A Labor shadow Minister has claimed there is a ‘dirty dozen’ of Coalition MPs with the mission of “blowing up” the superannuation system.
The “plot of these conspirators was undisclosed” during the election campaign, Stephen Jones, Labor’s Shadow Assistant Treasurer and Shadow Minister for Financial Services told the Financial Services Council Summit.
Jones said the “primary target” of the ‘dirty dozen’ – referring to the 1967 movie – MPs is the legislated increase to the Super Guarantee rate, in increments, so it reaches 12% in 2025.
“Few of the Dozen have broken cover of anonymity. We do know that included among their ranks is the one time warrior for retirees the Government Chair of the Economics Committee Tim Wilson who has turned his attack on those whose only hope of saving for a decent retirement lies in superannuation.”
“It also includes a gaggle of precocious new Senators from Queensland, Tasmania and the newly minted Senator for NSW, your very own Andrew Bragg who used his first speech to Parliament to suggest that superannuation should only be a feature of our payroll system for workers earning over $50,000 a year.”
The Treasurer and Finance Minister have ruled out changes to the timetable for Super Guarantee increases, though the Prime Minister has been less committal.
Jones compared the 15% superannuation that the MPs are receiving to the 9.5% of those workers who clean their Parliament House offices.
“Each of the Coalition’s Dirty Dozen is collecting a minimum $32,500 in superannuation every year. I make no criticism of that. I am appalled that they want to design a system which assumes that low paid workers have no right to the independence and security in retirement that they are set to enjoy.”
It is “heroic” to assume that freezing the Super Guarantee rate will lead to wage rises, Jones told the conference.
“It is worth noting that the Governments Budget forecasts for the next for years assume a wage growth between 2.5 this year growing to 3.25% in 2020-21. The SGL increases are worth .5% per annum in five yearly instalments between 2021 – 2025: less than one fifth of forecast wage growth which factors in the legislated increase.”
“We are expected to believe that if we cancel those increases (not set to take place for another 2 years), then wages will increase today. It is fanciful. It is not a claim that is borne out by the evidence, or by common sense.”
“When the scheduled increase to 10 per cent in 2015 was cancelled, wage growth did not rise. It fell.”
“And to claim that employers are going to pay workers more in wages when they don’t have to – in a time when private and public sector wages are as stagnant as they’ve ever been – simply isn’t plausible.”
But Labor isn’t planning to return to its previous Super Guarantee timetable, or any faster increases in the rate. Jones said that Labor is “committed” to the legislated timetable for the Super Guarantee reaching 12% – a timetable set by the Coalition, and which Labor has frequently criticised. Though he did say that delays to the increases cannot be allowed to happen again.
Need to “tread carefully” with Royal Commission stapling recommendation
Jones, drawing on the findings of the Productivity Commission, said the cost to a member of defaulting into an underperforming super fund is “enormous” – with a bottom-quartile fund producing a balance at retirement 54% less than a top-quartile fund.
The Financial Services Royal Commission also made a recommendation on default super, for people to be ‘stapled’ to a single default fund which would follow them from job to job. But Jones says “we need to tread carefully” on this recommendation.
“We don’t want a system that locks Australians into bad funds. We want a system that pulls them into the best funds. We can do this with stapling – but we need the right approach.”
Industry Super Australia is opposed to ‘stapling’, instead proposing that super fund members are automatically rolled over into new default funds when they change jobs.
“And we need the underperforming funds to lift their game, cut fees, and boost performance. And if they don’t – we need to find a way for them to exit the market, without damaging members,” said Jones.
“This is my challenge to every superannuation manager in Australia. If we want to stop the attacks on Australia’s superannuation system, we have to do better. The future livelihood of everyday Australians relies on it.”