Peter Maher, Chairman of the Financial Services Council.
John Brogden, Chief Executive Officer of the Financial Services Council
I thank Craig for that warm welcome.
It's great to be here to speak with an industry that is so fundamental to the security and prosperity of our nation.
I want to acknowledge from the start of my address that my Government appreciates the contribution that the Financial Services Council and all of your members make to the reform agenda in superannuation, financial services and financial advice.
This month we celebrate 20 years since the introduction of the Superannuation Guarantee, the birth of modern superannuation.
Universal superannuation is one of the greatest social and economic reforms in Australia's history.
And one of the major reasons we can stare global economic uncertainty in the face with confidence.
Behind it all were two remarkable Australians, described by David Love as the ‘Rudolph Valentino and Mickey Rooney' of Australian politics - Paul Keating and Bill Kelty.
This remarkable pair charted a path of productivity and reform that helped set up the strong, open economy that today is the envy of the world.
Friends, because of those reforms and their continuation under successive governments, Australia's economic outlook is strong.
Strong fundamentals based on sustainable growth, and low public debt.
A deep, stable and liquid financial sector.
Rapidly rising levels of education and skills.
An unprecedented investment pipeline, still building, with a staggering $430 billion planned in resource investment alone.
An economy that has created jobs while other nations were losing them - around 750,000 since Labor came to office.
All underpinned by our location in the right part of the world at the right time.
While fundamentally strong, the Australian economy is not immune to developments on international markets.
But it is essential to recognise that the real change underway in the Australian economy is that being driven by a sustained, unprecedented increase in Australia's terms of trade.
A change which is reshaping the structure of our economy.
Global growth has long been shifting from West to East - and this is accelerating again.
Developing countries like China and India emerged from the GFC strong.
They are generating growth still at historic highs - and that growth is increasingly driven by their own internal demand.
This is driving our dollar to a new high - a push which is currently being exacerbated by the relative strength of the Australian economy, compared to the rest of the developed world.
The appreciation of the dollar has been good for some businesses which rely on imports, and good for many Australians purchasing cheaper overseas travel or imports.
But it is also putting many sectors of the economy, like education, tourism, some parts of retail and especially manufacturing, under pressure.
A reason that while much of our economy is booming, many Australians feel as though they have been left behind.
Doing what we can to relieve that pressure is essential.
Those decisions are in our hands.
Economic management must focus on unlocking productivity and enhancing Australia's competitive position in the world - so that enough Australians have what we prize most - jobs and opportunity.
I am determined to make sure we not only put in place policies which drive us to do the things we do now more effectively; but also that we gear our economy to compete on the basis of its superior capacity to innovate, and seize new markets.
To help Australians to get ahead, by making sure that Australia gets ahead.
With this approach, we are building a dynamic, high-income modern economy.
An economy driven by:
* Investments in skills - to make sure we have the smartest workforce, providing the services most in demand in the world.
* Clean energy - to attract international capital, and lure direct investment from businesses which want to set up long lived assets in economies like ours which will be managing the carbon challenge in the cheapest way possible.
* Technology, especially high speed broadband - to support advanced manufacturing, and allow our services industry to access clients anywhere, anytime.
* Tax reform - to drive growth in the non-resource sectors of the economy by using our resource wealth to fund company tax cuts across the board; and lifting workforce participation by tripling the tax free threshold.
And of course super reform.
Friends, superannuation used to be the preserve of the wealthy or of tenured public servants and academics.
Universal super changed all that.
Jeremy Cooper called it “part of the democratisation of finance.”
In fact, it is the democratisation of wealth.
Until universal superannuation came along, most Australians had one source of wealth - their home.
With super, they can have two.
But perhaps even more amazing is the role super plays in the wider economy.
Today superannuation provides a nest egg bigger than the size of our annual GDP or the entire market capitalisation of the ASX - $1.4 trillion.
As a result, Australia has the fourth-biggest pool of pension assets in the world.
About 40% of superannuation investments are in Australian shares or Australian fixed interest securities.
Our wealth management industry employs 60,000 people.
