Financial Services and she joins me on Money News. Good evening, Senator.
HUME:
Hello, Brooke.
CORTE:
Hello. I can't go too much further without just quickly asking you about Virgin Australia, if you don't mind because that is a very big story.
We know many industries and many companies are under pressure. But the government seems like it's decided not to jump in and help Virgin Australia. And now we're looking at a very, very tricky situation with our aviation sector. We want two airlines in this country don't we?
HUME:
Yes. Well, I heard Lucas' report and you're right. Look the board were scheduled to meet as we speak and they will make the decision. It is their decision as to whether they should go into voluntary administration. They were after $1.4 bailout. But you look to be honest, buying chunks of corporate Australia is is not the government's core business. And there was some concern that there is private equity and potentially Super Fund investment out there and it's not really the government's place to crowd out the potential for that private equity or super fund investment.
CORTE:
Well, I know that message has been fairly consistent from the government. So it seems like that part sticks. Let's go to superannuation what's the number out today, how many people who've got registering their intent to draw down super early?
HUME:
Well, last night we had around 975,300 Australians who had registered on the MyGov website for early release of super. The applications open today and those Australians that were experiencing financial distress due to COVID-19 can now access up to $10,000 of their superannuation up until June 30th. And then potentially there is a second tranche available to them after the first of July up until the 24th of September.
CORTE:
And just to understand how it works. So after someone's registered with the ATO, then the funds get notified. And if that's all successful, the money comes into people's accounts in their own hands, what in the next week or so?
HUME:
Yeah, so once you've lodged your application via the MyGov website, the ATO will do an assessment and verification of that application will probably take about four days or the ATO do that assessment and verification. They'll then send instructions to the super fund and the super fund is then expected to put the money into people's bank accounts that they have nominated within five days.
CORTE:
What strikes me when I, I went to do an example of this today to have a look at that application process it's very, very easy. So I used it on my smartphone, I went into my MyGov, pretty much five touches of a button on my smartphone and I could apply for access to my superannuation early five touches. I think Superannuation funds are going to be absolutely swamped. Do you get a sense that maybe your figures are a touch light on as well?
HUME:
No well it's actually-
CORTE:
In terms of how many might end up doing it? Not that 975,000, the roughly one and a half million you're expecting?
HUME:
Yes, well we're expecting around 1.6 to 1.7 million Australians will apply for one or both of the tranches of the early release of superannuation. And that will equate to around $27bn. Just to put that into context, as you said before it's a 3 trillion dollar industry. 27bn is around less than 1% of the size of the industry. So while the numbers we've seen today are just the beginning, it's still early days, there's plenty of time yet for people to apply.
CORTE:
Yeah 3 trillion dollar industry are still struggle to get my head around those kinds of figures is number isn't.
HUME:
It's a big number isn't it? It it's actually, you know, it's big bigger than the ASX, it's bigger than GDP.
CORTE:
Bigger than GDP?
HUME:
That's exactly right.
CORTE:
One problem, though is we have this world class long term savings scheme and as some industry participants will say we've suddenly turned it into this short term cash box. There's a real problem explaining to people what superannuation is for after making this available to people.
HUME:
Well, I think we all know that superannuation is there to save for retirement. But these are-
CORTE:
Unless we are in trouble and then we can just jump in and grab it.
HUME:
Very exceptional circumstances. This is the first time we've done that in 30 years of compulsory super. But not only that, access to superannuation in situations of financial hardship has always been available. All that's happened now is that we've changed the definition of what financial hardship is, in a very temporary way to reach out and assist those people that would like to have access to their own savings in times of need.
CORTE:
We do kind of have to completely rethink what we're doing with our Superannuation now don't we? Because, it's supposed to build up for decades and now it's not.
HUME:
Actually a reasonably small proportion of most people's superannuation. But it's up to the individual to make that decision.
CORTE:
Totally.
HUME:
Accessing super now might outweigh the benefits of locking up their until their retirement and only individuals and families can make that call. This is really about giving people options, especially for those that are in acute distress, it's far better option to seek money through superannuation then you know, what's the counterfactual? You they might seek to find money through payday lending or credit card debt or selling a car. So this is about giving Australians a flexible financial options to help them a challenging time today when they need it most. And, you know, the superannuation industry have been terrific. They have really stepped up and said, the vast majority of funds have said, how can we help?
CORTE:
And we've got one of them coming up and certainly it is people's money and we've had a lot of people call this show to say, well, if it's my money and I need it, then it's good I can get it. But, yeah there's a bigger debate that people will have and they're already having, of course, as you know, great of you to join us and explain that to us because it was a big day for that part of the government stimulus. Senator Jane Hume, Assistant Minister for superannuation financial services. Thank you very much for joining Money News.
HUME:
Thanks very much, Brooke.