Those with long enough memories will recall the loudness with which employer groups bemoaned the imposition of the superannuation guarantee (SG), claiming that it would send businesses broke and generally undermine the economy.
It should go without saying that the complaints of the employer groups gained a sympathetic reception with the Liberal/National Coalition parties who were then in opposition. It is also history that when the Coalition assumed power under former Prime Minister, John Howard, they slammed the brakes down on lifting the SG to the Labor Party’s desired 12-15%.
That was 1992 and now, nearly three decades later and despite the success of the superannuation guarantee in underpinning the Australia’s retirement income system and the nation’s savings ratio, an agenda is being run within the Federal Coalition Government to generally constrain superannuation funds and cap the SG at 10%.
Allied to that campaign is the notion that the superannuation guarantee should be made opt-in for low income earners, and the suggestion that, in any case, superannuation is not always the optimal retirement income vehicle for Australia.
How serious is that agenda? Well there was much discussion of the issue and what the industry should expect during the Financial Services Council (FSC) annual leaders forum in August where the 10% figure gained a conversational airing, and as recently as late September the Assistant Minister for Superannuation, Financial Services and Financial Technology, Senator Jane Hume, was quoted as regarding 10% as a nice round number.
All of this, of course, now needs to be viewed in the context of the Treasurer, Josh Frydenberg flagging even before the 18 May Federal Election that the Government would be holding an inquiry into the retirement incomes regime and then in late September he said that the review would be looking at the three pillars of the existing retirement income system – the Age Pension, compulsory superannuation and voluntary savings.
Frydenberg announced the appointment of a panel led by former senior Treasury official, Michael Callaghan, which will produce a consultation paper some time later this month (November). The Government then wants to see a final report from the panel in June, 2020.
Is this inquiry the stalking horse which will deliver the Government the means to renege on its undertakings with respect to lifting the superannuation guarantee to 12% by 2025? It certainly looks that way. Is capping the SG at 10% likely to prove an electoral deficit for the Government? Only if the Federal Opposition and the superannuation industry choose to campaign vigorously on the issue.
While some may think that an Australian Labor Party (ALP) Government would, in any case, legislate to ultimately lift the SG, it should be remembered that when last in power the ALP sought to tie delivery of the ultimately-failed Mineral Resources Rent Tax – something which skewed the reality that the SG was originally intended to reflected deferred wages, not a tax.
It is in these circumstances, that the superannuation industry should be demanding clarity on the policy agenda of not only the Government, but the Federal Opposition.