What is the real purpose of the Retirement Income Review?
As the number of submissions to the Government’s Retirement Income Review continues to build well beyond 100 it is worth reflecting just how many Liberal National Party backbenchers continue to question the underlying premise of Australia’s compulsory superannuation regime.
The most prominent of those to question the regime have been former Financial Services Council policy director and now NSW Liberal Senator, Andrew Bragg, former Institute of Public Affairs (IPA) staffer and now Victorian Liberal Senator, James Paterson and, more recently, former tax accountant and now Queensland Senator, Gerard Rennick.
The fact that the three Senators have seen fit to ventilate their critical views on superannuation at the same time as the Retirement Income Review panel considers submissions from a broad cross-section of groups, suggests that they are intent on having a material impact and ensuring that their views are not ignored.
Little wonder then, that there are many in the superannuation industry who have seen fit to frequently reference the undertakings given by both the Prime Minister, Scott Morrison and the Treasurer, Josh Frydenberg, that the Government has no intention of moving away from the time-table which would see the superannuation guarantee lifted to 12% by 1 July, 2025.
However, when Frydenberg in September last year announced that the Government would be initiating the Retirement Income Review consistent with a recommendation from the Productivity Commission (PC), there were plenty of superannuation veterans who suggested that the review might, ultimately, prove to be the means by which the Government reneged on the 12% and indeed the embedded compulsory nature of super.
With this in mind, it is worth considering the terms of reference of the Retirement Income Review which is that it should identify:
- How the retirement income system supports Australians in retirement;
- The role of each pillar in supporting Australians through retirement;
- Distributional impacts across the population and over time; and
- The impact of current policy settings on public finances.
And it is the latter of these four points – ‘distributional impacts across the population over time’, and ‘the impact of current policy settings on public finances’ – which can be seen as turnkeys capable of enabling the Government to legitimately review the compulsory nature of the SG and whether, given current economic circumstances, it makes sense to proceed with progressively lifting the SG to 12% in 2025.
What is clear is that over the past two years voices within the Liberal National Party coalition have continued to question the rationale behind the current superannuation system and to accuse superannuation executives and organisations of protecting their own vested interests.
Queensland’s Senator Rennick was just the most recent voice to enter the debate, when he stated “Of all the rorts that exist in this country, nothing compares to superannuation” arguing that it was devouring the real economy and that at the very least it should be voluntary, not compulsory.
Between Senators Rennick, Paterson and Bragg it is clear that an agenda exists to make the compulsory nature of superannuation a major policy debate.
It is in these circumstances that the Government needs to be much clearer about what the objectives of its Retirement Income Review really are.
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