Steve Mills: Outside at the moment 29 degrees. Quite a beautiful day, and it's 22 past midday, as we said in our Sydney Morning Herald this morning, had a front page story, "Take home pay or put it in super". Government considers opt-in super model and the federal government is considering giving workers the choice of putting more money into their superannuation or having more take-home pay in an attempt to break a political deadlock ahead of a looming rise in the super guarantee. This is one that they say is L-A-W, law. Now we went looking for someone who might know a bit about it and Senator Andrew Bragg's first speech to the Senate in 2019 included an opt-out proposal for superannuation, so he commissioned a report. He knows a bit about it, and I'm sure he'll be happy to discuss it with us this afternoon. Hello, Andrew.
Andrew Bragg: Steve, how are you?
Steve Mills: Doing well mate. This is a touchy area, isn't it, for a lot of people, because we know we have to save for our future, but there's a lot of people that are battling as well.
Andrew Bragg: Well Steve, super is the people's money, as you know, and it doesn't fall out of the sky, so if you have more super by definition, you'll have lower wages. So what a proposal like this will do is put the people in the driver's seat so they could decide they want to have more super or want to have more take home pay today.
Steve Mills: Right, and is there an income limit there? Like, for example, can I say I don't want any super, I want at all paid to me?
Andrew Bragg: Well, I think that's yet to be worked out. But during the pandemic, which we're still living through, there was an early access scheme where people could take up to 10 grand of their super in one hit and the majority of people and most of the money that was taken out of super was put into people's mortgages to pay them down. So people wanted to improve their personal balance sheets. And that shows that people are smarter than the super funds think. I mean, the super funds, they think everyone's stupid.
Steve Mills: Well are they? They're not, obviously they're not.
Andrew Bragg: Well, of course not, because, you know, one of the best financial judgements you could make and I say this, noting that I'm not giving any personal financial advice is that people want to reduce their debt, so they can pay down mortgages. And so for many people, actually owning their own home is a very sound judgement, because as the recent review we had into retirement income said, "the best way to avoid poverty in retirement is to own your own house".
Steve Mills: Yeah, I totally agree and I believe you should be able to use super as a deposit. But that's where I sit on that as a topic. Fifty-thousand dollars a year, if I was earning fifty-thousand dollars a year, there was a report that you looked into, how much money would be saved or not saved, how much extra money would go into someone's pocket, if they decided not to take super and take that money over 10 years?
Andrew Bragg: Well, it would depend what they did with the money. I mean, as you know, having a house is a very important financial judgement because of the tax and Social Security laws we have. So, I mean, all we can do is look at the behaviour of what happened during the pandemic. And as I say, most of the money that came out of the early release scheme went into it to improve people's personal balance sheet. So in many cases, to pay down or pay their mortgages, so for more and more people, homeownership is becoming harder. I believe that superannuation has made homeownership more difficult to attain because for many, especially lower income Australians, the trade off between having more super and trying to get a deposit for a first house is real and genuine trade off.
Steve Mills: Absolutely.
Andrew Bragg: It's okay for the cigar chompers to say that, you know everyone should have both. But for many people, it's a real trade off, so the more flexibility, Steve, that we can give people, I think is the way to go.
Steve Mills: How are you getting on with your colleagues? I mean, a lot of them wouldn't agree with that.
Andrew Bragg: Well...
Steve Mills: You are a Liberal Senator.
Andrew Bragg: Well, there's lots of good debate inside the Liberal Party room and you know, you come you coming from the great state of Western Australia, you give us many good thinkers and contributors in Canberra...
Steve Mills: We give you a lot of money as well.
Andrew Bragg: Yeah, well, we thank you for that and we do alright here in New South Wales as well.
Steve Mills: Do you?
Andrew Bragg: Yeah we do alright. We're better than some of the other's...
Steve Mills: Alright, let's leave the state out of it, but from a point of view, it says in the Sydney Morning Herald that the government is seriously considering this, which is different to fighting it as an idea or floating the kite up and hoping that someone grabs it. What kind of reaction have you got inside the Liberal Party and inside the coalition?
Andrew Bragg: Well, I mean, we have this retirement income review, which is called the Calahan Review, Steve and that, as I say, proposes a number of challenges for our government to consider. And one of those is how do we get more people into houses? Now, one way to get more people into houses is to let people have more of their super.
Steve Mills: Sure.
Andrew Bragg: And so I think it's a it's an idea which is being, as you say, seriously considered because we are serious about home ownership. And, you know, the Prime Minister has done a lot to try and help people get into their first homes. We've had a number of first home saver schemes. And one thing we haven't done yet as far as we could do is to open up to super for first time deposits and that's something that I think we should do, especially for low income earners.
Steve Mills: Oh without a doubt. And the other thing that I'd like to look at is a form of income splitting of some description. Now, some say, "ah, that's detrimental to me if I'm not in a relationship", I accept that as far as being able to sell it. But say, if you want one of you, the people within the relationship to stay at home and look after children being able to income split from a taxation point of view provides them with an incentive to, one, provide a safe platform if you like to raise a family, but also economically, it reduces the pressure for them to enter the workforce.
Andrew Bragg: Yeah, look when we have the family tax benefit system, as you know, and I think childcare is another issue, which we're always looking at. And, you know, the Liberal Party will always try and provide the most flexibility we can. As you know, Labor, the party, which are ideologically committed in every way to Paul Keating's vision for super, which has been a failure. I mean, basically everyone still on the pension, the super system costs the federal budget more than it saves. I mean, and it's made first home ownership so much harder.
Steve Mills: Sure.
Andrew Bragg: So it's really a failed system.
Steve Mills: Alright, okay. Well, Andrew, thank you. Thank you for your time. Good to see you thinking outside the square at least and keep thinking like that.
Andrew Bragg: Good on you Steve, all the best.
Steve Mills: Senator Andrew Bragg there and he's a Senator from New South Wales, but in Federal Parliament. What do you reckon? Should you be allowed to take your super and just spend it? I mean, you argue, well, if you're going to put up against the wall, then that's probably not a great thing to do. But as Andrew made the point, if you can use it to get into a house, there's no greater investment than anyone can actually get than to have a house.
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