STEPHEN JONES:
An important week for superannuation. We launched a consultation on the objectives of super. We did that for a simple reason. There's been a lot of policy debate, but it hasn't been focused and we think if we're going to have a debate about the direction we want to take superannuation policy, then we should have a very, very clear understanding about what the destination is. And for too long, for over 30 years, we haven't had a clear understanding of what the destination is. If you look at any other similar area of government policy, Medicare, Defence alliance, education, there's a clear understanding of what the [indistinct] policy objections are. But in superannuation, you know, $3.3 trillion worth of funds under management, no clear objective and therefore we have a whole heap of whacky, sometimes well‑intended, sometimes not well‑intended, policy ideas which are thrown up and they aren't about the core objective retirement income.
I also want to say something because there's been a bit of hysteria in some sections of the media today about a policy that we don't have but the former government did have. There is some suggestion that the government has got a policy that we want to direct superannuation funds and how they invest their money. That was the policy taken into Parliament by Josh Frydenberg and Scott Morrison. We opposed it. We thought it was whacky. We think the best people to make decisions about Australian superannuation savings are the trustees of their fund, not the Treasurer, not the government. When Scott Morrison and Josh Frydenberg tried to do it, we roundly criticised them for it and we succeeded. It probably is still the Opposition's policy but it's not ours.
JOURNALIST:
I can go off that one, because I think there is concern by, including some of the media you've just spoken to is my own paper, about this idea that in this nation building sense in sort of directing super funds to potentially invest in areas of sort of national need, that is directing them what to do with their money. What's not quite clear is how that, whether it's a clear direction or not, reconciles with the best financial interest of members' duty and how the purpose would interplay with that. Can you expand on that?
JONES:
Our first, second and third principle is best financial interests of fund members. But if we can find some areas where the funds can make great returns, and that's great returns by investing in something which has a national interest in it, we'd be nuts if we didn't work in partnership with funds and the broad industry in doing that. I'm here at the SMSF Association annual conference. They have been lobbying me for over four years to do exactly this. The funds want to do it. They want to work in partnership with government to invest in things like infrastructure, whether it's roads, whether it's rail, whether it's ports, whether it's airports, whether it's health infrastructure or aged care. They want to do it. Many of them are already doing it. We want to lift that up and ensure we can do it in partnership and ensure we can remove some of the friction out of the process. The only party in Parliament which has introduced laws which would give the Treasurer and the government of the day the power to direct funds to invest in something or some other thing, is the Coalition. I'm not making it up. They introduced bills into Parliament to do this. We stopped them. The question for them, is this still their policy? Because it never was ours.
JOURNALIST:
When you say plans to sort of further ease the path for those sort of investment, are there any other incentives to encourage super funds to be in that space that are coming? For example, you talk about affordable housing. It is more profitable to members to be invested in regular non‑affordable residential property where you can charge full rent rather than subsidised, is there anything the government plans to do to ease the path to funds that may need to take a haircut on these investments?
JONES:
We don't want funds to take a haircut. If they have to take a haircut, they won't be at the investment table, simple as that. If an investment doesn't stack up and doesn't deliver commercial return for a fund, they won't be at the table and we don't want them there. So the job of government is to look for ways to ensure that it does deliver a commercial return, and if there are obstacles there, and often there's obstacles that are state government issues. So it might be sales tax or it might be sample duty or it might be other sorts of state government regulation. It won't be planning laws. That's why you have a round table, that's why you have an accord, that's why you bring people together and say, "What are the obstacles that are getting in the way of us building more houses and doing it quicker?" Let's use government's power and work with industry to ensure we can do it. Frankly, I just think it's common sense.
JOURNALIST:
Stamp duty's a big one. It disincentivises funds from investing in multiple properties. Will you be working with state governments to try and ease that issue at all?
