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(December-2001) A cloud with a silver lining
It’s been a tough year for the super industry, which has faced volatile investment markets, shrinking returns to members and a barrage of negative headlines questioning its fees and charges, and worse, its safety. Proposals emanating from inquiries by the Senate Select Committee on Superannuation and Financial Services and the Productivity Commission, and more particularly from former Minister for Financial Services and Regulation Joe Hockey’s issues paper, have also been making some players jittery.
In the meantime, however, Hockey has moved on, leaving his initiative without a driver, and ensuring that the new year opens with at least one cloud of uncertainty. But there are also some silver linings.
One is the endless possibilities that a new mix of chemistry can bring. The industry appears to have welcomed the possibility that the new Assistant Treasurer Helen Coonan could take over the role of superannuation. And, Labor Senator Nick Sherry, who has been given the shadow post of retirement incomes, promises to keep his passion for super burning.
The Government does appear to be viewing superannuation as a greater priority, judging by the fact that it actually announced a plan for a better system just before the federal election). But the industry shouldn’t hold its breath for any fundamental changes if comments made by Treasurer Peter Costello are anything to go by.
Costello obviously believes that Australians have enough incentives to save for retirement. During a pre-election radio interview he noted that if people do put money into super “then they do get tax incentives, quite substantial tax incentives” because tax rates for super are lower than normal tax rates.
He also said: “That system, having commenced 15 years ago, would be incredibly complicated to unravel now... Some people have paid tax on the way in and if you suddenly change all of that, they’ve got post-tax money in these funds, and extricating it would be a very complicated thing.”
Could this be the same Treasurer who about 18 months earlier said: “I think superannuation is now so complex, that it should be simplified.”? And later reiterated: “What I’ve said is that it would be a good project to simplify superannuation. And it would be a good project.” That’s when he was talking about holding a review on super, a suggestion that appears long since forgotten.
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