One of the most welcome statements which accompanied the election of the Abbott Coalition Government in 2013 was that, consistent with its pre-election promises, it would not be making any significant, adverse changes to the superannuation settings.
It was a statement originally uttered by the then Opposition spokesman on Financial Services and Superannuation and now Minister for Finance, Senator Mathias Cormann, and later repeated by the former Prime Minister, Tony Abbott. Up till now, the Coalition Government has been as good as its word.
Sadly, 2016 has kicked off with a torrent of speculation around superannuation and Financial Services Council (FSC) chief executive, Sally Loane, was absolutely right to suggest that most of it has represented unwarranted kite-flying on issues such as abandoning the superannuation guarantee increase timetable to changing the capital gains tax (CGT) regime as it applies to superannuation funds.
This is not the way to have a policy debate about something which represents the single biggest investment for many Australians. Indeed, the Treasurer, Scott Morrison and the Assistant Treasurer, Kelly O’Dwyer, would do well to listen to the admonitions uttered by the likes of Loane, Association of Superannuation Funds of Australia (ASFA) chief executive, Pauline Vamos and Australian Institute of Superannuation Trustees (AIST) chief executive, Tom Garcia.
The two ministers would do well to carefully peruse the pre-Budget submissions of the FSC, ASFA and the AIST and consider that the Australian superannuation regime is certainly not broken. In fact, while the superannuation system can certainly be improved, it remains mostly fit for purpose.
That is why the following quotation from the ASFA pre-Budget submission is so apt:
“The superannuation system is working well: it is reducing the cost of the Age Pension; reducing the cost of health and aged care for the Government through enabling retirees to maintain private health insurance and pay contributions towards the cost of health and aged care; and delivering better lifestyles in retirement for many Australians than that afforded by the Age Pension.”
After more than 20 years, it is undeniable that improvements can be made to the superannuation regime and many of those have been canvassed over the past half-decade including within the findings of the Financial System Inquiry (FSI). Thus it is possible to envisage legislative changes aimed at injecting greater equity in the superannuation tax concessions and on addressing the retirement income shortfalls which are encountered by women and lower income earners.
As the policy outlook feature included in this edition of Super Review makes clear, the industry and its leaders are keenly aware of the deficits of the current regime and what needs to be improved. But, to draw on a phrase used by a former Labor Assistant Treasurer, they are looking to renovate the house rather bulldozing the existing structure and starting again.
As the Treasurer hunkers down to deliver a May Budget capable of being taken to the next election, he would do well to remember that he is part of a Government which came to power on the back of promises such as the pursuit of super policy certainty.
Certainly, this Government should not seek to use super as an alternative to proper and meaningful tax reform.
