Interview with Michael McLaren on 2GB Afternoons

‍Subjects: Superannuation, Super fund independence, US lamb, Self-managed super funds, Economic management, Housing policy, Opinion polling, Economic management

E&OE....

Michael McLaren:

I think it's pretty evident to me anyway that within the Albanese Government, there's a mindset that says, "Well, look, superannuation's there, $4.5 trillion. Maybe we need to broaden its franchise, get rid of the sole purpose test, and maybe do a dual mandate where it's, yeah, individuals have got to get a bit of a return, that'd be nice, but what about the country, nation-building, this sort of thing?" I think it's dangerous. Andrew Bragg has been speaking about superannuation since he was about two. He's the Liberal Senator for New South Wales, Shadow Minister for the Environment. It is one of his passion projects. He's with me. Andrew, good to speak.

Senator Bragg:

G'day Michael, how are you?

Michael McLaren:

I'm good. I think you came out of your mother's womb saying, "Super, super, super," or something, so it's been one for you.

Senator Bragg:

It's been a long time. Well, it's such a big issue, right? And it's such a huge incursion into people's personal liberty, and you want to make sure that it's working really well, and you want to make sure that it's being protected, because what Don Farrell said was really quite outrageous when you consider he's effectively saying that he wanted to breach the sole purpose test and effectively direct the super funds to invest into US lamb.

Michael McLaren:

Yep, okay. Now, it hasn't got a lot of attention, but the attention it's got certainly alarmed me. I had some words to say about it at the start of the show a couple of hours ago now. But you see, he's not on his own. Only two and a bit months ago, the Prime Minister was speaking at a Fin Review-organised event where he was speaking about super as being a “national asset.” Once upon a time, we all thought we knew what that meant, because it would help take pressure off the pension system, but increasingly, when they talk about the national asset, it seems that government, this government, see it as a $4.5 trillion honey pot that can help financially provide for their so-called nation-building ideas.

Senator Bragg:

Well, that's right, and that's something that they clearly want to do. They want to try and push it into housing. They want the super funds to become landlords. They want them to invest into clean energy, US lamb. You can see the risk here to the people who are forced to put their money into these schemes, and that's why I think you're seeing a huge explosion in self-managed super funds, because people know that if their money is in a self-managed super fund, that Albanese and Chalmers can't steal it or give it away to someone else. So I think what it also tells me is that the Government's afraid to have a debate about how you can better calibrate the housing and the superannuation systems, but they're happy to talk about it being invested offshore. So I just think their priorities here are really misaligned with what the electorate needs.

Michael McLaren:

Well, I agree. I'm reminded of a document that the Trump Administration released, I think it was last year, Andrew, following the face-to-face with the Prime Minister, and Kevin Rudd, of course, was there doing his thing, whatever, and it was from an American perspective what they thought they got out of the meeting and the deals. And the third point, as you know, was about finance, or economic matters. And it said clearly that by 2036, Australia's superannuation sector would invest, I think they said $1.4 trillion in the American economy, a trillion more than we do today. Now, either the Americans were going out on a limb or using modelling, or they'd been told something that none of us knew, and then, of course, along comes Don Farrell reaching into the glad bag and finding superannuation as a potential way to smooth the relationship with the American lamb producers.

Senator Bragg:

Well, Michael, Labor love paternalism, and so maybe they like the idea of the Government sitting down with a bunch of trustees and deciding where the money will be invested. I think that would shock a lot of your listeners, but I think that's ultimately what they're doing more of these days. They've got Greg Combet at the Future Fund, there's a bunch of former Labor MPs now running or chairing these super funds, like Wayne Swan runs Cbus, and maybe they think that they can direct the investments in accordance with their political objectives, whether they be for or against the national interest. And I just think it's very dangerous territory. Even though I've had my doubts about superannuation, I have always thought that at least the trustees were always trying to get the best return for their members. But if they're going to be pressured by Canberra into doing certain things, then I just think the whole system will go off the rails. People will lose confidence in it very quickly, and I dare say that the numbers already we're seeing with the flight of capital from the big funds into self-managed super funds, that people already are losing confidence in it, at least at the margins.

Michael McLaren:

Okay. Now, I know it's difficult to try to imagine what Don Farrell's thinking, but when he said in America, quote, "Australian super funds have an obligation to the national interest," what does he mean by that?

