New Liberal senator Andrew Bragg has called for superannuation to be scrapped for all low-income workers earning less than $50,000, with consideration of making it voluntary for all.
Defying Prime Minister Scott Morrison’s request for Coalition MPs to toe the line on the super debate and not publicly discuss options the Liberals didn’t take to the election, Senator Bragg used his maiden speech to call for radical action.
“Super should be made voluntary for Australians earning under $50,000,” he said on Wednesday.
“Taxpayers could simply tick a box to get a refund when filing an annual tax return.”
“I do not believe the system is working for Australians. Certainly, the case has not been made for ever bigger super. I would change direction: superannuation should be made voluntary for Australians earning under $50,000.”
— Senator Andrew Bragg (@ajamesbragg) July 24, 2019
Senator Bragg said he had commissioned modelling from Rice Warner actuaries, which estimated a $1.8 billion saving to government in the first year if super was abolished.
“According to the Grattan Institute, Australians spend $23 billion on energy costs each year, but we spend $30 billion on super fees,” he said.
“Super is a classic case of vested interests triumphing over the national interest. The fees are too high, there is not enough competition and there is insufficient transparency.”
The senator for NSW described the compulsory super scheme, which has remained bipartisan policy for decades, as a “strange but huge experiment”.
“Super is making home ownership so much harder for lower-income Australians,” he said.
“The Centre for Independent Studies found that the average deposit for a first home has doubled between 2000 and 2015. Since super started in 1992, every single age group has experienced lower levels of home ownership.”
He said the last Intergenerational Report showed about 80 per cent of people would take a public pension in 2055.
“That is not good enough after 70 years of compulsory superannuation. Unless the next edition favourably answers these questions, I would be inclined to make the whole scheme voluntary,” he said.
Senator Bragg is a former Liberal Party director, appointed by Malcolm Turnbull. His background is in the financial services industry.
The PM and Treasurer Josh Frydenberg moved swiftly on Wednesday to shut down debate on allowing workers to use super to buy a house and also include the family home in the pension asset test, after another NSW Liberal MP Craig Kelly floated the option with The New Daily.
Whether the family home is worth $100,000 or $10 million, it is exempt from the aged pension assets test – a feature of Australia’s retirement income policy that economists have long debated.
— Kristina Keneally (@KKeneally) July 24, 2019
In Parliament, Labor’s treasury spokesman Jim Chalmers sought to suspend standing orders on Wednesday over Mr Kelly’s comments.
“The member for Hughes has called for the family home to be included in the pension asset test, which means more retires will be pushed off the pension, out of their homes or both,” Dr Chalmers said.
But Attorney-General Christian Porter shut down Labor’s attempts to debate the issue.
Mr Frydenberg took to Twitter to respond to Labor’s attacks.
“Labor’s claim that the pension assets test will be changed to include the value of the family home is a lie. It’s not our policy and it never will be,” he said.
But within hours of Mr Frydenberg insisting the government will not delay the super guarantee timetable to reach 12 per cent by 2025, Liberal senator James Paterson was calling for a retirement incomes policy review to consider the idea.
Senator Bragg then used his maiden speech to lash the industry and warn low-income workers would be better off taking the money now.
The New Daily is owned by Industry Super Holdings