CHRIS KENNY:
Thanks for joining us, Jane. Congratulations, I don't think we've spoken since you entered the Ministry. Tell us about this area because it's been such a troublesome area for the Liberal Party – really, even while you've been in Government, they've been tinkering with super – that many Coalition supporters have not been too happy about.
SENATOR THE HON JANE HUME:
Great to be with you, Chris, and thanks very much for your good wishes. Yes, I'm fascinated by this area of superannuation and financial services, and it is going to be such an important area of progress and reform for the next few years for the Coalition Government. Now, superannuation in particular, it's $2.8 trillion industry now. $2.8 trillion of Australians' retirement savings are within the superannuation industry. That is 145% of GDP, just to give you a sense of the size. This is just a sheer volume of money. And, you know, the superannuation system requires Australian workers to quarantine nearly $1 in 10 of their earnings away for potentially up to 40 years for their retirement savings. Now, that's a terrific scheme and there are more and more people each year who are retiring without having to rely on the aged pension. That's terrific, however, it's not an efficient system; and both the Productivity Commission, who have done a recent review into the efficiency of the superannuation system, and also Commissioner Hayne, as part of the Banking Royal Commission, have pointed out some of the inefficiencies of that system. So I think that before the superannuation guarantee is due to rise – and it's already legislated to rise to 10% in 2021 – we have an obligation as a Government, in all good conscience, to make sure that any more of Australians' money that goes into the superannuation system is managed as efficiently and as effectively as possible. There's a number of things that we've already done in that space, and there are some changes that are going through on July 1 – so next week – that will see a far more efficient system and reduce the costs for many Australian retirement savers. But there's still more to be done.
KENNY:
Yeah, we'll come back to some of those reforms in a moment because it's important to keep the fees down and keep it as efficient as possible. Let's just backtrack a bit though, Jane Hume, and firstly, what a lot of people approaching retirement and in retirement want is just stability with the rules; can you guarantee them that when it comes to tax treatment over this term of Government, there will be no changes from the Coalition?
HUME:
Yes, the Prime Minister has been very clear on this issue, that there will be no detrimental tax changes to the superannuation system for retirement savers, for those approaching retirement, and we made some quite significant changes in 2006 regarding the concessional rate to make sure that the system was more sustainable into the future. Those have passed, gone through now, and I think the dust has settled. But now, our responsibility is to make sure that it's an efficient system so that all Australians are getting the maximum benefit from their retirement savings.
KENNY:
Now, increasing from 9% to 10%, you're saying that’s already legislated. Of course, Labor were talking – and there's been lot of talk for a long while – of getting to 12% eventually, so you're not going to go beyond 10% at this stage? But that 10% will come from employers – that's not going to come from people's existing wages?
HUME:
Well, it is already legislated – the superannuation guarantee is now 9.5%, has been for a number of years. It’s legislated to go to 10% in 2021; and, indeed, it's legislated to go beyond 10% after that.
KENNY:
Right.
HUME:
However, I think that that gives us some sense of urgency – that we need to make sure it's an efficient system.
KENNY:
Is 12% already legislated, is it?
HUME:
Yes, it is.
KENNY:
To come in in which year?
HUME:
Off the top of my head it steps up over each year by half a per cent .
KENNY:
By half a per cent. Are you committed to that or is that an issue you could re-examine? Because there's a lot of us who think that perhaps it's not the best idea or best use of our money to have that percentage of it compulsorily put into super.
HUME:
Well, we're actually undertaking a retirement incomes review, which was one of the Productivity Commission’s recommendations, and the Treasurer announced that the Government would consider that review just before he jumped on the plane, I think, to go overseas a couple of weeks ago. The terms of reference of that review are yet to be established, but it will analyse the way that the superannuation system intersects with the aged pension system, and also the effect on national savings. Now, there is no intention at this stage to wind back the legislation that will see the superannuation guarantee rise, but that demands some level of urgency to reforms to the system to make sure that Australians' retirement savings are being managed as efficiently as possible and at low cost.
KENNY:
Federal and State public servants, as I understand it, get 15% superannuation paid?
HUME:
I think that there are a number of different rates of superannuation guarantee for different employment agreements. Certainly, I think, the public service gets 15.4%; but that's optional. You can move from 9.5 to 15.4%.
