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Editorial (Feb-2005): Time to clean up super legislation
If 2004 represented a watershed year for the Howard Government with respect to superannuation policy, then 2005 and 2006 have the potential to be even more significant and to stamp the Liberal Party as a party of meaningful reform.
The Howard Government will, from July, command a majority in both houses of the Parliament and this provides an unparalleled opportunity to impose legislative reform.
While there are those who might argue that, over the years, the Government’s lack of a majority in the Senate has acted as a moderating force on policy development, it is also true that it has led to complex compromises which have given rise to some highly unwieldy legislation.
Already in 2005 we have heard calls from the Liberal Party backbench for reforms to Australia’s taxation legislation and, frankly, it is high time that the Government also considered consolidating and simplifying the nation’s superannuation legislation.
Why should the Government make simplification of Australia’s superannuation regime a priority? Because even senior industry experts with day-to-day responsibility for running funds admit they don’t have a thorough and comprehensive understanding of the nation’s superannuation laws.
Last year the head of Towers Perrin in Australia, David Solomon, called for a scrapping of the existing legislative regime and the implementation of a simpler set of rules. This year, we have the chief executive of Tower Australia, Jim Minto, making a similar plea.
Indeed, Solomon likened the existing superannuation regime to the old Pacific Highway — “narrow and winding, full of potholes and pitfalls, which the Government tries to patch up as each new problem causes someone to run off the road”.
Solomon was right and the simple bottom line for the Government is that if the so-called experts cannot get a total grip on Australia’s super legislation, then how can ordinary tax-payers and super fund members be expected to understand the complexities.
The need for the Government to do something about this situation is underscored by factors such as the new co-contribution regime and the looming implementation of choice of fund.
To some degree, the need for a simplification of the regime is also underlined by the clear evidence that even the Government’s own agencies, including the Australian Taxation Office, are struggling to find the resources to make it work.
Whilst ever the Government lacked a majority in the Senate it was understandable that it would avoid seeking to implement any far-reaching simplification of the superannuation legislation. The Government’s experience with the co-contribution and choice of fund undoubtedly taught it that getting legislation through the Senate could be a highly intricate exercise too often resulting in the acceptance of unsatisfactory compromises.
None of this will be an issue after June this year. Thus, the Government is presented with the opportunity to simplify the nation’s superannuation regime. It is an opportunity it should take.
Mike Taylor, Editor
AUTHOR
Mike Taylor
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