Faced with a second year of negative returns, Australian superannuation fund members can ill-afford the uncertainty that is being generated by multiple government inquiries and reviews.
Without necessarily intending it, the Australian Institute of Superannuation Trustees last month made a very important point with respect to Government policy-making in the middle of a significant market downturn.
The industry body, representative of the bulk of industry superannuation funds, issued a warning to the new Minister for Superannuation and Corporate Law, Chris Bowen, about his inheritance and, specifically, the number of inquiries and reviews currently underway and touching on superannuation.
AIST chief executive Fiona Reynolds said the new minister had a difficult balancing act in front of him because he was now responsible for a number of reviews, “which, on the one hand, have the potential to deliver much-needed reform but, on the other, if not handled in a timely and efficient way, could further erode confidence in our super system”.
“While there is certainly room to reform our super system to ensure it is more efficient, more user-friendly and more equitable for the vast majority of Australians who earn less than the average wage, the Government also has a responsibility to ensure that Australians can plan for their retirement with confidence and that the Australian public has a better understanding about the long-term — and at times cyclical — nature of super.”
Reynolds makes a very good point and one that cuts through much of the rhetoric and polemic that usually surrounds the superannuation debate.
In essence, she is warning that, on the back of two consecutive years of negative returns, superannuation fund members need legislative and regulatory certainty if they are to continue to view super as a preferred investment destination.
With a number of inquiries on foot, not the least of which being the Henry Tax Review, few would be prepared to guarantee that there will not be further significant change to the rules pertaining to superannuation.
Further, the tinkering with super contained in the Federal Budget will have done little to reassure super fund members, particularly those rapidly closing in on retirement.
The Rudd Labor Government has made something of a specialty of initiating inquiries and reports into key policy areas and while at first glance such efforts may seem laudable, they also give rise to protracted periods of uncertainty.
What is more, it is hard to avoid the conclusion that a government with so many reviews and reports underway is, far from being assertive and energetic, guilty of policy lassitude.
Where superannuation is concerned, the uncertainty generated by the multiple inquires tends to be magnified by the increasingly widely held view that the former Howard Government’s ‘better super’ initiatives are not sustainable in the long term.
If Bowen achieves nothing else in his first few months in charge of the superannuation portfolio, he could do no better than to deliver some clear-cut messages with respect to the Government’s broad policy direction.
What ought to be taken into account with respect to superannuation policy and the broader economic debate is the fact that the Rudd Government has now entered a period of particular political volatility and that many of the inquiries and reviews currently underway may not be finished before the next Federal Election.
By mid-June it was becoming increasingly apparent that the Prime Minister, Kevin Rudd, was capable of calling an election as early as November and this, too, is likely to be a cause for unease among superannuation fund members and those approaching retirement.
With former Treasurer Peter Costello about to exit the Federal Parliament, it is worth reflecting upon his legacy, not the least of which, intentionally or not, was the injection of the sort of certainty into superannuation that made it a highly desirable investment option for Australians.
Right now, faced with two consecutive years of superannuation losses and all the signs of government fiddling, Australians must be wondering whether they were right to place their faith in super.
The Government owes it to Australians and the superannuation industry to put some certainty and policy discipline back into the equation.
