30 July 2020


SUBJECT: Early access super scheme blow out.

STEPHEN JONES MP, SHADOW ASSISTANT TREASURER: Today we've learned that the problems with the Government's controversial early access to superannuation scheme just go on and on and on. Just now we've learned that potentially hundreds and hundreds of cases of fraud are being investigated. The Tax Office has told Parliament today that there are people who are, because of the lack of administration of the scheme, have left themselves open to thousands of dollars in fines and potentially being whacked with a big tax bill. On top of all of this, we now know that the scheme has blown out by almost 12 billion dollars. What that 560,000 Australians have wiped out their entire life savings. Over 560,000 Australians have wiped out their superannuation savings entirely. Now, this is a tragedy that these individuals have had to do this and what it shows is, quite clearly, that superannuation is doing heavy lifting for the economy as a whole, heavy lifting in keeping individuals out of hardship. We know that they’re able to do this because we've got a strong superannuation system. We've got a system that has been built up over 30 years providing for retirement savings. People have had to access the scheme because support from government has been inadequate because of the hardships of this economic crisis. We know that it can't go on forever. The problem of an ageing population, the pressures that the increasing number of retirees to taxpayers hasn't gone away, in fact, it's got worse with budget deficits building and building and government debt going up and up and up. So those long-term problems haven't gone away and this can't continue. Superannuation has done a good job in supporting the Australian economy, it’s done a good job in supporting households in getting through this crisis, but we need a plan for the future. We can't keep treating superannuation as a magic pudding to be dipped into whenever government support for households in the economy is insufficient. So it's time for the Government to come up with the jobs plan, a plan to help households, a plan to get employment going, a plan to get business investment going. We can't be attacking the thing that has provided such strength to the economy over this economic crisis and hopefully will be there over the long-term. Happy to take questions.

JOURNALIST: Stephen, are you surprised that the ATO is only now looking at a pilot program to make sure eligible people were getting their super?

JONES: I think it's extraordinary that the ATO has taken all this time to look at the problems that have been pointed out to them for quite some time. I mean, it's a problem for the taxpayers, but frankly, it's a problem for the individuals. We've all seen around this place government MPs and Senators promoting the scheme as if it's some sort of free money or piggy bank. Yes, it is people's individual savings, but they are savings for a purpose and if people have been accessing this scheme outside the eligibility criteria, there are consequences for that. That should have been pointed out from the beginning. $12,500 of fines and a hefty tax bill is simply not good enough. The ATO's processes, processes frankly that the Government has setup has led to this situation.

JOURNALIST: What’s the solution in terms of, you know, if hypothetically speaking Labor was in office, how would you change the scheme?

JONES: We would ensure that there were sufficient support there in the first place, that households doing it tough didn't have to raid their own savings. There's always been a hardship scheme in place and we would have ensured that households had access to that. But, more support, better support earlier and more certainty and critically a plan for jobs and the plan for recovery. I mean, businesses are making those tough decisions now. They’re in negotiations with their banks. They need to know what happens beyond December, beyond on March. They need a lot more certainty. We need a plan to get the economy going and it can't be just superannuation. Superannuation funds themselves have got plans to invest in the future, have got plans to be creating jobs and investment. They need some certainty as well. So what we need, what this all leads back to is the Government having a plan to get job creation going again. 

JOURNALIST: The Prime Minister today said ‘this is people's money and they're entitled to do what hey do with it’, but there is clear evidence that a lot of this money has actually ended up in gambling or for people paying down debt at a time when interest rates are at record lows. Is it undermining the key elements of super where people have got up to?

JONES: Look, I think it's a tragedy that it has got to that and I make no judgement against the individuals themselves. The Government has set up a scheme and almost promoted it as free money to be used for any purpose. So once the money has been released then, sure, individuals have an entitlement to do whatever they like with it. But frankly superannuation funds have been treated differently at every stage in the process. They're treated differently at the time the income is earned, it doesn't get taxed at the regular rate, it gets taxed at a concessional rate. It's treated differently when it earns interest inside the funds, it's a concessional rate on the earnings and it's just about tax free at the point that it's withdrawn. So to argue that this is just like any other money and that superannuation can be treated like any other bank account is frankly disingenuous and it gets away from the fundamental issue, I’ve got to go back to the start, we embarked on this process because we knew if we didn't do something about our retirement savings we wouldn't be able to afford the pension and the next generation of Australians were going to retire in poverty. Now unless we want to hand on to our grand kids a bigger tax bill to support our pensions or we want to hand on to the next generation poverty in retirement, we need to ensure that we fix those problems. Those problems have not gone away. 

JOURNALIST: What about the broader policy settings? The Treasurer is sitting on the retirement review that he’s already received, their own measures undermining one of what could be a key pillar for people in the future.

JONES: Look, the government has received the Retirement Income Review. We call on them to release it. It is supposed to be a findings on fact around sustainability, adequacy, fairness and equity within the system. It's got to be in the public interest that that is released and frankly if it hasn't taken into account the fact that 40 billion dollars has been withdrawn from the system and half a million Australians already have wiped out their retirement savings then I think that probably got to go back to the drawing board. But there is a public interest in having that document released.