All of you are part of that achievement and should take immense pride in being part of Australia's success as a modern, confident nation with an incredible story of reform to tell the world.
In the midst of global economic challenges, I want to focus for a minute on the crucial role that superannuation savings have come to play in Australia's economic stability.
Superannuation savings have come to play a key macro-economic role alongside fiscal and monetary policy.
Our pool of superannuation savings has real consequences for economic management.
For a nation with a long-standing propensity to spend more than we earn, a super pool bigger than our GDP helps offset our current account imbalance, and fosters liquidity and stability.
For example, when the global financial crisis hit in 2008, our national savings were sandbags against the leakage of capital we saw elsewhere in the world.
At a time of desperation for many companies, super savings helped our listed companies overcome capital scarcity and recapitalise.
Almost $40 billion was raised in institutional share placements in 2008-09 alone, helping to keep Australia in business, our banks strong and our people in jobs.
15% of capital raisings in 2008/09 globally were here in Australia.
And the companies that recapitalised employed 1.6m Australians.
Since then:
* Super fund investments accounted for nearly 30 per cent of total market capitalisation of the ASX in the 2009-10 financial year.
* Super funds are the largest contributor to managed funds. As at the June quarter 2011, super funds accounted for around 70 per cent of all consolidated assets in managed funds.
The global economic uncertainty we face now should be a reminder to us of the importance of super.
In rocky international seas, super is an anchor.
And it should be a reminder to us that increasing super - increasing the weight and heft of that anchor - is the right goal.
Some say that in the current economic environment we should be considering establishing a sovereign wealth fund.
I take a different approach.
I believe that superannuation is already our trillion dollar sovereign wealth fund - but with market benefits.
That's because it's privately managed by thousands of trustees instead of a sovereign wealth fund managed centrally by a Canberra-appointed manager.
Or alternatively, you could say that Australia has 8 million sovereign wealth funds - the superannuation accounts of Australians across the country.
These are the very same superannuation accounts we want to make massive injections into.
But we can't do it without an important piece of policy architecture, and that is the Minerals Resource Rent Tax.
We can only get to 12 per cent by 2020 if we use part of the proceeds of the Minerals Resource Rent Tax to mitigate the lost revenue incurred by taxing super at concessional rates.
Neither the goal of increasing universal super contributions from 9 to 12 percent, nor the MRRT itself, are supported by our opponents.
A risk for every Australian heading towards retirement - for every Australian under 65.
And a risk for our future economic stability - not now, but in decades to come.
And a risk to jobs.
Our opponents, as usual, are willing to squander long-term economic stability and jobs for Australians for the sake of short-term political gain.
Hacking into the retirement savings of generations to come would be an act of social and economic vandalism that we cannot allow.
Superannuation is also starting to have the fiscal benefits envisaged by Keating and Kelty.
Superannuation has helped ensure Australia spends one of the lowest amounts on age pensions as a percentage of GDP of any advanced economy.
Latest Treasury estimates are that 12% super will mean $10bn saved each year on pension outlays in 2030.
Our superannuation savings pool, standing at an incredible $1.4 trillion, has doubled in just seven years.
That wealth is held in retail and corporate funds, industry and government funds and self-managed funds.
No model has a majority.
Each model has its benefits.
What unites us all is the understanding that universal superannuation is here to stay.
Like Medicare, it is now a fundamental part of Australia's social compact.
A glittering economic achievement which has created jobs and opportunity for millions of Australians.
And more proof, if anyone needed it, that strong economic management is not an end in itself - but a means to build a better nation, to provide work and the dignity that comes with it.
Our task is to build on that legacy.
To borrow a Keatingesque sentiment, superannuation policy is an unfinished symphony.
The Keating generation created the fundamentals of a system that will endure for decades.
It is up to us to take the next steps.
As our population ages, our expectations of quality of life in retirement will rise.
More than half of Australians now working would prefer to retire on an income of at least $40,000 a year, compared to the single age pension of just $17,000 a year.
Yet currently less than 10 per cent of Australians aged over 65 have incomes over $40,000 a year.
