Lost in the land of super

It is worth remembering that when the Coalition Government came to office in 2013 it gave an undertaking that it would not be making any unnecessary, adverse changes to superannuation.

Remembering that small detail is useful in the context of judging the Turnbull Government’s handling of superannuation both in the context of all the changes which occurred in 2016 and the debate which the Treasurer, Scott Morrison, has allowed to run largely unchecked in 2017.

Just as it was counter-productive and ultimately somewhat destructive for the former Labor Government to tie increasing the superannuation guarantee (SG) to the implementation of the proposed Resources Rent Tax, it was equally counter-productive for Morrison to this year allow a re-run of the debate around allowing people to access their superannuation to fund home ownership.

Even as the Departments of Treasury and Finance were getting ready to dispatch the Budget papers to the printers, there was continuing speculation that some sort of accommodation would be arrived at which would allow the use of superannuation for housing.

In the end, Morrison stopped short of allowing people to tap their super for a housing deposit, rather he provided the superannuation regime as a mechanism for accumulating a deposit. Either way, it represents another interesting entry on the Coalition’s superannuation policy report card.

This Government has from time to time made much of its commitment to the superannuation system, pursuing enshrinement of a “purpose” for super alongside persistently arguing for changes to fund governance and defaults.

At the same time, the Turnbull Government has done absolutely nothing to wind back the Abbott Government’s entirely short-sighted decision to impose long delays to increasing the SG to 12 per cent and it erred badly in last year lowering the concessional contribution caps.

The simple bottom line confronting this Government and its immediate successors is that most Australians remain significantly under-superannuated and measures such as delaying an increase to the SG or allowing people to dip into their super for housing would only add to this problem.

Superannuation is a long-term policy area which has too often over the past two decades been the subject of short-term political expediency – something which has to stop.

A number of the changes imposed by the Government in its 2016 Budget were arguably justified because they served to wind back some of the Howard Government era excesses, but there is already evidence that some of those measures lacked appropriate targeting, not least around concessional contributions.

Analysis released by specialist self-managed superannuation fund (SMSF) administrator, Class Super earlier this month revealed the Treasury had substantially underestimated the numbers of people impacted by lower of concessional contribution caps – something which will not please numerous Liberal supporters who voted with their feet over the Budget super changes at the last Federal Election.

What seems evident is that neither side of the political fence have covered themselves in glory on superannuation policy over the past eight years and a far more considered approach is necessary.

The problem with Governments tinkering with super is that small changes at the margin often require major remediation down the track.

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