14 March 2015
Transcript - #2015014, 2015

In the role of: Parliamentary Secretary to the Treasurer [23 December 2014 - 20 September 2015]

Interview with David Lipson, Saturday Agenda, Sky

SUBJECTS: Pensions; superannuation reform; Clive Palmer; university reforms

LIPSON:

G’day and welcome to Saturday Agenda. The Social Services Minister has proposed a political circuit breaker in the Government’s stalled attempts to pass changes to the pension that were announced in last year’s budget. Scott Morrison calls it a pension safety net overseen by an independent panel that would review the adequacy of the pension every three years and recommend whether further increases were needed. The Government is trying to reduce the rate of pension rises by pegging indexation to inflation rather than Male Average Weekly Earnings. On the program today I am joined now by the Parliamentary Secretary to the Treasurer Kelly O’Dwyer. In a moment we’ll be joined by the Shadow Minister for Financial Services and Superannuation Bernie Ripoll. Kelly O’Dwyer first of all is this a good idea and can you talk us through how exactly it would work.

O’DWYER:

Well look it is important David that we continue to have a conversation with the crossbenchers about the adequacy of our pension arrangements. We want to make sure that there is a strong social safety net for the most vulnerable people in our community and that that safety net is adequate to their needs. We know that the rate of increase for those on various forms of government payments is increasing exponentially. The Intergenerational Report also makes very very clear that that pressure is only going to grow larger and larger. The Labor Party don’t want to talk about this so we’re now having to talk to the crossbenchers about how we can make sure it is sustainable.

This is not a cut to the pension. We are looking at still increasing the pension every year in March and September but we want a consistent indexation approach across the board. That’s been recommended by the Henry Review, that’s been recommended by the McClure Review, and so crossbench discussions are taking place at the moment which would mean that every three years if we index to CPI that that adequacy will be properly and independently looked at to make sure that it is meeting the needs of those people it is meant to look after.

LIPSON:

Sure, and then the recommendations that would be made by the independent panel to the Government, my reading of it today is that they wouldn’t be binding, that the Government could still refuse. Is that right?

O’DWYER:

Well the recommendations would be made to the Government and obviously Government’s always ultimately make decisions on the recommendations made to it, but I would suggest to you that that would be very persuasive to the Government, and that those recommendations would be made before the budget and that the Government could then consider that in the budget context. So these discussions are taking place, unfortunately, as I said before, the Labor Party, while they talk about conspicuous compassion, really what they are doing is, is engaging in, as my colleague Scott Morrison has said, unfunded empathy.

The Labor Party, who are the architects of our debt and deficit disaster, are quite happy to see in future years pensioners and others who require Government payments to be left completely stranded because we haven’t adequately provided for them. We are not prepared to do that. We are going to make sure that we have a sustainable pension system that is fair, that is adequate for people, that is going to increase over time and that’s what we are doing right now.

LIPSON:

So the pensions would still rise by inflation which obviously is the benchmark of the cost of living. Why do you think there is pressure for it to rise above that? Obviously the Intergenerational Report showed that it wouldn’t keep pace with average weekly earnings but do you think personally that it needs to keep pace with those average weekly earnings?

O’DWYER:

Well we’ve seen in recent times actually that CPI has risen faster than Male Total Average Weekly Earnings. So in fact that indexation was higher than Male Total Average Weekly Earnings but what this adequacy review would do if it’s agreed to, and it would need to be taken to the Party Room, it is still just a discussion at the moment with the crossbenchers who are clearly concerned about making sure we have a sustainable pensioner scheme unlike the Labor Party—what this would do, would mean that we actually have a system that will meet the needs of pensioners, not only today but going forward into the future.

LIPSON:

It would obviously reduce the savings to the budget if this panel recommended that the pension go up above inflation. Is that the better of the two options, either that or not getting through any changes at all?

O’DWYER:

I guess we are speculating on what might be found here but we want to give the assurance to pensioners, to the crossbenchers that this is not about ripping off Australians this is about making sure we have a strong system that will support them in their old age, in their retirement years that will make sure it keeps pace with their cost of living and I think that is what all Australians expect. So we want to make sure that the system is going to be there for their benefit and that’s what Minister Morrison is talking about with the crossbenchers.

LIPSON:

Just turning to superannuation. Joe Hockey hasn’t found a whole lot of love for his suggestion that superannuation be freed up so that first home buyers can draw upon it to put a deposit on a home with it. Is that a good idea in your mind?

O’DWYER:

I think it is always a good idea to talk about superannuation and whether it is achieving the purpose for which it is intended and that is to supply retirement incomes for people in their retirement years. And I think it is very timely with the release of the Intergenerational Report that we have that discussion right now, that we look at whether or not it is providing adequate retirement incomes for people and whether superannuation is putting decreased pressure on the budget bottom line. We have seen from the Intergenerational Report that around about 70 per cent of people aged 65 and older currently are either on a pension or a part pension. In about 40 years’ time according to projections in the Intergenerational Report that will actually only drop by about 3 per cent. Now the mix between those on a pension and a part pension will change, there’ll be less people on a full pension, more people on a part pension but I suppose we do have to ask ourselves is superannuation providing the sort of retirement incomes that we would expect, is it doing that in the most efficient manner and should we be having a conversation about how Australians can build their wealth over time so that they have an adequate retirement income.

