Just as the superannuation industry was adapting to the new post licensing landscape, with the amalgamation of some funds, the total disappearance of others, and rigorous fit and proper trustee requirements, we had to come to terms with dramatic budget changes. While most of the latter simplify the benefits end of super, consultations about proposals such as changed age contribution rules demand more trustee time and attention.
There has been broad agreement in the industry. The simplification is welcome, the beneficiaries are middle and high income earners, and the remaining policy task is to build up the retirement savings of low paid and erratic earners. Bruce Baird’s committee report on super for the under 40s has proposed relevant reforms.
Now, for no apparent reason, the Parliamentary Joint Committee on Corporations and Financial Services has announced an inquiry into the structure and operation of the superannuation industry – and anything else anyone might care to come up with.
This is a strange initiative. Its terms of reference go over well trodden ground, or unnecessarily revisit issues already under discussion between government and industry.
They take no account of the many regulatory changes parliament itself has recently created. Why this broadest of broad ranging inquiries at this time?
The Australian Prudential Regulation Authority (APRA) with its licensing and ASIC with its many consumer and corporate law changes have implemented major supervisory reform. The financial performance of super funds is now a matter of frequent published assessment, as ratings bodies have moved comprehensively into rating super funds. Even the most passive of fund members can find performance data in the daily media and make comparisons between major funds.
Choice of fund has been widened and covers the majority of workers. That most of them seem content with their existing funds is a tribute to a strong economy and sound management by trustees over a long period. Other terms seem disingenuous. Is there really any confusion among stakeholders about the meaning of the terms ‘not for profit, or ‘all profits go to members’?
While benchmarking Australia’s superannuation performance against international experience might be interesting, this work has already been performed at a high level by international bodies such as the World Bank, which concluded that Australia’s performance is better than most.
AIST members, and the trustees and staff of not-for-profit funds, have no problems with parliament looking at any aspect of superannuation, in principle.
But so many terms of reference, and the give away final term ‘any other relevant matters’ create the sense of a fishing expedition rather than a useful piece of work. Useful work remains to be done. For example, everyone knows that the financial advisory sector is still serving consumers poorly. Why not a focused investigation aimed at improving that sector?
Or why not, courtesy of a parliamentary inquiry, get Treasury’s admired but inaccessible Retirement Income Modelling Taskforce and other technical experts to produce a fuller picture of the long-term revenue effects of the budget super changes and super taxes in general?
Or is this inquiry all about expressing annoyance by some MPs that these days, industry funds not only communicate with members through the mainstream media, as master trusts and retailers have always done, but also that industry funds, unlike some commercial providers, have such a powerful story to tell?
