The Assistant Treasurer, Bill Shorten, says he has adopted the Cooper Review as a policy blueprint, but good sense demands that he fully test the concepts before they are implemented.
Those listening intently to Assistant Treasurer Bill Shorten’s address to the Association of Superannuation Funds of Australia national conference in mid-November would have heard him utter a very important sentence with respect to the direction of the Government’s superannuation policy.
Referring to the Cooper Review, Shorten said it “has become the blueprint for advancing Australia’s pension system into the future, and we are implementing many of Cooper’s recommendations”.
There would be many people working in the superannuation industry who would have shaken their heads at the new minister’s statement which, without waiting for the necessary consultative processes to be completed, suggested the Government was giving the Cooper panel’s recommendations the status of Government policy.
Indeed, Shorten’s statement raises the question of whether, when undertaking the obligatory portfolio familiarisation process incumbent upon all new ministers, he actually examined what was being said about the Cooper Review recommendations within the industry itself.
If the minister had waited around to attend a subsequent panel discussion that included a number of industry heavyweights, he would have heard firsthand the level of disquiet being felt not only about many of the Cooper Review’s recommendations but also the manner in which the Cooper Review was conducted.
Shorten may not have attended the panel discussion but Jeremy Cooper certainly did, and the former deputy chairman of the Australian Securities and Investments Commission and now Challenger executive could have been left in no doubt about the views of some panel members.
This ongoing industry disquiet about the Cooper panel’s recommendations must then be weighed against the reality that the Gillard Government can only successfully pursue policy changes where it can gather the support of the independents and the Greens in both the House of Representatives and the Senate — something which may explain why Shorten has placed a 2013 implementation date on Cooper’s MySuper recommendation.
The problem for the Government in adopting the Cooper Review’s MySuper formula is that, by doing so, it is walking away from nearly a decade of messages aimed at encouraging Australians to become more involved in their superannuation.
Instead, and by Shorten’s own admission, MySuper not only accepts that many Australians will not become involved in their superannuation but also provides them with an excuse to maintain that non-involvement.
Then, of course, there is the question of MySuper in the context of default funds, award modernisation and some important questions that have been raised by the Federal Opposition Financial Services Spokesman, Mathias Cormann.
The opposition spokesman continues to be a strong advocate of a review of the modern awards approach to default funds and has argued that the issue should be referred to the Productivity Commission.
More recently, the Senate actually voted to refer the matter to the Productivity Commission — something that has the potential not only to affect the status of default funds with respect to modern awards but also the status of MySuper as a viable default option in 2013.
According to Shorten’s address to the ASFA Conference, “MySuper will replace existing default funds” but, in saying that, the minister does not say how this will be achieved or whether it will be achieved in the context of retaining the constructs that evolved out of the modern award processes.
The Government owes it to the superannuation industry and the broader electorate to explain how this new approach will work. It is simply not sufficient to say that MySuper will replace existing default funds without explaining precisely how this will be achieved and what elements of the existing regime will be kept.
Nor should the Government be allowed to proceed down the path towards the implementation of MySuper without first having considered the findings of the Productivity Commission following last month’s very specific Senate referral.
With a proposed implementation date after the next election, the Government has no need to rush the MySuper proposal and Shorten needs to deliver on his promise of full industry consultation and stakeholder involvement.
The minister has previously declared that while the Government is prepared to consult on the big policy issues, it will not allow that consultation process to ultimately stymie the implementation of the Government’s agenda.
However, the Government would be foolish to pursue a policy if significant sections of the superannuation industry remain troubled by the implications of its implementation.