It must be the goal of government to do better.
And the fact is we can't address that gap without increasing super contributions.
That is another reason we will increase superannuation contributions from 9 to 12 per cent over the next decade, adding half a trillion dollars to national savings by 2035.
This increase is affordable and sustainable for businesses if introduced in the right way.
That is why we have staged the increases with a gradual ramp up so they start from next year and reach 12 per cent by the middle of 2019.
I am thankful for your support in achieving our national goal of lifting superannuation.
Friends, our other key task is to make the system more transparent and efficient, so that fund members obtain the best possible service and value - and importantly have trust and confidence in the system
It doesn't matter whether an employee is a member of an industry fund or a retail fund, they deserve good service and real value for money. They also deserve to be placed in a super fund because it is in their best interests, not because of sales commissions being paid to advisers.
We need to strip away inefficiencies to ensure that as much money as possible flows into the hands of retirees.
Our SuperStream reforms address some of the most basic issues of improving the creaking back-office of the super industry.
On my advice SuperStream could deliver $1 billion worth of efficiencies, as well as giving employees greater peace of mind that their contributions have been paid securely and on-time.
Let's get moving on SuperStream - an important part of the productivity agenda for the wealth management industry.
The other big reform, of course, is MySuper.
The reality is that most Australians are not active managers of their superannuation.
They should not have to pay for advice or products they simply don't require.
For most employees, simple and reliable no-frills, low-cost super funds will be all they need.
And all parts of the superannuation industry have a role to play in providing them.
I know that many in this industry have already responded to this challenge by launching simple, commission-free super products.
And we as the Government have a role to play as well. To listen to your concerns and explain our policies. Our efforts in this respect have been spearheaded by the Minister, Bill Shorten, but I want you to know that my entire Government is committed to working with you to deliver a competitive superannuation industry.
I understand that the issue of how administration fees will be calculated in relation to MySuper products as well as the manner in which existing superannuation accounts will be treated following the introduction of MySuper, is a significant matter for the FSC and your members.
I know the Minister is consulting with you and the Government looks forward to continuing our engagement with each of you on these important issues.
It is in this spirit that we also recently released the first tranche of legislation for our Future of Financial Advice reforms on Monday. We will be releasing further details in coming months and are on track to introducing the legislation into Parliament later this Spring.
A competitive superannuation industry benefits all Australians.
It is the right policy at the right time in our history.
Friends, private savings through super, backed by public saving through tough budget rules.
It's all part of a whole.
A plan to modernise our economy for the future so Australians have jobs.
A plan to create opportunity for every Australian - the opportunity that comes through having a job.
A plan to transform innovation, skills and training - so Australians can get a better job.
A plan to build the infrastructure of the future, the NBN, to unlock the opportunities of the digital economy so we don't export jobs to countries with better technology.
A plan for a clean energy future in which economic growth is decoupled from carbon growth, and Australians have clean energy jobs.
Tax reform, to better reward Australians who get a job and to help non-mining companies create jobs
Building the road and rail infrastructure that will reconnect and re-energise our cities, and create jobs.
And, of course, reforms in health, ageing and disability to meet the demographic demands of tomorrow and make sure we don't leave Australians behind.
In uncertain times, it is these things that will decide the outcome.
These are the things that will secure our future as a nation.
A nation confident in the world - and confident in itself.
If, on the other hand, political short-sightedness wins the day, then Australia will lose the future
If we allow the insidious belief to creep in that Australia is not up to reform - that we should punch below our weight, rather than above - that we should always put off to tomorrow what we'd prefer not to think about today - then it is ordinary Australians who will feel the pain of that failure of confidence.
Just as it is those ordinary Australians who are benefiting today from the reforms in superannuation undertaken twenty years ago.
I am optimistic about Australia and Australians. I believe that our best days are ahead of us, and that the choices we make today will make that true.
Australians are rightly proud of our economic achievements.
We did big things before in tougher times than this.
Achievements like Medicare, tariff reform and universal super.
Walking the reform road together, there is nothing but fear preventing us from doing great things once again.