Superannuation system envy of the world - Transcript, 2SM with Marcus Paul





SUBJECT: Charities struggling for volunteers; Coronavirus vaccinations; Superannuation.

MARCUS PAUL, HOST: Andrew Leigh is the Shadow Assistant Minister for Charities and Shadow Assistant Minister for Treasury. And he's a regular now on the program, each and every Tuesday. Andrew, good morning to you mate.


PAUL: Great to have your company. Have you been well?

LEIGH: I have, indeed. I ran my first ultramarathon on the weekend - did a 50km trail run and pulled up alright. So life is good.

PAUL: Jeez, I walked around the block, Andrew. How do you think I feel? 

LEIGH: [laughter]  I’m a sucker for punishment.

PAUL: Now tell me, are charities still struggling from the COVID fallout at the moment mate?

LEIGH: They certainly are, Marcus, and we’ve seen that increasingly now charities are calling for new volunteers. Older volunteers had to step back earlier in the year and many are still self isolating. So one of the charities that's put out the call recently is Orange Sky, which is a terrific laundry service to the homeless and people with insecure accommodation. They put washing machines in the back of vans, drive around to places to help out the homeless, but also then provide those conversations and community connections. So they're calling for volunteers. If you've got spare time, then reach out to Volunteering Australia, the peak volunteering organisation. It can plug you into an organisation that needs help. It's a terrific way of giving back and I know many people have been stepping up this year.

PAUL: Just on another issue before we move on to super - I noticed that former prime minister Paul Keating had a bit to say about that last night - but just wanted to touch on this and get your thoughts. I see that Qantas is suggesting that passengers who wish to travel overseas in the next 12 to 24 months will need to have a COVID-19 vaccine before they travel. What do you make of this? Is it the - I mean, it’s almost is if Alan Joyce and others are suggesting that it should be compulsory. And I'm wondering whether other airlines will jump on board as well once a vaccine is available, Andrew.

LEIGH: What we have in Australia with kids’ vaccines is that you need to be vaccinated in order to get certain government payments. Some schools and childcare centres require vaccination in order for kids to attend. So I guess this is the airlines applying that same principle and recognising that if you're not vaccinated, then you’re a potential risk to others. My wife's born overseas and really missing her family, and I know so many of my constituents are missing loved ones overseas. There’s a real hankering to travel as soon as possible. 

PAUL: Alright. I just want to play a bit of audio from last night’s 7.30 just to preempt our next discussion. We know that the House Economic Committee held a hearing on Friday in relation to superannuation. Here’s former prime minister Paul Keating with Leigh Sales.

LEIGH SALES: What would you say to an Australian who said to you, ‘I get what you're saying about needing money for my retirement, but I need money right now, because I've got rent to pay, I’ve got kids and it's my money and why shouldn't I have it now if I want it and let later worry about later’.

PAUL KEATING: The report gave the answer. They said for every $10,000 that was allowed out in the release program for someone in their 30s, it cost them $100,000 later. So there’s a tenfold increase in leaving it in because of the compounding. So now we're talking about the half a per cent goes, from 1 July goes from 9.5 to 10. The half a per cent is $8 a week, two cups of coffee. So for two cups of coffee, people are supposed to walk away from their future. And of course, the other thing the Libs are up to is in the report - I'll just read this to you, what they want people to do, they say this ‘if the SG rate remained at 9.5 per cent and people made more efficient use of their retirement savings, many would have higher replacement rates than they would have under the SG at 12 per cent’. And what they mean by that is accessing home equity. So the idea is this - that you can do better than 9.5, you can just keep 9.5, you don't get 12 but you've got to eat your house. You've got to eat your own house by reverse mortgaging your house.

PAUL: Yep. What do you make of all of that, Andrew? I mean, there will be discussions to be had over this, but the compulsory superannuation - I mean, we were promised it was going to go up to 12 per cent. It'll sit around 10 in the next 12 months. 

LEIGH: Marcus, I’m on 15 per cent superannuation, as is Josh Frydenberg and all his Liberal colleagues who don't seem to want low and middle income Australians to enjoy 12 per cent superannuation. The fact is the legislated increase is slow and steady. It goes up to 10 per cent in the middle of next year, and it's not until 2025 that superannuation would hit 12 per cent. And it's doing that because we recognise that superannuation compounds, that money in superannuation grows and as Paul Keating has pointed out, it can be worth many multiples of what it is when you put it in. The Liberals have always been telling us that a dollar that wasn't put into superannuation is a dollar extra of wage gains. But that's not what their report says. Most of the estimates in their report suggests that to get a dollar of wage gains, then you you forego much more than a dollar of superannuation.

PAUL: Yeah. I mean, it is it true what he says. I mean, for the fact of an extra $8 a week, you know, two cups of coffee, if you choose - it's basically saying that if that if you forego all of these changes, you're going to lose out long term. And as he said, you'll have to eat your mortgage. I mean, that is basically when you reach retirement age that you will need to dip into either your savings or your capital, and that's not good for everybody.

LEIGH: It’s the magic of compounding returns. You find a low-fee fund, well managed, with a mix of diversified investments and just let those returns continue to grow. And that ensures that Australia has a retirement income system that is not just providing for those who are in high wage jobs, but for low and middle income Australians right across the board. Other countries are now looking to the Australian system and wishing that they’d set it up decades ago. American state governments are struggling under the burden of having to pay defined benefit pensions, European countries are unable to sustain their retirement income systems. So our superannuation system is a great national asset, but it was always intended that we would increase that superannuation rate. The problem is every time the Liberals get in, they break their promise. We saw it under Howard, we saw it under Abbott. Now we're seeing it under Morrison. 

PAUL: Alright, Andrew. Good to chat as always, mate. We’ll catch up soon. Thank you.

LEIGH: Thanks, Marcus. Take care.

PAUL: Alright. Dr Andrew Leigh, Shadow Assistant Minister for Charities and also the Shadow Assistant Minister for Treasury.


Authorised by Paul Erickson, ALP, Canberra.

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Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | [email protected] | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.