SPEECH TO THE AUSTRALIAN INSTITUTE OF SUPERANNUATION TRUSTESS

16 Mar 2018

SPEECH TO THE AUSTRALIAN INSTITUTE OF SUPERANNUATION TRUSTESS
CONFERENCE OF MAJOR SUPER FUNDS

SENATOR THE HON DOUG CAMERON

SHADOW MINISTER FOR SKILLS, TAFE AND APPRENTICESHIPS

SHADOW MINISTER FOR HOUSING AND HOMELESSNESS

SENATOR FOR NEW SOUTH WALES

 

SPEECH TO THE AUSTRALIAN INSTITUTE OF SUPERANNUATION TRUSTESS

CONFERENCE OF MAJOR SUPER FUNDS

 

BRISBANE CONVENTION & EXHIBITION CENTRE

FRIDAY, 16 MARCH 2018

 

***CHECK AGAINST DELIVERY***

 

I would like to acknowledge the traditional Owners of the land on which this event is taking place, and their Elders both past and present.

 

Thanks to Eva Scheerlink - CEO Australian Institute of Superannuation Trustees for the invitation to be here today.

 

In his farewell address to the 2012 ACTU Congress, Bill Kelty, a pivotal figure in the development of occupational superannuation, outlined some of the great achievements of the Australian Labor Party and the Australian trade union movement.

 

These included modernising and growing the economy, national healthcare, national superannuation and the most effective minimum wage system in the world.

 

More recently it was Labor who steered the country through the global financial crisis and implemented the National Disability Insurance Scheme and paid family leave.

 

It is Labor governments who identify the great economic and social challenges and develop the policies to deal with inequality in a socially beneficial and economically responsible manner.

 

It is Labor who works with business and the trade union movement to increase the productive performance and international competitiveness of our nation.

 

It is the ineffectual Turnbull government that stumbles from one crisis to another focusing internally, failing to lead effectively.

 

It is the Turnbull government that lacks the courage and vision to address the emerging challenges of inequality, technological change, wage stagnation and housing unaffordability.

 

As the alternative government, Labor will once again have to address the issues of inequality, health, education, job security and domestic and international competitiveness.

 

As a young Metalworkers Union official in the 1980s, I was part of the movement’s campaigns to break the Fraser government’s wage freeze, develop the social wage through the Accord process, and win career paths for blue-collar workers.

 

One of our greatest achievements was to gain portable superannuation entitlements for working class families

 

In the early 80s, unless you were in management or a public servant you were reliant on the age pension in your retirement.

 

There was no portability of entitlements, no vesting of employer contributions and no concern by employers for the welfare of their workforce in retirement.

 

Employers, supported by the Coalition were opposed to the introduction of occupational superannuation and it took a Labor government and the ACTU to do two important things in tandem; increase the profit share of national income above 20 percent and spur investment.

 

At the same we made significant improvements to the social wage, including Medicare bulk billing, the pharmaceutical benefits scheme, superannuation, housing assistance, and home and community care for the ageing.

 

It would be impossible to achieve such wide-ranging and important social and economic change under the current industrial relations system which has resulted in wage stagnation and a decline in fair and effective bargaining.

 

This is an issue that Labor will need to address in government.

 

The declining rate of home ownership across all age groups is well known.

 

Among young people it is in freefall.

 

A result of the declining rate of home ownership and unaffordable house prices is increasing numbers of people approaching or entering retirement with a mortgage debt or reliant on private-sector rentals.

 

Under current policy settings, it is inevitable that this trend will accelerate over time as younger age groups already priced out of the housing market remain locked out.

 

Owning one’s home has always been seen as a pillar of retirement. It has been implicit in our retirement incomes policy that the vast majority of retirees will own their home outright and will have low housing costs.

 

For those retirees who didn’t own their own home, governments provided public housing; with rent charged as a proportion of tenants’ income.

 

This was a central feature of the social compact. It is no longer the case.

 

In the future, growing numbers of working class retirees face insecure, expensive tenancies in the private rental market where their housing costs are determined by market forces.

 

As Saul Eslake's paper prepared for AIST last March made clear, these trends have dire consequences for Australia's retirement income system.

 

As increasing numbers of people exhaust some or all of their superannuation savings to retire their mortgage debt, the superannuation system will in effect be tasked with paying for excessive house prices driven by tax policies that benefit the top ten percent of income earners.

 

In effect, the banks are going to have first call over your members’ accounts if they have a mortgage when they retire.

 

This is not the purpose for which a Labor government, and the trade union movement, established universal occupational superannuation more than 25 years ago.

 

Funding wealthy property investors was not what we fought for.

 

We know that reforming the tax benefits of the wealthy opens us up to the usual disinformation and scare campaigns from the Coalition and the vested interests that back the status-quo.

 

The same thing is happening around our announced reform of dividend imputation.

 

We will fight for these reforms because maintaining unsustainable and unfair tax expenditures penalises the vast bulk of Australians.

 

These are reforms that are good for the federal Budget and good for your members.

 

Removing distortions in the housing market will improve housing affordability.

 

As a former Trustee Board member, I would say to you that you have a duty to guard against house prices increases driven by speculative property investment and funded by tax breaks for the wealthy that result in your members' superannuation accounts being drained on retirement..

 

Our approach to reform of negative gearing and capital gains tax discounts on residential property investment will guard your members' accounts.

 

By the end of the decade, our negative gearing and capital gains tax reforms will be adding $8 billion a year to the federal Budget.

 

Labor will be making further policy announcements on housing before the next election.

 

Australian superannuation funds should be investing at scale in new affordable and social rental housing – here in Australia, not just in the United States.

 

It is an asset class whose time in Australia is coming.

 

It is not a traditional, cycle-dependant, speculative, commercial property play that will deliver short-term, double digit returns.

 

As trustees, you should be making sure your investment managers are doing some serious risk/return profile analysis on it.

 

I want to close with a twin challenge to you.

 

Firstly, I challenge you to think very carefully about the tax reforms that are necessary to take the heat out of house prices and to think very carefully about the consequences of doing nothing - when the banks raid your members’ savings to pay for house prices driven ever upwards by tax breaks for the wealthy.

 

Secondly, I challenge you to think through what you and your funds can do to develop investable products in affordable housing.

 

While you are doing that, remember the history of why you are here.

 

You are not here because of some mysterious outcome of market forces.

 

You are here because of the foresight of the Labour movement and the financial sacrifice of Australian workers. You are the product of a historic political settlement that should never be undone.

 

Like superannuation, housing outcomes are not the product of mysterious market forces.

 

They are the outcome of politics and as things stand, they’re working out very badly for your members. You have a responsibility to change this.

 

Thank you.