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

SHUTTLEWORTH: One of the questions that I’m just very interested in is you mentioned about competition and the whole MySuper, and it was how award modernisation fits in.

I guess, you look at that and you go, “It doesn’t feel like a level playing field,” where you’ve got award modernisation.

SHORTEN: The default fund, which, you know, this issue that retail funds think there is some sort of Shangri La, El Dorado, Lassiter’s Reef of monopoly rent-seeking by industry funds, and that but for the award system, the world would be different, and there would be all these serfs freed from the domination of industry fund who could flee to the happy lands and the sunny uplands of retail funds.

And whilst I’m being deliberately colourful, you know, at Beaconsfield Mine, if you were on an AWA, you could only be signed into the BT fund. And good luck to you for getting the arrangement – but I’m just saying that perhaps there’s a whole lot of arrangements which are complex. Perhaps there’s a whole lot of employers who’ve set up arrangements with retail funds because they do their banking with them, historically, and that’s the fund which is default. I’m just saying that perhaps it’s not quite one-way traffic.

Having said that, the government did commit to go to the productivity commission to have a look at how we can address this question; and I do accept that there’s principles of competition and not having monopoly access.

DELANEY: I’ve just got a couple of comments. The first one is that super’s and enormous industry now. I’ve been in it for 15-20 years; it’s just an enormous industry. The simple task is just gathering peoples’ savings today and pay them out tomorrow; it’s just a massive thing. Given the industry exists because of government regulation and government incentive, we don’t lose sight of what is our public duty, you know, what we’re trying to achieve. So we’re all proud of what we try and do, but what we’re really trying to do also, is trying to get a bigger share of pubic duty. I always think lobbying ministers is all about dressing up private interest as public interest, and I think that’s all of us trying to do that game a little bit.

I don’t mean to be idealistic, but the reality is, getting a decent retirement income for people of decent adequacy is an enormous task. You know, people are going to live to 85 or 90 years of age; the amount of money needed to be put aside for that is just massive, compared to what’s already in the system. It’s probably unachievable for most people, if it’s between the expectations and the reality, but if we’re going to do a better job of it, we’ve got to put more money going in, we’ve got to get better returns, we have to take less money out in costs in how we do it, and we’ve got to protect consumers – don’t get ripped off along the way. The task isn’t all that hard, it’s just focusing on the bigger picture and not what’s our own self-interest.

GRAY: One word I wanted to add to David’s list of words was “simplicity” – from a lawyer.

I don’t think anyone around this room would like to see some of the complexity that we’ve got in the FSR laws at the moment. What we’re talking about here is a lot of law reform over the next couple of years, and I think simplicity is the key. Complexity is cost, and that will cost, at the end of the day, members and super funds’ investors. So if I could just add “simplicity” as a key word to that.

In relation to the Johnson reforms, some of the reforms that we’ve been talking about today are probably going to take priority over some of the things we were looking at with Johnson, and I appreciate that, but I don’t want the Johnson reforms to be lost. I think the Johnson reforms really go towards the strength of the industry going forward, particularly the investment asset management part of the industry. Strength in the types of investments available to the members in our super funds is absolutely key that we encourage both our Australian talent back into bringing them back onshore, bringing that investment global equities managers, that talent overseas back into Australia, and to develop those business down here, just to build the strength of the industry. It’s absolutely key.

RUSSELL: I think it’s worth reminding ourselves how far we’ve come in the last 18 months. I mean 18 months ago, we had a minister who remained to be convinced that we needed more than nine per cent, we had a Treasury which was determined to unravel a lot of the tax preference in the system, we had a Treasury which had managed to focus the SG on the bottom – you know, zero to 45,000 – that had managed to bring a lot of attention to the benefits of a tax preference up the income scale.

I mean the industry’s taken a lot of chops in the last little while, but a lot of that came from that debate 18 months ago, where we were talking about…lifting the preservation age to 67, we were talking about whether we’d cut the [contributions] caps, we got rid of the age-based [caps] – and I think, at that stage, a lot of people started to wonder if it was government policy to actually support the SG because the SG was always intended to improve the retirement incomes the vast bulk of the population. It was really targeted between, you know, $50,000 and $150,000.

I think what the Treasurer at that stage was seeing was a certain government indifference or lack of support for the notion that there should be tax preference for SG because this is one of the few areas where ordinary people can save in a tax-preferred way. High-income earners can always save in a tax-preferred way because of gearing, and I think, at that stage, people started to have second thoughts about super. But in the last 18 months, I think we’ve gone a long way to redressing that. I think the Minister’s on the right track.

SHORTEN: The propositions which were raised about insurance and commissions on insurance, is that going to be carved out? We’re consulting on that issue; there’s some insurance which doesn’t take a lot of effort to sell, and there’s some insurance where people have got relationships with the insurance companies. I do also accept, having got a disabilities background, that in the case of some insurance products, the planners, the agents work pretty hard to get policies together.

So it’s a complex issue, doesn’t deserve a (unclear), so we’re consulting on it. But having good insurance, to me, is – I’ve become a bit of a convert after the bushfires, and also where you watch the underinsuring of people, and the non-insuring – now, people did that for all good reasons, but nonetheless – and especially with disability, where if you acquire a disability in Australia, absent an insurance policy, your quality if life is so much inferior, it’s moving first world, second world.

So I’m not anti-insurance, but by the same token, the whole thrust – the legitimate thrust of FoFA and the Ripoll Report is that people shouldn’t be getting remuneration through conflicted structures.

But I guess, to console your concern, I’m not an idiot; I get the TPD and the life insurance stuff, and again, you’ve heard my general philosophy about underinsurance is an issue which perhaps I was less aware of, until I got involved especially in the reconstruction after the bushfires. It is important, more than I’d realised previously.

In terms of some of the other issues, tax deductibility – you know, at some point, we’ve got to protect the integrity of our tax system. Don’t give me the big eyes, Mark.

I said that I liked planners, it’s okay, you know?

RANTALL: This is a way of proving it.

SHORTEN: Yeah, I know. There are many ways proving it though. I’m an imaginative person.

It’s hard, but you know, we’ve got to preserve the integrity of our tax system. We’re looking at that issue though; that’s not a definitive position.

On fiduciary duty, we are committed to the statutory test. I don’t know why that should be a particularly hard issue to resolve. I think people get that, and I actually think that’s a common theme, especially at the very professional end, and the committed end of this industry; people get that. We’ll just work it through, try and have a common sense test which doesn’t – I don’t know – make people reluctant to make any decision other than invest in cash or, you know, blue-chip equities, but you know, beyond that, I think we can get that one right.