KENNY:
It's preferential treatment for public servants, isn't it? They do get a pretty good deal out of the Australian taxpayer with additional leave entitlements, with permanent tenure in many cases, and an extra 5% superannuation?
HUME:
Well, look, I don't want to get into the industrial relationship between public servants – or anybody's industrial relations agreements that they may have. Suffice it to say that, at the moment, there are a number of employment agreements that require workers to go into a particular superannuation fund as part of their employment agreement, and that defaulting into a particular fund is something that we would probably consider addressing. The Productivity Commission have agreed that that is an inefficient system. Sometimes it forces people to go into either an underperforming fund or potentially into multiple accounts, which is highly inefficient.
KENNY:
Yeah, exactly, so you don't want multiple accounts because you'll have too much of your superannuation chewed up in fees. You obviously want to keep downward pressure on fees and you want to maximise choice, not force employees into prescribed funds?
HUME:
That's exactly right. Commissioner Hayne, as part of the Royal Commission, suggests that a system whereby accounts were stapled to the employee – that's a terrible visual expression but that's the way he described it! That was quite consistent with the Productivity Commission's recommendations too: that the default system is changed in such a way that the fund follows the member around, rather than the member having to change funds with different jobs, or enter into additional superannuation funds.
KENNY:
That would make a lot of sense especially given how many times people tend to change jobs in this day and age, to have your super fund go with you, instead of, as you say, so many people end up with multiple funds and that's very inefficient. Tell me, Jane Hume, about your thoughts on today's revelations going back to August last year and the suggestion that Malcolm Turnbull may well have spoken directly with the Governor-General to raise questions about the eligibility of Peter Dutton to be sitting in parliament and therefore raised questions about whether or not he'd be sworn in as Prime Minister if indeed the Party Room elected him.
HUME:
Yeah, look, these are revelations, I suppose, from the documentary that aired last night. Hand on heart, Chris, I haven't seen the documentary and I don't necessarily –
KENNY:
I don't want to diss our documentary. The documentary was stunning and brilliant –
HUME:
It was very good –
KENNY:
– and you need to catch up on it, but these revelations are from Paul Kelly on the front page of the Australian today and they raise this prospect of the Governor-General actually being roped into the Liberal leadership trauma. Is it the first you've heard of it? Does it concern you?
HUME:
It's not necessarily the first I've heard of it, it's the first the implications of that are probably – now, you know, we're now reading the, entrails, the chicken was gutted some time ago. Look, what I would say is those issues were not raised in my consciousness during August last year. I don't really want to rake over those coals. I would like to put that period of Liberal Party history behind us. I think that Scott Morrison has put together a really strong and united team. We have a terrific agenda going forward, and I would much rather look forward than look back on that particular week.
KENNY:
Going back five or six weeks, Christopher Pyne was the Defence Minister, now he's got a job lobbying on behalf of Defence industries. Is that appropriate?
HUME:
Look, that's an issue for Christopher to consider – and the clients that he deals with. It's not really for me to say.
KENNY:
But it's a matter of great public interest, and it's a matter of probity in the way the Governments deal with it. In principle, do you think it's acceptable for Ministers to step out of particular industry areas and then, within weeks, with no sort of cooling off period, while they're armed with all of the information that comes with being a Cabinet Minister, are able to be paid for lobbying in that exact same area?
HUME:
Look, I think Christopher Pyne was a highly skilled politician and he made a great contribution to parliament when he was there. The profession he's chosen to follow outside of politics is not illegal. There are no rules against it. It's entirely his choice – and also the choice of the clients to who choose to use his lobbying – so it's not really for me to say whether it's appropriate or not appropriate.
KENNY:
Well, Senator Rex Patrick has suggested the Government ought it to be looking at this, and surely it's relevant to public debate about probity and process and perceptions of all of that. You don't have a view at all about whether Ministers should be able to step into lobbying roles straight out of Cabinet?
HUME:
I'll be honest with you, Chris, it's not something that I've been turning my mind to in the last few weeks. I have been, you know, drowning in briefings on superannuation, financial services and, in particular, financial technology – and also some of the real priorities in that sector, because it is so important. This is a really important area of reform for this Government and that's what I've been focussing my attentions on.
KENNY:
Alright, Jane Hume, thanks for joining us.
HUME:
Great to be with you, Chris.