LIPSON:

So you are supportive of the discussion but it doesn’t sound like you are throwing huge support behind the idea of being able to draw upon super at various points in your life.

O’DWYER:

I think we should have a very open discussion about superannuation. It is critically important when people reach their retirement years that they have an adequate income and we will only have an adequate income if we properly look and re-evaluate superannuation on a periodic basis. Now is the opportunity to do that. I think it is very important we discuss all aspects of superannuation. The Treasurer has clearly indicated one aspect that we can discuss. I think that is only a positive and healthy thing.

LIPSON:

But as you point out, the Intergenerational Report is saying that we need to plan much better so that we can afford to keep living longer lives up to an average age of 95, 96 by 2055 but Joe Hockey is suggesting that we should draw down on our superannuation earlier in life, that would give you less money later in life in your super, in your nest egg. They are contradictory messages aren’t they?

O’DWYER:

Well I suppose it depends on how it’s done and this is where the conversation takes place. If an individual borrows in effect from their superannuation fund rather than borrowing from a bank, and they are going to be increasing their wealth over time through the building up of assets but those assets ultimately are in their superannuation fund then the question perhaps is well is that a good use of superannuation? I make no judgement on that I am simply pointing out the fact that we should be able to have those sorts of mature discussions about whether or not superannuation is best serving people both today and into the future and whether it can be made even stronger.

LIPSON:

Okay. I want to turn to Clive Palmer and the split within his party which has seen Glenn Lazarus exit the party and Clive Palmer just has one senator under the yellow banner of the Palmer United Party in the Senate and that is Dio Wang. Do you think this is going to make things easier or harder for the Government, what’s your reading of this from where you stand in trying to get legislation through the Senate.

O’DWYER:

Well, frankly, the best way for us to be able to get legislation through the Senate is to actually have adults on the opposition benches, to have somebody not as obstructive as Bill Shorten, to have somebody who is actually prepared to talk about the future of Australia rather than petty political point scoring. That is going to be the best way that we can achieve sensible, moderate reform that will last beyond this current generation but into future generations. But unfortunately we have seen political pygmies on the other side. Now we do rely on the crossbenchers in order to have some of those sensible discussions. We have been working with the crossbenchers since we were elected to government, we will continue to do that. Each individual is approached individually and I don’t think that that will change.

LIPSON:

And do you think, I mean Christopher Pyne seems to be a little bit more hopeful if you like of getting the numbers for his university reforms next week, or perhaps the week after. Dio Wang for example seems to be in support of reforms although he has said overnight that he is not going to support them. On those university reforms, is that going to get through, I mean is this going to happen next week?

O’DWYER:

Well if I knew that I would have a great career in fortune telling I think. Look Christopher is always the eternal optimist and that’s what we love about him but he is quite right in saying that these sensible reforms are supported by the entire university sector – very rarely do you get university chancellors all agreeing with one another and agreeing with the importance of this sort of..

LIPSON:

Not every single one, there are a couple of dissenters.

O’DWYER:

But they all support the need to reform the university sector so that we can increase our investment in higher education so that we can actually open it up to a broader number of people, more than 80,000 more students will have access to higher education which will only increase their future prospects if we get our university reforms through. The Labor Party want to pretend that this is somehow not going to eventuate because they are going to be obstructive to it. They are denying those 80,000 students who want associate diplomas or sub diplomas the opportunity to get that higher education that will skill them up to ensure that they have that have a better future. Now, you know, frankly the Labor Party really needs to answer questions about this. We will continue our discussions with the crossbenchers but really the Labor Party continue to have no solutions to the problems and challenges we face as a nation. They have demonstrated in the past that they can’t be trusted with the budget and they have demonstrated again how reckless and irresponsible they are with this reform.

LIPSON:

Just one more thing briefly before I let you go. This $150 million in funding for the national collaborative research infrastructure scheme which is essentially scientific research, 1,700 scientists jobs are on the line, this is being used as a threat to try to force the Senate to pass the university reforms. If the Senate doesn’t play ball, are you really comfortable with the Government carrying out on that threat and those scientists losing their job and their research?

O’DWYER:

Well I have very strongly been a supporter of science and innovation. I set up the Parliamentary Friends of Women in Science, Maths and Engineering shortly after coming into the Parliament along with Amanda Rishworth one of my Labor colleagues across the aisle. I believe that science and technology and maths and engineering is really the key to our future prosperity. I am very confident that we will be able to ensure that that is properly and adequately funded but this is just an expression of how reckless the Labor Party is that they are prepared to put at risk this sort of funding that is so essential that will drive our national economy, and again I say the pressure should be on the Labor Party to respond to some of the concerns that have been raised about their reckless approach.

LIPSON:

And Labor will have time to respond after the break. Kelly O’Dwyer thank you for joining us on Saturday Agenda. Bernie Ripoll up next.