Senator Bragg:

Well, they don't, they don't. Their interest in law is to their members. That's it.

Michael McLaren:

Sole purpose test.

Senator Bragg:

And they're not allowed to take into account anything else. Don Farrell is the Deputy Leader in the Senate, so if he's no longer of sound mind, you know, he should consider his position, because that's not his portfolio, and his misreading there of the law is very material for a senior Cabinet Minister. I think it's very worrying, and perhaps that's why the Government's economic record has been so bad, because they really have no idea what they're doing.

Michael McLaren:

And as you just touched on a moment ago, Andrew, they're completely against the idea of younger Australian couples accessing, say, $50,000 out of their super today to try to get the deposit to get a property, which would be their greatest asset in retirement, providing, of course, the Government don't continue to stuff the property market up. But they seem now open to sort of riffing and flying kites about investing in lamb, you know, boxed meat or I don't know what it is, in Midwest America.

Senator Bragg:

Well, they won't let you use your own money to put a roof over your own head, but they're happy for your money to go to support US lamb. And I just think the way that Mr Albanese and Chalmers have conducted themselves in relation to this debate about how you can better calibrate the super and the housing systems, because, as you know, the key test of your success in retirement is your housing status. They're afraid of that debate. They've tried to raise money on the back of that. Jim Chalmers sent out a text message saying that Pauline Hanson and Andrew Bragg were trying to destroy the superannuation system, which was a lie. But they're happy to have a debate about how they can effectively underwrite the US lamb market. So, as I say, I think it shows their priorities. They are old-school paternalists. They think they know best. They want to sit down in a room and direct all the investment with their mates who used to be in Parliament, who are now on the boards of these funds. And I think it's very dangerous. Don Farrell frankly needs a lesson about how the laws work. I think it's very scary that a senior Cabinet Minister would be saying this crazy stuff.

Michael McLaren:

I guess it would almost be tempting though to—well, I'm saying this facetiously—let them get their way here if this is where they want to go, because I'd love to hear the hue and cry if the Coalition were to win office with this as now accepted practice, and say, "Well, okay, so you were willing to channel people's superannuation into, quote-unquote, 'nation-building' enterprises of your ideological persuasion. Well, okay, we'll tip a couple of billion into a nuclear power station, for example, and we think that's nation-building.” What do you reckon?

Senator Bragg:

Well, I just think we've got to be careful here, because they'll wreck the confidence in the system. As I say, I think people are already worried about the big funds, and that's why you're seeing this flight to self-managed super funds, because people think they can do a better job themselves, and in many cases, they can. And I think what you'll see is just a loss of confidence. People think that Canberra is effectively playing politics with their money. So I don't think this will happen, but I just think it's extraordinary that a senior Cabinet Minister would actually go on the record and say these things. Chalmers needs to pull Farrell into line here.

Michael McLaren:

Wasn't he saying certain things in Japan recently about super, as well?

Senator Bragg:

Well, I think he's struggling in the role. After almost five years as Treasurer, he's wrecked the Budget. The nation's financial trajectory is terrible. I think he's got a lot of problems to solve, and one of those should be to rein in Don Farrell. I don't think anyone's ever gone as far as what Don Farrell said last week. I think certainly Mr Albanese and Chalmers have made broad statements, but nothing as particular as encouraging the funds to invest in a particular asset class in a particular country.

Michael McLaren:

No. Well, at least the super industry pushed back for now. Let's see if they can hold the line. Just finally, as I mentioned, those opinion poll numbers keep coming in. To a degree, they're irrelevant because we're a long way away from the vote, but they do give us a bit of a sense of maybe the lie of the land. The Coalition clearly in front when it comes to the important issue of handling the economy, being best equipped to handle the economy, and by crikey, doesn't it need some handling at the moment? But that's not yet translating into an increase in the primary vote. Do you have a sense of why that might be?

Senator Bragg:

Well, I think people are frustrated with the system overall, because whether you're in a small business or whether you're a worker, you can feel the pain. And I think we need to do more on our policy flank to win the confidence of the electorate that we do have the right stuff to right the ship, and that's something that we'll be doing in coming months.

Michael McLaren:

All right, we'll keep talking. Thanks for your time, Andrew. Appreciate it.

Senator Bragg:

Thanks, Michael. Thanks a lot. Bye.

Michael McLaren:

Not at all. Andrew Bragg there, Senator Bragg.

[Ends]

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