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From Schwartz Media, I’m Ruby Jones. This is 7am.

For the last 30 years, Australian retirements have been tied to superannuation. It’s the nest egg that most of us spend decades building up.

And while it might not be a perfect system, any changes to it have usually become stuck in controversy; whether that’s increasing compulsory contributions, or allowing people to raid their super to buy property.

This week, the treasurer said he wants to start a national conversation about super – but will it lead to reform, or will this conversation end up in the political graveyard?

Today, columnist for The Saturday Paper Paul Bongiorno, on the future of super.

It’s Friday, February 24.

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RUBY:

So, Paul, this week the Treasurer Jim Chalmers, said that he wanted a national conversation about the future of superannuation, and as soon as he said that he was met by a lot of concern about what it is that that could actually mean. So tell me what Chalmers is signalling here?

PAUL:

Well, Ruby, on Monday Treasurer Jim Chalmers opened up what he called “a national conversation about superannuation” and he pointed out that the cost to the budget of tax concessions for super… well they're enormous and getting bigger. He said that within 30 years the cost — which is around $52 billion a year — would actually be more than the amount the government forks out for the aged pension. He said he was not convinced, quote, “That's a sustainable way to get to our destination of good retirement incomes for more Australians now and into the future.” But changes to superannuation are always highly controversial. You might remember after the 2019 election loss, Anthony Albanese was so gun shy about touching tax concessions, particularly for retirees. Well, he ruled them out. Virtually on the eve of the May election, he assured voters, quote, “We have no intention of making any super changes.” Well, those comments have opened the government to the criticism this week that it was going back on its word. And not surprisingly, the opposition leapt at the opening the Treasurer and Prime Minister were providing.

Archival tape – Sky News Host:

“Let's bring in the shadow treasurer, Angus Taylor. He had heard the Prime Minister there, out of his mouth. He says there's been no announcement made. They're having a debate. What's your contribution to that debate?”

Archival tape – Angus Taylor:

“Well, I think Australians have been sold a pup…”

PAUL:

Shadow Treasurer Angus Taylor, completely ignored questions of equity or cost, and he accused the Government of a serious broken promise.

Archival tape – Angus Taylor:

“It's clear the Prime Minister said something… one thing before the election, and he's saying something quite different right now. I mean, he was unequivocal before the election.”

PAUL:

And on the commercial channels, the likes of Karl Stefanovic also lashed the idea of any changes.

Archival tape – Karl Stefanovic:

“It's our money in a super fund, and maybe I'm silly, I would just want the best return…”

PAUL:

I have to say, Ruby, somewhat missing the point. But anyway, it's clear there's an opening and Labor is bracing for the Liberals to roll out old lines like "Labor is after your nest egg."

RUBY:

Right. And superannuation has been the bedrock of retirement for Australians for decades, Paul. So why is Chalmers willing to risk this kind of blowback to make changes to it, or at least as he put it, to start the national conversation?

PAUL:

Well, Ruby, it comes back to the cost of the generous tax concessions on superannuation. Contributions to super are generally taxed at a much lower rate than the rest of your earnings, usually just 15% and you know, the pretty general 30%. And then, there are more tax concessions when you draw down that money in retirement. The problem is at the moment the average Australian, when they come to retirement, has just $150,000 in their superannuation account. The Treasurer says less than 1% of people in the system have balances higher than $3 million. The average among that group is $5.8 million. But the rub is the lion's share of the $50 billion or so in tax concessions cost. Well, they go to this group, the wealthiest superannuants. As Assistant Treasurer Stephen Jones points out, the Government's concern is that these high end super accounts don't seem to have any bearing or relationship with retirement income, so much as being like a tax shelter for wealthier Australians. So the Treasurer is looking at capping how much money someone can receive these tax concessions on. The super industry itself has suggested a $5 million cap. The Grattan Institute thinks that's still too generous and proposes a cap of $3 million on accounts.

Archival tape – Jim Chalmers:

“We haven't taken any decisions, but we can't ignore the cost of these tax concessions with all of the other pressures which are on the budget. We've got this.”

PAUL:

Jim Chalmers told RN breakfast we won't, quote, "necessarily see adjustments in the May budget." The Government, he says, hasn't come to a definitive view.

Archival tape – Jim Chalmers:

“One of the things I've tried to do since I've been Treasurer is not to try and kind of pretend away some of the pressures on the budget, and this is one of them. What we're talking about today is one of them. There's no point ignoring that fact.”

PAUL:

Ruby, you'd have to say, it sounds like he's softening us up.

RUBY:

And Labor did seem to rule out changes to super before the election, Paul. So what is the Prime Minister, what's Anthony Albanese saying about it now?

PAUL:

Well, on Tuesday, the Prime Minister, confronting the broken promise charge…well, he ran for the hills.

Archival tape – Journalist:

“Prime minister have you broken an election promise not to change superannuation tax breaks?”

Archival tape – Anthony Albanese:

“That's a big call you’ve made. We haven't made any announcements at all.”

PAUL:

He seemed to put some distance between himself and any immediate action, instead saying his government was simply pointing out what the cost of super would be to the budget.

Archival tape – Anthony Albanese:

“And democracy will entertain both short term issues that we're dealing with. The long term issue of superannuation is something that we do need to deal with. My government makes no apologies for pointing out what the future looks like…”

PAUL:

Though on Wednesday at the National Press Club, he was more in line with the Treasurer.

Archival tape – Anthony Albanese:

“We said during the election campaign that we did not intend to make big changes to superannuation, and we don't.”

