25 March 2020


SUBJECTS: Virgin stand downs,Superannuation early access in hardship scheme, Centrelink queues. 

ANNELISE NIELSEN: Joining us live now is Shadow Assistant Treasurer Stephen Jones via Skype. Stephen, thank you for your time. Now, this is pretty alarming news to come out of Virgin not entirely unexpected. Do you think we should be doing more to try and help these employees get redeployed somewhere, so they aren't waiting until May, June, July to find the next job.

STEPHEN JONES: Across the travel industry, the retail industry, the hospitality industry, tens of thousands of workers have been thrown out of work over the last couple of days. I'm not criticizing the Government. I think the first wave of package, obviously support aimed at small businesses and apprentices, the second wave is moving quickly, but I think we really do need to be doing more to support these workers and their households. I don't think the existing package that's been put in place is going to be good enough. I'm certainly concerned that their proposal to allow workers to raid their superannuation fund has not been well thought through. It's not good for workers and it's not good for the economy as a whole. I think we're going to have to do a rapid rethink given the scale and the number of workers that are being thrown out of work in record numbers in a very short period of time.

NIELSEN: This proposal to allow workers to raid their own super, this is their money, it's a time of critical need and the Treasurer's office has said that APRA says there's 300 billion dollars’ worth of cash in these super funds. Why not use that money now when people need it?

JONES: We know that workers are doing it tough households are doing a tough. We want them to get more support from the Government, but we need to ensure that whatever is put up well thought through and is not going to do more harm over the long term. If I could just give you one example of what I mean., if you're a 27 year old worker today and your you withdraw $20,000 from your superannuation account as the Government facility will allow, that's going to cost you a quarter of a million dollars at retirement. $250,000 is the long-term value of that withdrawal that you've made today. So what might sound like a good idea in the short term can be absolutely devastating for an individual over the long term. It's why we're saying get advice. This is a last resort not a first resort and a much better approach would be if the Government could step in directly and provide better wage support, better wage subsidy for those workers have been thrown out of work.

NIELSEN: When you say that the Government could step in and provide better support, there's no such thing as free money. If the Government does that they need to find the cash from somewhere else. If this money is sitting in people super accounts not being touched why not use that now?

JONES: There's a couple of reasons why we shouldn't do it now. I've explained one, why it's bad for individuals because $20,000 250,000 dollars lost to them over the lifetime. That's an enormous amount of money that they are losing for $20,000 now so it should be a last resort. Surely there's got to be a better way for the Government, and can I say it's also going to create enormous pressure, not just for the individuals that make the withdrawals, but everyone's going to be affected. The government's been suggesting that the superannuation funds have got 300 billion dollars in cash just lying around the can be easily liquidated. Actually, that's not the case, it's probably half that and that money be in cash for very good reasons, such as it's sitting there to pay account-based pensions for people who are already in retirement, so not well thought through. If the super funds have got a sell down their assets on the stock market today to pay for the sorts of run on the funds that may well happen, then we all lose because they're going to sell it the bottom of the market. Enormous amounts of shares are going to have to be turned over to pay for those withdrawals only to need to have to replace those equities, those shares, sometime 12-18 months down the track and instead of buying back those shares at the bottom of the market, which is today, they'll be buying them at the top of the market. So we are going to lose twice. There's got to be a better way of doing it than this. If the Government is insisting on using this superannuation facility than it should be putting in place some sort of buffer for the superannuation funds so that we do not lose billions of dollars, as an economy, as a result of a run on the super funds and that is what is likely to happen unless the right sort of balances are put in place.

NIELSEN: Isn't the argument you’re using for the super funds directly the same argument for the Government that they can't afford to be taking on more of that debt? They're also going to have to be buying into the bottom of the market and paying it back at the top of the market. This is the time when the Government has put in, cumulatively, about a hundred billion dollars, a record amount of stimulus. This is the time for those last resorts.

JONES: There's never been a cheaper of time for the Government to be borrowing money and the Reserve Bank has set the long-term three year bond rate at 0.25 percent. That is just about the cheapest money has ever been in our nation's history. So it's actually relatively affordable for the Government to be borrowing that money, as it already is, to help pay for the emergency relief that is needed for workers at the moment. Contrary to your assertion, Annelise, the one body in the country that is best positioned to access that money to provide for emergency relief is the Government, because it can do it a point to five percent. That's going to be a lot cheaper than any other option available.

NIELSEN: Just finally, we've seen these horrendous lines at Centrelinks around the country, people desperate to get that cash support. The system went down. It's been remediated as we've heard from Centrelink, but do you think more needs to be done to help people access it at home, or is this just an extraordinary rush that no one could have really prepared for?

JONES: It is an extraordinary rush but a rush that was entirely predictable. I lay no blame at the feet of the Centrelink staff. They're working flat out. They're short-staffed as it is. They're scrambling to try and hire new staff to cope with the workload. But some of these systems issues could have and should have been anticipated. I hope they are fixed immediately. Nobody wants to see thousands of people lined up outside of Centrelink offices at the very time that the Prime Minister is urging people to stay home. We have the Prime Minister saying stay at home everyone at the very same time as the government policy or systems are forcing people to come out in public and stand up in long queues in very unsafe circumstances. For God's sake, let's get this fixed. Too much is at stake. Households need the money and for public safety we can't afford to have long queues in public creating a health risk for everybody.

NIELSEN: Stephen Jones, thank you for your time.

JONES: Good to be with you.