||Issue No. 147||09 August 2002|
A Call to Action
Interview: Save Our Souls
Unions: Rats With Wings
Bad Boss: If The Boot Fits
History: Political Bower Birds
International: No More Business as Usual
Corporate: The Seven Deadly Sins of Capitalism
Review: Prepare To Bend
Satire: Bush Boosts Sharemarket Confidence: Shares his Cocaine Stash
Ten Click Walker 'Unfit for Work'
Casino Workers Overtime Jackpot
Abbott’s Task Force “Rank Hypocrisy”
Shipping Policy Blamed for Reef Damage
Combet Pushes Consultative Vehicle
Maternity Leave for Pacific Workers
Magistrate Endorses Health and Safety Rights
Contracts a Thorn in Workers' Side
Fringe Success for Workers’ Pick
The Locker Room
Week in Review
Labor Council of NSW
Save Our Souls
Interview with Peter Lewis
During the accord period, Labor championed the idea of universal superannuation. What's Labor's big idea for the 21st century?
On the fundamental issue of compulsory super it was to provide an additional retirement income, that the majority of low and middle income earners didn't access or didn't have access to. The first of our current discussion papers, and there will be two of them, focuses on broader choice and stronger protection and fairer tax. The feel is stronger protection, making sure the system is cost effective in what it delivers, that people don't pay unnecessarily higher fees and charges. Because higher fees and chargers mean a lower retirement income, that's a very important principal.
Do you see a responsibility for a Labor Government to actually be supporting certain types of super funds?
The Labor Government has an overall responsibility to ensure we have cost effective system and that there are not excessive fees and charges. That does happen in respect to industry funds or corporate funds or public sector funds for that matter, its not just industry funds that are cost effective. There's a responsibility to ensure that all Australians who have super, whether in an industry or not an industry fund, have a cost effective product that does not have excessive fees and charges.
So, you don't see it as Labor's role to actually champion the industry model?
It's not up to a Labor Government to prescribe that all Australians would be in an industry fund. The current system of industrial commission, state and federal, determining as an independent body, determining what's the most effective mechanism is a good system.
What do you see as the impact of the Liberal decisions in government to basically scrap the superannuation levy that was going to go up to 15 per cent if Labor had stayed in power after 1996?
Well, that was the co contribution. It was an incredibly short-sighted decision. If we'd got to 15 per cent we would have no arguments about the adequacy of super, it clearly would have been adequate. It was a short sighted decision, which has resulted in millions of Australians effectively having a significantly lower retirement income than they would otherwise have had. That opportunity has now been lost, because the money that was allocated in the budget for the co contribution model of three percent from the government has now been spent elsewhere, and I think the reality of the budget today is that that money will not be available in the future.
Your discussion paper has already drawn criticism from at least one union, the LHMU, who says that it's quite naive to be promoting choice and that really industry funds are the best way of protecting the interests of workers. What's your response to those criticisms?
I think if you look at the options paper, it recognises that industry funds are good value for money. As corporate and public sector funds are good value for money. But we also have to deal with the issues relating to entry and exit fees, I'm not criticising industry funds in that respect, but there are some products in the market that have entry and exit fees which shouldn't be allowed. We have to deal with that issue. We have to deal with the issue of excessive fees and charges, where they exist, and again I'm not critical of industry funds on that, they are good value for money. We have to deal with those issues and we also have to deal with the issue of multiple accounts. There are 24 million accounts for eight million workers, so again we've proposed an automatic consolidation regime, from which you can opt out, rather than consolidation, which requires people to opt in at the moment.
At the moment when you do move jobs that process is highly bureaucratic and quite difficult to manage. Is there a push to centralise that whole process?
Well the way I envisage a possible model working is the Australian Tax Office at the end the financial year would use TFN number and consolidate automatically into the last fund. That's the way I would envisage that working. We have to minimise the number of lost accounts, its clearly excessive at the moment.
Some on the progressive side of politics look at superannuation funds and think well there's a huge opportunity in using savings in an ethical way What does your paper have to say about the whole realm of ethical investment?
What we've said is that the majority of fund members now have access to investment choice, there's a category they can pick from, that's a good thing. But at the moment that is not available to all fund members and we argue in the paper that it should be made available to all fund members as a matter of right and that within the investment you would include an ethical investment option which the individual can elect to invest in if they wish. Again even where you've got investment choice being offered many do not offer an ethical investment area and they should do that.
It seems your package is more about offering consumer choice rather than actually having a vision how a super system should work in the broader social context. Is that something that you will also will tackle as you develop your policy?
Our second discussion paper will focus on adequacy of contribution levels, health and/or education and other accounts, women, investment and income streams.
What are some of the key issues you see in that discussion?
There is the issue of the role of trustees and some managers in exercising a greater level of accountability in corporate governance. And in respect to ethical investment there are issues there, there has been some quite widespread debate in the super industry about those, and the community for that matter. The paper focuses on broader choice and consolidation but with the very strong regulatory protection, and also on the tax issue as well.
On the general level there's a feeling within the community, particularly for younger workers, that by the time the baby boomers have gone through, there's not going to be really much of a scheme left for them to access, when they're at the end of their working life. Are you optimistic about the strength and durability of super funds?
What the current Senate Committee Inquiry which is looking at adequacy shows, is that a person who is in the system for most of their working life, that's the under 30s, their outcome with super together with the part or full age pension, will be a good outcome for them. The problem is with those who have only been in the system a short while, the people who face the most significant problem are those who've only been in compulsory super, which is the majority of the workforce, for the last 15 years. They are the ones who will have shortfall on a reasonable retirement income. They haven't been in the system long enough.
That's why the PMs saying they'll have to work longer.
Well, that's his solution, it's not a Labor solution, and I don't think we should be forcing people to work longer.
The other argument that is put around is that there is probably as good a return in investing money in property as in super. Have you a view on that?
In superannuation you have to diversify investment. Some funds have an investment in property, so there is investment in property. But I think its really important for a system to have diversified investment across a range of investment types. We've seen a property boom in some areas in Australia, although Tasmania is a bit different, where I come from. The other issue you have to look at is the long term average real rate of return, not the return this year but the average rate of return over the last 5 or 10 years, and even with poor returns this year, which most funds are going to experience, the average real rate of return is still very good.
Finally what are the risks if we don't get our superannuation policy right?
Well, the importance of super is to maximise the retirement income of Australians, and if we don't maximise the retirement income of Australians by having an efficient system, strong protections, an adequate level of contributions and fairer tax, then many Australian will struggle when they retire. The central issue is maximising the retirement incomes of Australians, particularly low and middle-income earners. Everything else is subsidiary to maximising the retirement income of Australians.
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