Superannuation fiddling rubs industry the wrong way

The recent announcement by Federal Treasurer Wayne Swan that he had convened a Superannuation Roundtable seems to thoroughly misunderstand the consequences that go with constant policy 'fiddling' and uncertainty.

In the past decade Australia’s superannuation regime has been subjected to no fewer than five review processes, the largest and most expensive of which was the Cooper Review.

During that same time, successive surveys and research reports have suggested that Government fiddling with the superannuation regime has created serious distrust among ordinary Australians, particularly those who are at an age when they are thinking more seriously about retirement and worrying about the size of their retirement incomes.

Thus, last week’s announcement by the Federal Treasurer, Wayne Swan, that he had convened a Superannuation Roundtable seems to thoroughly misunderstand the consequences that go with creating further policy “fiddling” and uncertainty.

Looked at objectively, the Superannuation Roundtable is an unnecessary exercise. It is not scheduled to produce a report until December this year – something which, at best, means the earliest the Government can react is in the 2013 Federal Budget, its last budget before it must go to the polls.

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Further, the Treasurer’s brief for the Roundtable skirts around the superannuation issues that bleedingly obviously need to be fixed a good deal more quickly – contribution caps and excess contribution tax.

Rather, its brief seems designed to hand the Government a grab-bag of minor goodies it can trot out before the next election.

This much was clear when Swan described the first stage of the Roundtable’s work as being to “discuss and examine better ways to target and deliver certain concessions”.

“As part of this initial work, the roundtable will consider compliance cost issues raised by the superannuation industry in relation to the new higher concessional contributions cap for individuals aged 50 and over who have less than $500,000 in superannuation.

"The Roundtable will subsequently examine proposals to expand options in the drawdown phase, like annuities and deferred annuities, as well as appropriate offsetting savings.”

For a party which has, with some justification, claimed authorship of Australia’s highly successful compulsory superannuation regime, the Australian Labor Party has not covered itself in glory since it regained office in 2007.

Indeed, the whole issue of contribution caps and excess contributions is owed to the fiddling which occurred in its first budget. Since then, the situation has not been helped by a range of subsequent, albeit more minor, changes aimed at seeking to contain the budget deficit.

The Roundtable exercise must also be viewed in the context of the existing uncertainty around implementation of the Government’s Stronger Super and Future of Financial Advice changes – processes which will still be on foot through much of 2013.

When the ALP regained office in 2007 the Australian superannuation regime was not seriously broken – something acknowledged by the former Minister for Financial Services and Superannuation, Senator Nick Sherry, when he described the need to “renovate the house”.

The Stronger Super process should spell the end to the renovation, and the Government needs to ensure that by fiddling at Roundtables it does not undermine public confidence in its foundations.