Bill Shorten on the Government’s reform agenda: “I like planners.”

TATE: Okay, ladies and gentlemen, we have 20 of the most senior executives of the industry around this table with a rare hour and quarter to address the key policy formulation issues and concerns. Who would like to be first?

REYNOLDS: I think the 12 per cent issue is the most important issue, and I’m glad that it’s really high on your agenda. With the tax summit that’s supposed to be happening next year, do you envisage that superannuation is going to get caught up in that, and again repeat, particularly, the comments that the opposition has been making about the Henry Review and preferring to go down that route with superannuation? Because that’s probably going to not help the debate, if we have to go backwards rather than forwards?

McCREDDEN: I was just going to comment, the adequacy debate is the most important issue. I know there’s a lot of technical ones, but I agree the solution is to get 12 per cent.

I think, you know, to actually sell that debate out in the [community] we need to sort of get a very quick view of what the communication strategy should be…we have to work out how that should be (explained).

The Australian population, in general, is reasonably [well informed]; if you put the proposition to them, we should be able to get them to understand it, and it’s about the adequacy, that we’re living longer, longevity, so people [understand] that nine per cent isn’t enough; 12 per cent probably isn’t quite enough.

SHUTTLEWORTH: I think everyone in this room would support nine to 12 per cent; I’d be surprised if they didn’t. For me, it’s also people’s ability to get money into the super system, and because we reduced the contribution caps and we’ve come off the back of a GFC, it’s what we actually do to encourage people to put more in. I know there’s tax implications that obviously you have to face into, but I was looking at flows in the industry of you combine a bull investment market that we had with the ability to put up to a million dollars in super, and in 2006, if I just look at the master funds category – which is master trusts wraps, corporate super – about $36 billion in net flows went in; in 2007, it was just under $50 billion, and last year it was $12 billion.

It’s the ability to look at contribution caps and what we do beyond just the nine to 12 per cent to really make it attractive because I think the fundamental issue with a lot of the reforms is loss in confidence in the system.

SHORTEN: Yeah, I agree with that.

WHITELEY: The lowering of the caps did, I think, have a disproportionate effect on people’s confidence because I think people don’t necessarily understand the detail of it. We’ve got to remember though, we’re looking at providing incentives for people to contribute to their super, but there is somewhere in the order of between – well, just under three million people that are receiving no tax concessions on the super contributions. That’s, in my view, a greater priority than assisting people who have maybe got the capacity to put tens of thousands of dollars into their super sometime in the future. There’s benefits to both – benefits to both – but looking at the two to three million people that are getting no concessions at all, is surely a priority.

SHORTEN: Do you want to expand on that and describe the two or three million people you’re talking about?

WHITELEY: Well, there would be a lot of lower income earners, people working part time, of course, whose income – or their marginal tax rate is at 15 per cent or lower. So they’re receiving no tax concession on the contribution they’re making to their super. Now, this is something which the government has looked to address, and they’re looking at a proposal where they will be rebating up to $500 which in effect – for people earning, I think, under $36,000 – would mean they’d be getting a tax concession, so we’re looking to address it. But I think what happens a lot in our industry is we tend to focus more on those members of the community that can afford to contribute more, and we need to do that – I’m not diminishing that, we tend to focus less on those for whom compulsory superannuation was first set up. These are the people that need the system so they’ve got something to retire with. It’s not about having, you know, the icing on the cake; it’s about having something to retire with.

SHORTEN: I appreciate everyone saying they support focusing on 9-to-12 and that people support this, and I don’t wish to verbal anyone in the room, if someone doesn’t support going 9 to 12, please let us know.

There was something which I think John said about we’ve got to rebuild some confidence in the sector, and there’s a couple of core operating principles or values of superannuation which we need to constantly have front of mind. One is, it is treated concessionally; two is, it is compulsory; and those two have to go together like, you know, Jack and Jill. If you are going to tell people they can’t access a portion of money now, the compulsory nature, it has to be concessional, and I think that it’s dangerous ground for a government or an opposition to start tangling too much with concessionality.

But the other thing which I think needs to rank up with the first two Cs of compulsory and concessional is certainty.

I think that certainty’s got to be something we do; at some point we have to bed down the debate and say, not, “That’s it” – there’ll always be things which come up; you should never be monolithic – but we’ve got to remove it a bit from the day-to-day political hurly-burly because I think one of the things which undermines confidence in superannuation, obviously continued poor performance, definitely, but I also think that inconsistent tax treatment under – people just get annoyed.

They’re trying to make long-term planning decisions.

So when we talk about adequacy, I think those three Cs underpin the debate about adequacy too. David’s right, we should – and John Brogden was right – we are proposing to provide up to $500 for people who earn up to $36,000, $37,000; that’s effectively handing them back their contribution.

I think that’s just good sensible stuff, but that comes with a cost; but we’ve got the mining tax.

But can I also just say – and this perhaps isn’t quite as en vogue – going to the point that was made about concessional caps and contributions: when people are in their 30s and 40s – and this is, of course, like all good demographic generalisations, you could find a hundred different exceptions to it – but I think, as a generalisation, it floats. You’ve got a range of costs in your life: your house, your kids – I don’t know, your divorce – whatever goes on in your 30s and 40s, but the point is you have a few ups and down, you’ve got to pay a few bills. But in your 50s, people do, I believe, get a bit of a sweet spot in terms of their earnings, provided their health is reasonable, provided they don’t lose their job, there’s an opportunity; women have returned to the workforce, there’s a chance to have a bit of prosperity. So I am supportive – strongly supportive – of the government’s measures to increase the concessional cap.

Now, I’m mindful of what David Whiteley said, that in a system with scarce resources, we should worry about the lowest paid punters, and that’s where my heart goes, but I think that if we want to have a universal consensus about the value of superannuation, people further up the food chain also have to see benefits.

It’s also that case that for a lot of middle class people, and let’s face it, most Australians are middle class – and by middle class, I just refer to people who earn a reasonable amount of money – well, they should have the opportunity because they haven’t had the opportunity in their 20s, 30s and 40s to be able to back-end load their savings plans. So I do think that it is appropriate – and that plays into that theme of concessionality.

I accept that what we’re saying about people over the age of 50, that they can contribute up to $50,000 a year, we’re reversing that earlier decision, which is smart; they can contribute up to – their accounts have half a million dollars – I suspect that over the effluxion of time, that will raise. It’s not policy at the moment, but I do think that as people grow older, and they focus more – you’d all appreciate the demographics, even of your lives, certainly of your constituents or members or indeed of your family members – I know as a former AWU rep, I couldn’t interest my younger workers or members in super, but somewhere in their early 40s, when we’re talking about pay claims and super came in, they switched on. I’m sure Andrea knows from the sort of demographic profile of people who’ve set up self-managed super funds, some of the trend I’m describing would exist, people engage more.