JONES:
This is something that has been raised with government by the funds, by the housing industry, by lots of other stakeholders as well. We want to work with state governments, local governments and the industry to find ways that we can work through all of these issues. Now of course state governments have got revenue pressures on them as well as whatever we do in this space can't make it harder for one tier of government to provide basic services like health care and education and all the other services which people expect them to provide. So that's why you bring people together at a round table and say, "What can we do at the Feds? What can states and territories do? What can private capital do?" We're up for the conversation.
JOURNALIST:
There was a lot of discussion yesterday about whether changes to super would constitute an election promise broken. Today we understand that the Shadow Treasurer will be giving a speech where he will argue that the government doesn't have a mandate to make changes to super. What's your response to that?
JONES:
The government said before the election we weren't going to do any major overhaul of superannuation. We're not going to do any major overhaul of superannuation. But at the very same time we said we weren't going to do a major overhaul we specifically said there are things that we will do. So let me go through some of the things that we specifically said we would do. Legislate an objective for superannuation. Overhaul, review if you like, let me take that back ‑ review the operation of the performance benchmarks that were introduced under the former government to ensure that they are operating in the way that they are intended. We've conducted that review. We'll have more to say about that over the coming months. We've started the consultation process on an objective of superannuation. Yes, there are some stand out issues. If we all agree that the objective of superannuation is retirement income, it beggars belief to say a superannuation fund with 100 million dollars in it or more, and there are some with more, is about retirement income. Come on. It's not. It's about tax minimisation, it's about estate management, it's about something else. Come on. Fair go. That's not about retirement income. It's about something else. Yes, once we settle the objective, we'll look at those sorts of things. The overwhelming majority of Australians have a superannuation balance somewhere in the vicinity of $150,000 at retirement. Overwhelming majority have a retirement in that order. So the overwhelming majority of Australians will look at this and go, "What are you talking about?"
JOURNALIST:
Are there any changes that you've completely ruled out other than what you've mentioned today?
JONES:
Look, there's a whole bunch of stuff that's been thrown up and a lot of dust. I don't actually think it adds to clarity if I say ruling in, ruling out, ruling in, ruling out. I spoke to your station yesterday. I was frank and honest and said, yeah, we're looking at caps. It beggars belief to sort of say we're not ‑ I gave a speech in Sydney about this last year saying it's an anomaly, it sticks out. But other areas there's no big agenda. That's an anomaly. We're looking at that anomaly. But there's no other huge agenda. Fine‑tuning, not architecture. I must make this point. When the Prime Minister said no major changes, absolutely in the context of four years of the Coalition trying to knock off the superannuation guarantee levy, to stop it going from 10 per cent to 12 per cent, or 9.5 to 12 per cent it was then. We fought a vigorous campaign against that, and it was in that context that the Prime Minister said, no major overhauls. We're committed to going to 12 per cent. We want to ensure that Australians retire with dignity and certainty.
JOURNALIST:
What would you say to people who might have been watching the media storm over the past few days and might be concerned, what would you say to reassure them?
JONES:
Look, I have great faith in Australians' ability to pierce through the noise and the dust and understand what's going on. And when Australians hear about superannuation funds of 100 million dollars or more they go, yeah, that's not me and it's not the overwhelming majority of Australians. There's some tidying up to do in the cupboard but for the overwhelming majority of Australians there'll be no change to those arrangements. Can I say this, the very tenor of the debate over the last week is a reason why we need to nail the objective. There's people have been coming out with all sorts of stuff which is frankly not informed by either what the government is planning or what superannuation is about, and it's the very reason why we need to nail an objective, so we can have some sensible policy debate about this thing which Australians should be very proud of and are, $3.3 trillion, the world's fourth largest pool of pension savings, [indistinct] biggest economy, third or fourth largest pool of pension savings. People come to Australia to study our system and say, how can we implement that in the countries that we go back to? It's a bloody good system. Let's celebrate it, let's improve it. But let's not trash it.
JOURNALIST:
In terms of nailing down that definition though, some legal minds have pointed out that there's some sort of inherently subjective words in that definition which leaves a lot to play with for governments after, whether Labor or Liberal, after you guys. Are you worried by having a somewhat subjective objective that it may not stand the test of time?
