MICHAEL ROWLAND:
Let's pivot to federal politics. The Treasurer, Jim Chalmers's plan to overhaul Australia's $3.3 trillion super industry, a key part of which is the government's move to define the actual purpose of superannuation. The Assistant Treasurer, Stephen Jones, is in Sydney. He joins us now. Minister, very good morning to you.
STEPHEN JONES:
Good to be with you.
ROWLAND:
Want to start with the issue of trust and transparency before the election, the Prime Minister, then our Prime Minister, then Opposition leader, said on May the second, we said we have no intention of making super changes. In March before the election, the Shadow Treasurer, Jim Chalmers, told David Speers on Insiders, and I quote, "Australians should not expect major changes to superannuation if the government changes hands." Stephen Jones, on anybody's reading what Jim Chalmers is talking about are major changes. Why weren't you more upfront with voters about this before the election?
JONES:
We were. Quite simply, we were. We're talking about an objective of superannuation. I announced that we'd do it before the election. I told the Australian people, I gave a speech at a major conference in the superannuation industry saying we've got a policy that's been in existence we've got a major public program, superannuation that's been in existence for over 30 years. And every ten years we get a cycle of ideas about things that we could use people's superannuation savings for that have got nothing to do with retirement income. One of the reasons we have this cycle of madcap ideas is that we haven't done what several reviews of the superannuation system have recommended that we do, and that is have a legislated objective of superannuation. On Monday this week, Jim said we were going to do that. Okay, but we also -
ROWLAND:
You said before the election there wouldn't be major changes. How do you square that up with what he's talked about on Monday and what you say you talked about before the election?
JONES:
Yeah, look, I don't think there I think the comments that we've made before the election, the indications we gave before the election have to be viewed in the context of everything we said about superannuation. Yes, we're not going to be making a major overhaul of the superannuation system, but we also specifically said that we would legislate a purpose of superannuation. We also specifically said that we'd undertake a review of the way superannuation funds were being managed. We also specifically said that we wanted to form partnerships with superannuation industries to ensure that we could find ways to invest in the national interest. So I think those broader general comments have to be taken in the context of the debates that we've been having over the last three years where superannuation's very existence, has been under threat. Many within the other side of politics wanted to kill it. We wanted to preserve it and ensure that was focused on retirement income. And that's the debate we launched on Monday, this week.
ROWLAND:
Does the government want to kill some of these superannuation tax concessions?
JONES:
Look, we need to have a debate about it. As Jim said yesterday, on Monday this week, by 2050 we'll be paying more in superannuation tax concessions than we are on the pension. Now, that doesn't make sense if the policy was set up to ensure that people were less reliant on the pension as they retire and as we got an ageing population. So we got to look at it. There's a couple of areas that are just obvious. And if we all agree that the purpose of superannuation is to provide retirement income in retirement, it beggars belief that you could have $100 million in a superannuation account attracting very generous tax concessions that aren't available outside the taxation system. And that's about retirement income. Clearly, it's not. It's about tax management. It's about estate planning, but it's not about retirement income. So that's an obvious place to go.
ROWLAND:
What about a cap of five million, or as the Grattan Institute is calling for a cap of two million? Is that consideration on the table as well?
JONES:
We haven't formed a final view on that yet. I'm not going to say we're not thinking about it. Clearly, we are.
ROWLAND:
Okay, so you are thinking about putting a cap on either $2 million or $5 million of super balances?
JONES:
What we're thinking about what we're thinking about is what is a reasonable amount of money, which is consistent with that objective of having savings, tax assisted savings for retirement income. Let me be very clear. This is not about saying the government, saying people can't save more than $5 million, $10 million, $100 million for their retirement. That's not what we're saying. We're saying what is a reasonable contribution that the Australian taxpayer, through the budget, should be making to assisting people save for retirement incomes? To put that in context, the average retirement balance, the average superannuation fund balance at retirement is around about $150,000. That's a long, long way from $100 million. So we got to have a debate about how much we are willing to continue to subsidise these mega‑sized, oversized superannuation balances that clearly aren't about retirement income.
ROWLAND:
Okay. Speaking about large superannuation balances, the transfer balance cap, the amount of money you can have in pension phase for super currently is capped at $1.7 million. Care of indexation that is set to rise to $1.9 million in July. That's a bit of low hanging fruit there right there. Why don't you simply freeze that indexation?
JONES:
Sure. Again, government hasn't made any decision about these things. And it's our very strong view, Michael, that we start at the beginning, and that is getting a national and a parliamentary agreement on what the objective of superannuation is, the purpose of superannuation. And from that, we can then start having a conversation about what the reasonable level of assistance and tax concessions that should be available to ordinary Australians for that retirement income.
ROWLAND:
Okay, so freezing that transfer balance cap indexation is under consideration based on what you're saying.
JONES:
Look, I don't think you can make that, you can't extrapolate that at all, Michael. What I'm saying is we want to talk about the objectives. Yes, Jim and the government has squarely put on the agenda the fact that on current trajectories, the superannuation tax concessions, particularly those that are skewed very much towards excessively large superannuation balances, aren't sustainable over the long term, they're just simply not sustainable over the long term. That was pulling it out to the previous government. It's obvious to this government we'll have a conversation about the objective and then a conversation about tax support for retirement savings.
ROWLAND:
Lots of conversations ran super at the moment. Can we expect to see any changes to tax concessions in the May budget?
JONES:
Well, it's our intent. We've got a consultation paper out on the objectives of super which close at the end of March. We'd very much like to see a parliamentary agreement on that in the first half of the year. But I guess that in large part to part depends on whether we can get political consensus and national consensus around these foundational issues. I just want to stress again, I can think of no other area of public policy, whether it's Medicare, the national defence arrangements, where we don't have a very clear bipartisan understanding of what the purpose is that is so important to our national economy or our national security. It just sticks out as something that we've got to do and we intend to do it.
ROWLAND:
We'll see where the review lands. Stephen Jones, really appreciate your time this morning. Thank you.
JONES:
Great to be with you.