We got another taste of the critical relationship we have with our big banks as they recently jacked up their mortgage interest rates. But like them or not, banks and the broader financial system are a crucial part of our everyday lives.
So it’s an exciting time to be the new Shadow Minister for Financial Services and Superannuation, combining that with the sport portfolio and giving Penny Wong and Chris Bowen a hand with trade, investment and productivity as well.
There is a lot going on in these areas, with the Government’s response to the Financial Systems Inquiry released last week. We found some common ground with them, including the need for higher standards for financial advice, cracking down on credit card fees, stronger capital standards for our banks and supporting innovation in the financial sector.
The Liberals are no friend of your superannuation
There’s still a big gap between us in one area: superannuation. We know three things: superannuation is a proud Labor creation; it’s the envy of the world; and the Liberals are uncomfortable with it.
Faced with the challenge of reform, the Liberals are part of the problem not part of the solution. They’ve frozen increases in the superannuation guarantee; they’re abolishing the Low Income Super Contribution; and plan to lower the penalties for companies who don’t pay what they’re supposed to.
Now they are attacking the board structures of the best performing funds, which bring employers and employees together and which have consistently delivered the best outcomes for members. This is an ideological crusade against unions, imposing a ‘solution’ on a problem that doesn’t exist.
Labor’s approach to superannuation goes to the core of who we are and what we believe: that the financial system should work for people not against them and that everyone deserves a dignified and well-funded retirement after a lifetime of work.
3 ways we can improve our superannuation system
We want to make the system better, and we need to make it fairer and more sustainable for the future. Here are three ways:
One, we need to come together and agree that the overriding objective of the superannuation system is to provide adequate funds for a secure and dignified retirement that relies less on the pension. This seems elementary but there’s still some debate and that goal has never been written down like this before.
Two, we need to fix the superannuation tax concessions so that the overwhelming benefits no longer flow to the people who need it least.
Thirty eight per cent of the tax concessions in the system go to the wealthiest ten per cent. This makes it too attractive as an estate planning tool at the top end.
Finally, we need to address the gender gap which sees women retire with $86,000 less in superannuation on average. Labor Senator for NSW Jenny McAllister’s Senate committee will help us work out the best way to do this.
Implementing those three ideas would go a long way to ensuring that universal superannuation – already one of Australia’s best financial innovations – is even better, and is working for more Australians.
First published on the Labor Herald on 2 November 2015