There’s also ongoing speculation about the future of the superannuation guarantee, which is set to rise 0.5 per cent in July and then continue with these annual increases until it reaches 12 per cent by 2025. The government has also considered making a portion of the super rises optional for workers and at the same time faces pressure from backbenchers to scrap the rise completely.
The federal government, Labor and the super funds all appear to have a different view about the point of superannuation funds in the first place. If there’s no agreement about the purpose of the eggs, is it really a surprise we don’t know what to do with the goose?
It’s here where most reports and reviews of the system agree. There has to be a clearly defined objective for superannuation and for the retirement system more broadly.
In 2014, the Financial System Inquiry’s final report after a broad review of the sector referred to three areas where improvements could be made in the superannuation system. Two of these, improving operational efficiency during the growth of super accounts and improving efficiency during retirement, continue to see federal government action. Fees, an ongoing source of scrutiny, are currently a focus of the ‘Your Future, Your Super’ reforms being pursued by the government.
However, the third was to “set clear objectives for the superannuation system”. That objective does not yet exist in law.
Former financial services minister Kelly O’Dwyer got the ball rolling on enshrining a purpose in law in 2016, following the recommendation to do so by the Inquiry. There was a bill written up in 2018, the industry was consulted, and since then there has been no progress.
The final report of the Retirement Income Review last year, which talks about all the pillars of the retirement system, says an agreed objective is needed “to anchor the direction of policy settings, help ensure the purpose of the system is understood, and provide a framework for assessing the performance of the system”.
This is one of the major sources of tension between the Morrison government and the industry super funds, who are now flexing their financial muscle in multi-million dollar advertising campaigns directly targeting the Coalition for “meddling” with retirement savings.
Enshrining an objective for superannuation in law would not be a cure-all, but it would help limit some of the frustrations the industry holds about how the government treats super.
It would also mean any suggestion of opening up super to solve pressing issues, such as housing affordability or running out of money during a pandemic, would need to be looked through the prism of the purpose for the system. But it would also mean the super funds have to look at their use of money through this lens and have this purpose in mind when choosing how to invest.
Defining a purpose for the current system would provide a solid ground for policymakers, the industry and the public to be able to talk about the future. It’s hardly surprising people are pulling super in multiple directions when there isn’t agreement on the fundamental purpose.
Bringing back this Bill has the potential to be a line in the sand to start repairing the relationship between the government and the super sector. It will also put everyone back on the same path.
Without a clear view of what we are doing with the superannuation system we are at risk of falling prey to another mistake warned about in a lesser-known story from Aesop’s Fables.
In this tale an astrologer is gazing at the stars as he walks along, contemplating the future. He is so focused on the sky above that he does not notice what is in front of him on the ground. Distracted and too busy pondering about what might be, he falls into a well. A woman, scornful that he cannot see what is at his own feet, queries how he expects to be able to see into the heavens.
This same concern should apply now. How can super funds and workers plan for the future if they do not know the lay of the land today?
Ross Gittins is on annual leave.
Jennifer Duke is an economics correspondent for The Sydney Morning Herald and The Age, based at Parliament House in Canberra.