Heidi Murphy: There’s a Liberal Senator named Andrew Bragg who’s today released a book about superannuation. It’s called “Bad Egg – How to Fix Super” and the Senator in that book is questioning what the system is actually delivering. He’s proposed a heap of changes to ensure at least 50% of retirees can be self-funded. He is on the line now, Senator Andrew Bragg, Liberal Senator for NSW. Senator good afternoon to you.
Senator Andrew Bragg: Heidi how are you, I actually grew up in Victoria so it’s lovely to speak to you.
Heidi Murphy: Oh good, well lovely to have you here, what on earth did you leave for?
Senator Andrew Bragg: Well I am still a very fervent Geelong supporter so don’t worry I’ve still got my tabs down there.
Heidi Murphy: Tell me, what is so broken about the superannuation system currently?
Senator Andrew Bragg: Well, the idea, of super is terrific but the execution’s been poor, it doesn’t get people off the pension and the fees are really very high. So, if we want the scheme to work it needs some significant surgery in my view.
Heidi Murphy: Yeah surgery how? We’re talking wholesale surgery, or just a little cutting of the unsightly mole?
Senator Andrew Bragg: It’s quite significant because I can’t think of any other government program which has run for 30 years without an objective. Super has no objective.
Heidi Murphy: It has a broad objective.
Senator Andrew Bragg: Well, but it should have a very clear objective to get people off the pension, to help people to be self-funded, and moreover there should be a target for the proportion of the population that we want to be self-funded and I think it should be at least 50%. For the moment we’re only getting about 30% of people off the pension and that’s the same until 2050. One other idea I’ve got is to allow people access to their super to purchase a first home because my view is if you can only have super or a home, you’re better off with a home.
Heidi Murphy: There has obviously been some early release of super as part of the coronavirus response from the federal government, and we’ve seen reports this week of that money being spent on fripperies, on gambling, on consumer goods, on pool tables and the like. Would you tie it directly to a house deposit. It has to go directly from the superannuation account into the mortgage?
Senator Andrew Bragg: My strong preference would be to drive higher home ownership and for lower income people in particular who find it difficult to get a deposit together. I think super is the most obvious place to go. Now there’s a strong correlation over the last 30 years between super starting and homeownership going backwards. So I think we should aim to allow super for that purpose.
Heidi Murphy: Yeah but you need it to go specifically into that purpose rather than just have it: Ah you can access this much for this?
Senator Andrew Bragg: Well I think we should start with homeownership, but then there’s also the principle at stake here that it is actually people’s money so if people have a good case to get their money they should be able to have it. I mean that seems pretty straight forward to me.
Heidi Murphy: It sounds like you’re throwing out the entire idea. You’re not just doing surgery you’re just shoving the patient off?
Senator Andrew Bragg: Well I think we should start with homeownership as I say, but I think if people have a strong reason and rationale for accessing their own money they should be given the money. I mean it is their money.
Heidi Murphy: There’s a similar system in New Zealand, isn’t it where you can access it early to use it for homeownership?
Senator Andrew Bragg: Yeah the same scheme applies in Singapore. I think this is a discussion to have and to try to be open about it. I mean every time we try and talk about changing super, the industry technical get in the way and they accuse people of being anti-vaxxers and all these other dreadful terms. But I think it’s a healthy discussion to have. I mean compelling people to send 10% of their salaries and wages each and every year off to a fund many people don’t engage with should be able to be discussed.
Heidi Murphy: Just to be clear are you an anti-vaxxer?
Senator Andrew Bragg: I’ve vaccinated both of my children!
Heidi Murphy: Good. Would you scrap super fees altogether as part of it? Super fees are obviously a fairly controversial part of the system.
Senator Andrew Bragg: Well the fees are $32 billion a year, that’s more than Australians spend on power bills each year. I think if we were to have a more competitive market where it wasn’t dominated by the unions and by the financial institutions we could probably get a better deal and try and cut those fees in half.
Heidi Murphy: Ok. I can see how that could maybe work. You need to take the industry along with you on this and I don’t see the industry going for much if any of these ideas.
Senator Andrew Bragg: The industry will hate these ideas which means that they’re great ideas because there’s no other sector in Australia which has been established by a government mandate. It’s acted as you would have expected to, quite privileged gets very shirty when anyone asks any difficult questions. So frankly, I was attacked quite significantly after my first speech and so I thought I would in fact right a book. So be careful for what you wish for.
Heidi Murphy: Do you think it needs to be thrown out entirely or just a whole scale redesign with some much more transparent structures in and around it? I guess what I’m asking, is there any value in your mind to the superannuation scheme as it currently stands.
Senator Andrew Bragg: Yes there is because the superannuation idea is a fine idea, but it’s only a good idea if it works and it’s getting people off the pension. If it’s costing the budget a bomb and it’s costing the budget a bomb at the moment, it’s going to cost the budget a bomb as far as the eye can see. There’s no projection which tells you in the future, in some future year if super’s going to save the budget. So I think any fair minded person would say well hang on, surely this idea of super is supposed to save us money over the long term not cost us. So I’m not an ideologue and I’d like the system to work rather than throw it out.
Heidi Murphy: The aim of it is worthwhile.
Senator Andrew Bragg: The aim of it is fantastic. The aim of it is fantastic and it was conceived and delivered by a Labor Prime Minister and I think he did a lot of good things. I’m talking about Paul Keating of course. But on this front, I think he and others should be open to a discussion about trying to make it work.
Heidi Murphy: What about the argument that it will need another few years before we see the retirement of the people who’ve been paying super, been paying into super their entire working lives. That’s still a few decades off isn’t it?
Senator Andrew Bragg: Yeah, the last treasury data shows that in 2050 it’s still 70% of people taking a pension which is the same number we have today.
Heidi Murphy: Yeah but in another 10-20-30 years will that still be this case?
Senator Andrew Bragg: The Grattan Institute has looked at it out into 2060 and they say it’s still budget negative.
Heidi Murphy: Really? So the pension would be that high?
Senator Andrew Bragg: Correct yes. So we are where we are. It sits and doesn’t really deliver that many self-funded retirees and it should because it’s costing the budget a lot. I mean the treasury review at the moment which is the retirement income review has identified super tax concessions as a really significant issue.
Heidi Murphy: Instead you’d make it tied to home ownership and that’ll have a greater benefit to the economy, to the budget.
Senator Andrew Bragg: Well certainly it will improve people’s lives in retirement if they’re a homeowner not a renter and that they’re a long way away from poverty if they’re living in their own home that is theirs. So I think we need to provide a lot more flexibility, some people could do with more super so they become self-funded, other people are going to be better off with a home. I do think we should give the Australian people some credit and allow them to decide some of these things.
Heidi Murphy: Alright thank you very much for your time this evening.
Senator Andrew Bragg: Nice talking to you Heidi.
Heidi Murphy: Good luck with the book. Senator Andrew Bragg there, Senator for NSW.