The federal government's plan to increase the superannuation guarantee (SG) will definitely happen, despite being overshadowed by the negativity surrounding the mining tax, according to Cbus chair Steve Bracks.
"It will be hard to put this genie back in the bottle," Bracks told an Australian Institute of Superannuation Trustees lunch in Melbourne yesterday.
Bracks said he believed the SG increase could be painlessly delivered in the form of business tax offsets and through a wages super trade-off, as occurred when the SG was first introduced in the 1980s.
TWUSuper chair David Galbally, who also spoke at the function, added that it was essential the SG go up to 15 per cent "and the sooner that happens the better off we will all be, because otherwise the government will not be able to afford an increasingly ageing population".
As to whether the superannuation industry was mature enough to be able to handle the vast amounts of money that will come its way as a result of the SG increase, both Bracks and Galbally argued that it was well supported to do so through Australia's superannuation prudential supervisory system.
"We do have to get a bit smarter in the way we inquire into (individual) investments," Galbally said.
"But our compliance regime, and the fact that we have what is in effect a double licensing system, does put us in a better position to minimise the potential impact of future financial crises and corporate collapses."
In an environment where reducing costs had become the main competitive advantage, further fund mergers were on the cards, Bracks said.
"We have a lot of funds - and if you could give members a better return by cutting administrative costs and other overheads (by merging) you would probably be negligent not to consider that option."
Bracks and Galbally also argued that super funds should be taking a stronger advocacy role in terms of influencing the government and business community on behalf of their members' interests.
