The Morrison Government wants to present a small target on superannuation at next year’s election. But Labor has big ideas for the sector that could be impossible to match.
Superannuation might well be the Liberal Party’s Moby Dick. It’s a popular policy inextricably tied to Labor and the union movement, and while they can barely abide its existence, their attempts to tinker with it have usually gone poorly. The issue of retirement savings is an emotive one; Labor need only say that the Liberal Party wants to mess with them to open up the old front again.
Which is probably why, after a year of relative success in the endless super wars, the Morrison Government will present a small target on the matter at the election.
Speaking to an Industry Super Australia (ISA) event on Wednesday (December 15), shadow finance minister Stephen Jones noted that the Abbot Government froze the SG increase in a policy continued by Turnbull and Morrison, until the increase finally went ahead this year. And while Jones voiced his support for some aspects of the controversial Your Future Your Super (YFYS) legislation, he said that Labor wanted a “clear commitment from the government” on whether future super increases would go ahead.
And he got it.
“(The SG can’t be frozen) without opposition support,” said superannuation minister Jane Hume at the same event. “We have no intention of doing that, the Treasurer made that perfectly clear. There was an awful lot of pearl clutching about whether the SG was going to rise a year ago. And it did. And that seemed to go unnoticed. It’s legislated. It’s done. It’s going ahead… The promise hasn’t changed.”
Whether it’s an ironclad commitment or an agreement in principle remains to be seen. After all, we’ve been here before. The previous increase was legislated, but there were rumours at the time that it might be “flexibilised” – made optional, if workers chose to receive it as take-home pay instead, or opened for the use of housing – or frozen again. Those rumours were never borne out, but Morrison and Treasurer Josh Frydenberg earned the suspicion of the industry after the dual shocks of early release and the unexpected announcement of YFYS on Budget Night.
Just as likely, the Morrison Government will stick to that ironclad commitment. They’ve already won a decisive victory with YFYS; there’s no need to plunge back into battle over the SG increase, even if it does rankle them.
Of course, the election will not be fought on an increase alone. Labor has more vision for the sector in a post-Covid world where “national resilience” is quickly becoming a buzzword. And that vision stands in stark contrast to the one put forward by the LNP, which is less vision and more warning to the superannuation system to stay out of the national debate around renewables and economic growth.
“The message that we want to send to business, superannuation and capital markets, is that Labor is open for business,” Jones said. “We see the superannuation sector as a solution to the challenges that we are facing, whether it is building infrastructure, whether it is ensuring that we renew and increase our stock of housing, or whether it is ensuring that we enhance productivity in our agricultural sector, so that Australia truly can be the food bowl of the world.”
Jones also wants superannuation to take a lead role in funding research and development to commercialise “the great innovations in our universities, our start-ups, our research institutions” – a role they may find hard to play, given that early stage funding and venture capital is a tricky business for such large investors.
“If your money isn’t being invested in Australia, it’s creating those opportunities in another country,” Jones said. “I don’t think it’s controversial to say: Australia first.”
And while Labor wouldn’t play “52 pickup” with YFYS by making wholesale changes if they win the election, it would be casting a critical eye over the metrics by which performance is measured under YFYS.
“My concern is that if you let it run for ten years, it’s almost mathematically certain that every fund in Australia will fail… You’d review how it’s operating to ensure you don’t get unintended consequences in its operation,” Jones said. “It might be that some of the benchmarks need tweaking here and there. But to the message of stability and certainty, we will make no sudden changes, and believe that benchmarking has a role to play.”
Hume offered a different and perhaps more populist message. Her assertion that the executives she’s spoken to are entirely onboard with YFYS doesn’t really hold water. It tends to be an agreement with the objective – to weed out underperformers – paired with significant criticism over how that objective is achieved. But that is of little importance to the LNP, which will instead focus on members, leveraging its track record on achievements that even Labor has supported: stapling, the closing of duplicate accounts, and the removal of exit fees.
“Everything we have done is a track record of delivering for members,” Hume said. “And that has paved the way for the passage of the Your Future Your Super reforms, the most significant reforms to superannuation in 30 years… Underperforming funds should never be able to hide behind compulsion and disengagement, or slick advertising campaigns and the better performance of other funds in their cohort.”
Hume noted that ISA had criticised the Morrison Government for tinkering with the superannuation system while posing the rhetorical question of who could actually oppose the long list of reforms that that has been pushed through.
“We all know where the problems have been, and we have known it for years,” Hume said. “But I’m unsure who would put their hand up and say that these things weren’t worth doing.”