DAVID LIPSON:
Well, Stephen Jones is the Assistant Treasurer and Minister for Financial Services. Stephen Jones, thanks for your time. I want to go straight to the words in the proposed statement on the purpose of superannuation that savings should be preserved, quote, "in an equitable and sustainable way". Now, is it equitable or sustainable for a few very wealthy people to have tens of millions of dollars in their super, reaping all the tax discounts that come with it?
STEPHEN JONES:
Blunt answer no, it's not. And the superannuation system was never set up to provide some means of estate planning or tax avoidance or literally to put tens of millions of dollars away for purposes which might be about saving, it might be about tax minimisation, it might be about handing an endowment on to the next generation. But it's not about retirement income. And superannuation is about saving for retirement income. When you think about all the tax concessions that go into it, we simply can't afford anymore to have a system being distorted, if you like, by a very small number of Australians taking advantage of a system which is supposed to deliver a benefit to all Australians.
LIPSON:
One way to make it more sustainable would be a cap. And there seems to be some acceptance in the superannuation industry that $5 million in super would be a reasonable cap. Can you name any reason why you'd need tax concessions once you go beyond $5 million in super?
JONES:
Very good question, David and I have flagged that the government wants to look at that. But we think it's important to ensure that we get these things in the right order. If we can get the nation to focus on the objective of superannuation, and if we all agree that the objective of superannuation is retirement income, retirement savings for retirement income, then I think we can all agree that somewhere between the $100 million balance that you talked about and something much more modest than that - you've mentioned 5 million. Maybe it's there. Maybe it's somebody - somewhere higher, somewhere lower. But I think we can all agree that an account balance of 100 million or even 10 million is not about retirement income, it's about something else.
LIPSON:
So when can we expect some action on those benefits?
JONES:
Well, that's why we want to have the conversation about the objective of superannuation first, and it's not just about those excessively high account balances. It's also about all the other ideas that get cycled through the policy debate every decade or so, whether it's housing, whether it's education, whether it's healthcare. Using superannuation as the magic pudding to solve every other policy failure is just not sustainable.
LIPSON:
The other parts of the proposed statement go to preserving a retirement income that is dignified. Now, what's your definition of dignified? I mean, is it dignified? Is the aged pension a dignified retirement income, or does it need to be more than that?
JONES:
We think the age pension is a base but I think the observation I'd make is whatever we think is sufficient for a dignified retirement today, we know that that's going to change over the course of the next decade. Because if you think back over the last decade or the decade before, broadband applications and mobile phones and a whole range of the services, telemedicine and video-based health and health video, none of these things were seen as a standard, normal part of life, but today they are, and for the generation that's retiring over the next decade, their expectations are going to be much higher than the expectations of anybody over the last 30 years. So I think when we're thinking about dignified, we're not just thinking about what we need today, but what we're going to need into the future, and ensuring that the needs of future retirees are going to put such a pressure on the Budget, that is simply going to be unsustainable.
LIPSON:
Because words like dignified, equitable - less subjective, right? I mean, that could mean that not only, as you say, our expectations will change, but whatever the government of the day believes those words mean, they can change the policy to suit, can't they?
JONES:
That's true. But if I could take you back to the discussion you just had, you were talking about whether we should or some people are suggesting we should cap superannuation balances at $5 million. Well, where we stand today, the average Australian woman is retiring with, or the median Australian woman, is retiring with a superannuation balance of around about $120,000. The median Australian male, $180,000.
That's a long way from $5 million. So somewhere between where we are and the sorts of caps that people are talking about lies "dignity". I don't think it's for the Australian government to prescribe each and every element of what might be a dignified retirement for one person and inadequate for another. I think we're a long way at the moment for having all of those things nailed down and we want to ensure that when we're setting our policy, it's fit for the future, not just the present. Which is why having that discussion around what we're trying to achieve through the system - dignified retirement, preserving savings, having a system that operates alongside government support an important part of a conversation.
LIPSON:
Stephen Jones, thanks for your time.
JONES:
Good to be with you.