Liberal Senator Andrew Bragg chastised the superannuation industry for pushing back on the early release superannuation scheme, saying it was providing access for people to their own money in an “economic shock” and that fears people are ruining their future are “just not true”.
In a wide-ranging fireside interview with Rice Warner’s Michael Rice, Bragg spoke of the superannuation funds’ collective concern at seeing huge outflows in line with the scheme.
“I don’t think the industry needs to be too defensive about it,” the Senator commented.
As at July 5, the Australian Prudential Regulation Authority reported that $19.1 billion worth of super had been paid out according to the early release scheme, with 2.7 million applications received so far representing $23.3 billion. The average payment is $7,511.
Several funds voiced concerns that the government’s early release scheme would be an onerous administrative burden, while industry funds especially cited liquidity issues in coping with the cash demand.
Reserve Bank of Australia Governor Philip Lowe quashed the cash concerns, saying liquidity requirements were “perfectly manageable”.
It was also revealed in May that super industry lobby groups including ASFA and the AIST sent a letter to Treasury and regulators asking to slow down the scheme, with the concern being centred on safety and efficiency issues.
‘Sorry about that’
According to Bragg, the funds need to accept the scheme as a lifeline for consumers.
“I know its uncomfortable for the super industry and I’m sorry about that,’ Bragg said. “But there is a $3trillion pool of savings there which can also be deployed to help.
“The most important thing a government can do in a crisis is keep the fabric of society together and that’s what we’re trying to do,” he added.
Bragg served as director of policy & global markets at the Financial Services Council – which hosted the event – between 2014 and 2016 before being elected to the Senate in 2019.
The Senator and Rice, who chaired the discussion, both noted that in some cases, paying off credit card debt or placing a deposit on a home might be more valuable uses of retirement savings than their intended purpose.
“If it’s between super and a home you take the home,” Bragg said.
Bragg was notably forced to defend an accusation from Shadow Assistant Treasurer Stephen Jones in April that he had distributed “illegal” financial advice and undermined the superannuation system by explaining the government’s early release superannuation scheme in a mailout to his electorate.
“ASIC has actually provided advice that parliamentarians can advise constituents about the new laws we have enacted about super,” Bragg responded, before accusing Jones of trying to protect the industry ahead of consumers.