Address to the Superannuation Lending Roundtable hosted by AFR, Sydney
I acknowledge the traditional owners and thank Anthony – for the thoughtful introduction, for sponsoring today, and for hosting us at his Sydney home.
Michael, Jon and the AFR – thanks for convening and covering this roundtable each time, but also for the interest you show in super policy more broadly.
And in thanking all of you here I acknowledge that no gathering of super royalty is complete without the king himself – thanks for being part of it, Paul [Keating].
You’ve got the 30th Treasurer here and the 41st – but that’s only counting Scott Morrison’s two digs as one.
For about a dozen years now, but especially the last few, I’ve been a beneficiary of Paul’s wisdom and friendship and I’m really grateful for it.
In some respects compulsory super and I have something in common, we wouldn’t be here without him.
So let me set the scene with one quick story about some advice he gave me.
Less than a year ago it became clear my predecessor had abandoned the idea of freezing the super guarantee, and that he’d stick to the legislated timetable.
Good and welcome news after a hotly contested and pretty willing skirmish that we read about for months on the front and up the back of the Fin.
In victory, Paul’s advice then was to rub nobody’s noses in it, to be gracious, that there’s more in it for us in ending the super wars than prolonging them.
Surprising advice at the time but the right call.
And it brings me to the first main point I want to make about super:
We have no interest or inclination in being goaded into unnecessary or ideological fights.
There’s been too much of that for much of the last decade.
We are looking for solutions, and for opportunities, not needless brawls.
The super wars have been won and now we need to win the peace.
We have an incredible foundation to build on:
Trillions of dollars looking for a home – and making us a net exporter of capital.
A system bigger than Canada’s as a share of GDP.
Top three in pension assets despite being the 13th biggest economy.
More paid out each year in super than pensions, taking pressure of budgets.
None of that would be possible without the compulsion that Mike Callaghan’s review acknowledged as central.
So super is the hope of the side:
When it comes to building national savings for the masses.
When it comes to investing in our national priorities.
When it comes to projecting our influence in the region.
And when it comes to addressing our most formidable economic challenges.
That’s why we won’t be messing with its fundamentals: not sole purpose, not preservation.
We won’t be directing funds into asset classes or looking for new excuses to give members early access – that was a disaster in my view.
What we will do is dispassionately diagnose the challenges in the system, and in the economy, and work at addressing them.
I want to thank and pay tribute to my colleague Stephen Jones here, who does so much of this work.
For example, we see non‑payment and non‑compliance and we are working up a reform package to ensure people get the super they’ve earned.
We see gender disparities in retirement balances and we will fund the SG [super guarantee] on paid parental leave when the Budget circumstances permit.
We see a lack of appetite for retirement income products and we will work with you on some new options to try and turn that around.
We see the rapid growth in spending on aged care and we obviously need to fund that and contemplate what if any further role there could be there for super.
We see the lack of a legislated objective of super as a source of ambiguity which left the gate open for early access – and so we will legislate one.
We inherited a set of Your Super Your Future reforms and arrangements for AGMs and we want to make sure they’re reviewed and working well.
We also see trillions of dollars in workers’ capital, government budgets heaving with debt, and obvious needs for investment in areas like housing and energy.
We are up for reform here if we can agree the way forward.
So let me spend the balance of my time on this because I want to push the boat out a bit and see what you think about three things.
First, funding and financing the energy transition.
Our work is well‑underway on the disclosure of climate risk and opportunities.
We will catch up and keep up with global regulatory developments here so there’s some consistency and transparency for investors like you.
We are told that will make it easier for you to invest in the transition.
But once that work’s done, this financial year after some proper consultation, what else do you think we could do on climate finance?
Second, recognising and responding to the shortage of housing.
In all our discussions in the lead up to the Jobs and Skills Summit it’s become even clearer that our ability to get migration and mobility right relies on this.
Clearer ways forward are emerging on a number of fronts before the Summit, but we need more than our big investments in social housing and help to buy.
We need to work with the states on our housing strategy and we need you too.
You’re all aware of the number of reasons why super has been reluctant to get into residential housing in a big enough way.
That’s part of the reason why the growth in super investment in infrastructure the past decade or so hasn’t been matched by housing, which has been static.
Infrastructure investment’s gone from 3.7 per cent of super assets to 6.6 per cent in the last 8 years, but housing’s only gone from 7.4 to 8.5 per cent.
My question for you is, how do we do better here?
Can we work to package up enough like‑projects to deliver scale, do we require some kind of availability payment to make it worthwhile, in addition to the bond aggregators and the like, or are there other better ways?
Third, I’m thinking about putting together a Treasurer’s Investor Roundtable.
To nut out the opportunities in areas like energy and housing, perhaps impact investing as well, and iron out the difficulties.
To bring together super funds and other institutions like banks, venture capital funds, and the like.
But also to work out the best place for the government’s own co‑investment funds – for energy transmission, clean energy, housing, advanced manufacturing and supply chains, northern Australia – and the Future Fund.
Like our discussions today, it would be a genuine attempt to treat super’s potential for common ground not another battlefield.
To try and bring people together to solve our biggest economic challenges.
Looking for ideas not ideology.
The interests of members, funds, the economy and the country are inseparable.
And in that spirit I thank you again and look forward to the discussion.