STEER:
Kelly O'Dwyer is the Assistant Federal Treasurer. Morning Minister.
MINISTER O'DWYER:
Good morning Adam, great to be with you and your listeners.
STEER:
Almost half of Australian workers belong to not-for-profit industry super funds, what's wrong with that? Why do you want to change the system?
MINISTER O'DWYER:
We don't have any problem with industry super funds. What we want to do is to ensure that we have a system that's simple for all Australians. We want to maximise their retirement income and what we want to do is to stop them being forced to have two or more super funds which means that they're paying double the fees, double the insurance premiums. We want them to be able to choose the superannuation fund that's right for them and that's right for their retirement income. Now at the moment, there are more than 20,000 enterprise bargaining agreements and about 26 per cent of those force people into a particular super fund where they have no choice about where their money goes. Now given that the Government forces people to save money for their super, they should have the final say as to where that money goes and that's all that the Government's trying to do. It's nothing against any particular fund, in fact there are retail funds that are also part of enterprise bargaining agreements, it's not just industry funds.
STEER:
So you're not just trying to undermine the industry super funds because they're backed by unions?
MINISTER O'DWYER:
No, not at all. There's nothing ideological about this at all. This is all about providing people with choice as to where their money goes and I think it's very hard to argue against that. There are a lot of vested interests who would like to be able to trade away peoples' rights, I had the example of a young man who wrote to me, he's a university student, he works part time at a supermarket and he works part time as a tutor. He has two superannuation funds because both of these employment arrangements are covered by an enterprise bargaining agreement. One of these funds is a retail fund and one of them is an industry super fund and he said why is it that I have to pay two sets of fees, two insurance premiums, why can't I choose my own fund? I actually think that's a legitimate question which is why we're changing it.
STEER:
It's one of four major changes you're lining out for superannuation. What are the other three?
MINISTER O'DWYER:
What we're doing is we are also making sure that we have the highest possible governance standards apply to our superannuation industry. We don't have a cottage industry anymore when it comes to superannuation. We're not talking about a couple of hundred million dollars, which would be the cottage industry, we're talking about $2 trillion of superannuation savings which is moving to $9 trillion in the not-too-distant future. We need to have the highest possible governance standards apply to those funds to again, make sure that we preserve peoples' retirement incomes. There have been two separate recommendations made by two independent committees – David Murray with the Financial System Inquiry that said we need a third of independent directors and an independent chair on these fund boards, and also Jeremy Cooper under the previous government who made a similar recommendation that we have to move with the times and make sure that we have the best standards that apply. We've seen what happens with the royal commission when you don't have good governance that applies. These standards will apply across the industry, not just to industry super funds but to corporate funds, to retail funds as well, and we think that will place us in the strongest possible position to have the best super funds in the world.
STEER:
Is it ideologically based these changes or not? Because the criticism is that you're just trying to undermine not-for-profit industry super funds that, a lot of them, are backed by the unions.
MINISTER O'DWYER:
No, as I said to you before, it isn't specific to any one particular part of the industry. It applies across the board. These are not changes targeted at one part of the industry. As I said, it applies to corporate funds, retail funds and it applies to industry super funds as well. So we think that it's really important that it applies right across the industry. You've asked me about some of the other changes that we're making in superannuation – we want to make sure that when people choose their super fund they have enough information to make a really good decision about where their money goes, so we're making sure that we can compare funds better, that there is more transparency of information so that people can compare like with like before making a final decision about where their money goes.
STEER:
Successful Federal Governments have battled to get people to care about their super at all. What makes you think people will change their super funds if they have more choice.
MINISTER O'DWYER:
Well not everybody will change their fund. But what people who argue against this are arguing is that for those people who do care and who do want to change their fund that they should be stopped from doing that, now why should they be? There will be a number of people who won't want to change their super fund and they'll have a default fund where their money goes but for those people who do care – and there are people who care because they know at the end of the day, it's going to be the money they're living off in their retirement, or a substantial portion of the money they're living off in their retirement – they do care and they should have every right to determine which fund they choose.
STEER:
On other matters, Assistant Treasurer, is the Coalition decided that it will take the issue of raising the issue of the GST to the next federal election?
MINISTER O'DWYER:
No, I know there's a scare campaign that's being run by a number of people but let me say this, when we're looking at the issue of tax reform, we're not talking about simply hiking taxes which some people would have you believe. We want to make sure that we get the tax mix right and getting the tax mix right means lowering taxes overall, it means making sure that we can be competitive as a nation. I'm also the Small Business Minister and I understand this better than most because I know how important it is to get the tax mix right for small business. It's one of the reasons we announced in the Federal Budget a 1.5 per cent tax cut, company tax cut, for small businesses. We also know that there are a lot of small businesses that aren't in fact companies that are unincorporated entities and we've given them a 5 per cent tax cut as well. So we're looking overall at the tax system. That means getting rid of a whole heap of inefficient taxes, making sure that we can be a competitive nation. We are at the moment…
STEER:
But are you ruling out any rise in the GST or not?
MINISTER O'DWYER:
We're not ruling anything in or out at the moment. We're looking at the system holistically…
STEER:
But would you plan to take that to the next election perhaps?
MINISTER O'DWYER:
Obviously, we will take any proposal to the next election. We will absolutely take it to the Australian people for them to determine whether or not this is the right plan for Australia.
STEER:
So what type of concessions do you think you'll be offering Territorians who are already paying more for goods due to freight costs etcetera? What type of concessions do you think that you will look at if indeed you do raise the GST?
MINISTER O'DWYER:
Of course the Northern Territory receives a very large portion of GST payments compared to the amount that's actually raised in the Territory, I think that's the first point to make. But obviously we're going to look at this holistically and we want to make sure that states and territories who actually benefit directly from the GST, they're responsible for those GST dollars in that they spend every single dollar of the GST that's raised. None of it actually goes into the Federal coffers, it goes straight to the states and territories and the question I suppose that Territorians need to ask themselves is, is all that money being spent as effectively as Territorians would want? And that's a question that I think you should put to the state government.
STEER:
Kelly O'Dwyer, thanks for your time today, I appreciate it.
MINISTER O'DWYER:
Terrific, thanks very much Adam.