JONES:
Look, if you removed every subjective phrase from the Australian statute books it'd be a good way to remove half the laws from the Commonwealth, but in this area there's actually a very good reason why you want to have something which can be broadly interpreted over time. We want Australians to have a dignified retirement. The purpose of superannuation is not to replace a modest pension funded by the government with a modest pension funded by private individuals. It's to ensure we can have a better retirement overall and better living standards overall. My definition in 2023 of what a dignified retirement is going to look like is going to be very, very different to what my kids' definition of that is and very, very different to what my grandfather thought. He didn't have a mobile phone or broadband. There are medical procedures and medicines and things that are available today that he'd never even thought of. As society's expectations change so will the definition of what a dignified retirement is going to look like, and so will the amount of money that is going to be required to fund that dignified retirement. So is that going to change. Can I make this point and hark back to a speech that was given by a good friend and mentor of mine, you might have heard of him, a bloke by the name of Paul Keating. He said in a speech to the Sydney Graduate School of Management back in 1994, the reason that we have to do superannuation and we have to make it universal is we've got an ageing population. Back then it was about one in seven, one retiree for every seven workers. It's one in four today. And he made the very valid point there are going to be more retirees as compared to workers. Their expectations of what is going to be needed in retirement is going to grow and therefore their call upon public services and public purse is going to grow. If we don't take steps to have private provision for retirement income now, the call on the public purse in the future generation is going to be greater. He made that point in 1994. It was true then, it's true today.
JOURNALIST:
Just a last one on SMSFs considering that's why we're here. Lots of obviously push back on a cap and concern particularly around a hard cap. There is this issue for a lot of these accounts regardless of why people have $100 million in super. The reality is they do and a lot of those are in unlisted assets. I've had farmers emailing me asking if they're going to have to sell their farm because it's in their SMSF. How is Labor going to navigate the fact that if there is some form of limit, whether it's hard or not, put on this that we may see quite ‑ people are going to have to sell down significant assets that may not actually be in the best interests of their own incomes or the broader economy?
JONES:
Let's get these things in order. First, let's have an objective. Nail that down then we'll talk about what that means for the size of superannuation fund balances. And can I be really, really, really clear about this. This is not about the government saying to any individual, a farmer, a small business person, a factory worker, a teacher, a nurse, you can only have this amount of money for your retirement savings. We're not saying that. We're not saying there's a cap on how much money you can have in your retirement savings and we're not saying there's a cap on how much money you can hand over to your kids in the form of an estate or your favourite charity. We're not saying that at all. What we're saying is there is a legitimate question to be had about how much the Australian taxpayer through the budget subsidises your retirement savings through generous tax concessions on savings placed inside superannuation. We're not saying to you that you can't have all of those other assets in some other form of savings vehicle or even inside a superannuation but without those generous tax concessions. We're saying to the Australian people, what is a reasonable level for us to subsidise a retirement saving given that we are currently spending about $40, $50 billion a year on tax concessions for superannuation? It's a legitimate question. That's nearly, you know, it's more than we spend on Medicare. Let's be frank here. We throw big numbers around. $40 billion, that's more than we spend on Medicare. It's almost twice what we spend on Medicare actually. So if you're going to spend that amount of money subsidising a social good, it's legitimate to ask how much are we supposed to, what is reasonable for us, what is a reasonable level for us to subsidise a dignified retirement? And how much should just operate outside of the enhanced savings and tax concession system? We're not saying to people, you can't save lots. You can. We want them to. Celebrate success. There is a legitimate question about how much should be subsidised by the taxpayer.
JOURNALIST:
So that does mean you're ruling out a hard cap and instead suggesting a levy on super savings or income above a certain level within an account?
JONES:
I just want to be clear: we haven't ruled in or ruled out any particular model, okay. I know you'd love me to say yes, rule in this, rule in that. We haven't ruled in or out any particular model. What we are saying is fair dinkum, $100 million or more for retirement savings, you're pulling my leg, aren't you?