Recently, your FSC team intently watched the Senate live stream as divisions were called for a critical piece of reform to superannuation – Minister Jane Hume’s 'Your Super, Your Choice' bill enabling every Australian to choose a superannuation fund.
The vote was tight – but in the end the Senate, including the newly independent Rex Patrick, did the right thing for Australians. Come 1 January 2021, after 30 years of compulsory super, every single one of us will have the freedom to choose our own fund. Revolutionary!
This fundamental right barely made the mainstream news, despite the fact that it’s been on the agenda for consumer groups like CHOICE, and indeed, the FSC’s, for years. The win will hopefully give the Government courage to keep going with more incremental reform to super – for instance, the Hayne and Productivity Commission’s recommendations for defaulting once, which will end the scourge of multiple accounts; and the decoupling of super from the industrial system will allow it to become truly competitive.
For anyone who still thinks the status quo should remain, have another think. Right now, super is being whacked like a piñata – its diverse group of detractors are punching holes in something we’ve all probably ignored or taken for granted for too long. It won’t take much for a critical mass of voters to lose confidence in the current superannuation system, given the relentless attacks on it. If we fail to reform super, to lower fees and end the self-serving scam of multiple accounts, Australians may vote for the party which promises to weaken and dismantle it as a system that doesn't deliver what it promises.
If on the other hand we commit to reforming the system as fast as possible, so that everyone can be confident that the vested interests are not prioritised over their own, I believe Australians will stick with the mandatory system. After all, it has proven its worth over and over again – whether recently allowing people to access up to $20,000 to help them survive the worst recession in our lifetimes, or whether it’s doing the heavy lifting in the economy, as Exante Data’s Grant Wilson writes. Wilson, who supports the Superannuation Guarantee rising to 12 per cent, says that superannuation plays a major role in Australia’s transition to a net creditor nation. It underpins the ongoing accumulation of international assets that pay interest and dividends to Australians, he says, enhancing our gross national income and acting as a buffer for economic shocks.
While structurally, we will never strip the partisan politics out of compulsory super given its origins in the trade unions and the Labor Party, we should be able to all agree that it does contribute significantly to the health of the national economy. Imagine how much better that outcome would be if our political parties and cross-benchers commit to delivering the remaining suite of reforms. Then, and only then, will our super system be able to deliver the best possible retirement savings to every Australian. We are perhaps about half-way there.