PAUL:

So Ruby, whether or not this ends up as a broken promise could all come down to how you define big changes. For Albanese, his definition is that most in the system won't be touched, or the purpose of superannuation will be left alone. He said none of the changes under consideration would impact the average Australian.

RUBY:

But the Government will have to start getting more specific soon, won't they? Particularly if they want to cap tax concessions and the budget's only a few months away. So does it seem like this is one area where they could actually make some savings?

PAUL:

Well, certainly budget repair is easy to promise, but hard to do without decisions that invariably cause pain for someone. Chalmers will have to make room, he says, in the budget to deliver the Fair Work Commission's wage rises for aged care workers, to strengthen Medicare, and bring down the cost of seeing a doctor, as well as funding the ambitious national security agenda Albanese committed to this week. The timing, though, is interesting and it is beginning to look like Albanese may be prepared for a short term political hit for a longer term gain with budget repair.

RUBY:

We'll be back in a moment.

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RUBY:

Paul, The federal government seems to be on the edge of at least bending an election promise, if not actually breaking it when it comes to changes to superannuation. And you said that the timing around all of this is interesting. Why is that?

PAUL:

Well, it comes right before the by-election in Aston to replace the controversial Alan Tudge. Labor, on the face of it, with only a 2.8% gap to bridge, could be in with a real chance, which would deliver Peter Dutton a humiliating defeat. But Aston has a significant number of wealthier, self-employed tradies and contractors who could be susceptible to a scare that the Treasurer is coming after their super. Beginning the conversation about reform right before the by-election, it could suggest the government doesn't give itself that much of a chance of winning anyhow. Man I've got to say it has some reason for that. 100 years of by-election history would suggest they're certainly the underdog; it's that long since the government took a seat off an opposition at such a contest. Aston, though, is certainly no sideshow for Peter Dutton. It's a moment of truth for his leadership. As one Melbourne MP puts it: if the Liberals lost Aston, it would be shocking news for the party leader.

RUBY:

No doubt Peter Dutton will be making the most of any mistakes that the Government makes in the coming weeks. But when you say that this is a moment of truth for his leadership, what do you mean, Paul? What would it mean for Dutton if the Liberals were to lose this seat?

PAUL:

Well, already, Ruby, there are doubts about his electoral appeal in sections of the parliamentary party, and according to some Liberals, his deputy, Susan Ley, is ready and willing to step up. Dutton is no doubt aware of these sorts of doubts, and it put a lot of pressure on him to get the sort of candidate that the Liberals need to hold onto the seat. He urged his Victorian colleagues to select a high profile woman. In the end, Barrister and Melbourne City councillor, Roshena Campbell won the night. She's of Indian heritage, and one enthusiastic supporter says, she ticks the boxes as an accomplished woman and being ethnically diverse. These were issues the Liberals have to address after the lessons of the last general election loss. Campbell is also well connected to the Melbourne media. Her husband, James Campbell, is the Herald Sun's national political editor. She says she'll immediately move into the outer Melbourne seat from the family terrace in inner city Fitzroy. By polling day, she promises the voters will have a local to fight for them.

RUBY:

And just finally, Paul, as we get closer and closer to the budget, there is another pre-election promise that could be tested and that is Labor's pledge that they wouldn't raise taxes. Anthony Albanese was asked about that at the National Press Club this week. And I just wonder with the need that Labor has now to repair the budget and reforms like strengthening Medicare, looking perhaps more costly than the government might have initially thought. Do you think that there are going to have to be some hard conversations about the way that the government can raise revenue?

PAUL:

Well, it certainly is Ruby. And the Treasurer is preparing to release a detailed paper outlining how much the Government's spending to meet commitments already out there, outstrips its revenue. He'll nail all the tax concessions that the Government has on the budget's books. But Mr. Albanese wouldn't answer directly on Wednesday when asked if Australians needed to accept the upcoming budget must include some policy decisions to increase tax revenue to make government programs more sustainable. And nor did he rule out the possibility of tax increases in the future. He said, we'll continue to have a conversation with the Australian people about what's needed going forward.

RUBY:

Paul, thank you so much for your time.

PAUL:

Thank you, Ruby. Bye.

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RUBY:

Also in the news today,

In the infamous case of Scott Johnson’s killing in Sydney in 1988, a man has made a shock guilty plea to the crime of manslaughter – having previously had a murder sentence quashed.

The man, Scott Phillip White, was arrested in 2020, over thirty years after the death of Johnson.

The case remained unsolved for decades and was widely suspected to have been a gay hate crime killing.

And,

Star Entertainment casino operators have released their financial reports for the past six months, revealing a loss of around $1.2 billion.

The casino operators have been under pressure after investigations revealed evidence of money laundering and fraud.

To hear more about the Star Group, listen to our episode ‘The dirty secrets inside one of our biggest casinos’.

7am is a daily show from The Monthly and The Saturday Paper.

It’s produced by Kara Jensen-Mackinnon, Alex Tighe, Zoltan Fecso, and Cheyne Anderson.

Our technical producer is Atticus Bastow. Our editor is Scott Mitchell.

Sarah McVeigh is our Head of Audio and Erik Jensen is our editor-in-chief.

Mixing this week by Laura Hancock and Atticus Bastow.

Our theme music is by Ned Beckley and Josh Hogan of Envelope Audio.

And this week is the last for our producer Alex Tighe. Thanks Alex for helping make the show, and we wish you all the best.

I’m Ruby Jones, see you next week.

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