“The next election will be about a lot of things, but now at least in part it’ll be a referendum on super,” proclaimed Treasurer Jim Chalmers to the AFR on Sunday after One Nation leader Pauline Hanson suggested people should be able to access their super to pay off their mortgages.
The Treasurer’s rebuke followed key members of the Coalition earlier in the week calling for the abolition of compulsory super entirely, setting up a political stoush that looks set to simmer away until the election in 2028.
It’s disappointing that despite its obvious success, Australia’s super system remains politically contested.
Wealth beyond the family home for middle Australia has risen 196% in wage-adjusted terms over the last 20 years (2002-2022), largely thanks to the compulsory super system.
Any move to dismantle compulsory super would make Australians poorer, push more people onto the Age Pension, and saddle future generations with a bigger tax bill.
Our modelling shows a 30-year-old who withdrew $20,000 from their super today would retire with around $93,000 less because of lost compound investment returns.
It would mean more Australians end up relying on the Age Pension, adding an estimated $75 billion to $85 billion in extra costs to taxpayers.
It’s everyday Australians that lose when politicians play politics with their retirement. Political energy would be better directed towards strengthening, not dismantling, a system that is boosting wealth for millions of people.
Which brings us to the significant package of consumer safety reforms announced by Assistant Treasurer Daniel Mulino on Wednesday, as the big week of headlines continued.
The proposed reforms are designed to stop disasters like the Shield and First Guardian collapses, which cost 12,000 Australians more than $1.2 billion in retirement savings.
Overall, the package is a major step forward, with stronger controls on lead generation practices, tighter oversight of advice fees deducted from Australians’ super accounts, more obligations on super ‘platform’ funds and some much-needed movement on DBFO reforms that will expand access to safe, affordable financial advice.
The proposal to license lead generators will help, but when you consider two of the lead generators involved in the Shield and first Guardian cases were licensed, it would have been preferrable ban the practice outright.
We also strongly oppose any moves to water down the Best Interest Duty and will continue to monitor this part of the reform package. Weakening the Best Interest Duty would expose members to exactly the kinds of harm these reforms are meant to prevent. It’s a consumer safeguard worth protecting.
And we once again urge the Government to reconsider its proposed changes to the Compensation Scheme of Last Resort, which unfairly shift the costs of financial misconduct onto millions of everyday Australians with their retirement savings in safe, mainstream super funds who were not involved in the collapses.
Progress is hard-earned, but easily lost. The next two years will be crucial to ensuring the super system continues on the right trajectory.
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