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Can governments resist superannuation temptation?
Superannuation policy roundtable
Part 1: Superannuation policy before, during and after the election
Part 2: Can governments resist superannuation temptation?
Part 3: Income streams and where they lead
Part 4: What are the post-election priorities in superannuation?
A recent Super Review roundtable looked at the temptation faced by governments of using superannuation as a cash cow when running budget deficits.
Mike Taylor, managing editor, Super Review: I thought one of the important things that was said by Chris Bowen at the FSC conference was his acknowledgment that superannuation is a big bucket of cash to any Government. And it’s very hard.
I know they all say, ‘well, we won’t touch it for five years’ or whatever, they promise that, but the reality is that any Government running a deficit – and it looks like they’ll be running the deficit for some little while – is going to be tempted to reach into that big superannuation bucket.
John Brogden, chief executive, Financial Services Council: Well they are, Michael. But I think it’s extraordinarily significant for both political parties to go into this election with a commitment – slightly different on the edges – to not touch superannuation for at least three years.
Now that’s extraordinary, in the sense that we have been able to influence political parties to realise that it’s an area that you can’t keep playing with.
Ironically, and bearing in mind a number of my members are banked-owned subsidiaries, but it is relevant that the week after the Treasurer said “I will leave superannuation alone for five years” he put a levy on banks.
So you look at their contrast. You look at the contrast and how those decisions were made. And we – the consumer lobby that doesn’t even exist in superannuation – I mean consumers don’t rally in superannuation, formally...
Pauline Vamos, CEO, Association of Superannuation Funds of Australia (ASFA): Informally they have.
John Brogden, Financial Services Council: Yeah, and so from that perspective I think the fact that both parties have said they’ll leave it alone is significant.
That of course does not, in any way, conflict with your point that the temptation will be massive, and also Treasury will be pointing at the group saying, ‘Get some more tax out of them’.
Pauline Vamos, ASFA: But there is a bigger issue here. I agree with John – we are going to see a stabilisation of the tax settings for the next three years.
Tax settings only though. There’s still a lot of other work to do. But that is not a long time when you think about a lot of the conversations that are happening now within Government, Coalition and Treasury circles in terms of the interaction of retirement incomes policy and looking after an ageing population.
They know that the superannuation pool, as large as it is, is not going to meet those needs. We already saw a sneaking of that on 5 April.
What they have done in changing Centrelink is change the view and the treatment of income streams in some income-stream products.
So what we are going to see I think, over the next three years and after the next three years, is not so much a change in super, they’ll keep that promise we think, but they’ll change how the superannuation account balances, how the income streams are treated when it comes to access to other public policy areas.
This is something we need to be mindful of.
This is going to take resources and collaboration.
Superannuation policy until now has been fairly simple, to be frank. So the ability of three or four organisations to cobble together good superannuation policy has not been that hard.
But when I look at the research agenda that we have to embark upon over the next couple of years, that is multi, multi what I’ve ever done in the past in terms of ASFA.
So [we need] a central research centre across the superannuation system, a central best practice. Again, best practice papers are never quite there because of the resources.
This is the conversation we’ve got to change – not about [professional] bodies, but again, what I said before: what activity has to be handled, how best should we, as an industry, resource that? Because we can’t do it at the moment.
And that inability is not going to stand us in good stead.
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