The start of a new Super War?

On Monday 20 February the Treasurer gave perhaps the biggest nudge that superannuation has received in many years, and the opposition and cross benchers have been quick to take issue on a number of fronts. Is this the beginning of the new Super Wars, and what’s at stake? The early exchanges of the government, opposition and cross benches go straight to the most fundamental issues; the individual versus the collective wellbeing, long term versus short term horizons, the trustee’s duties to members, government policy and ESG considerations appear to be in issue.

It appears that the golden egg laying super goose is out of its coop, flapping across the retirement savings paddock.

All this arose from the commendably succinct Consultation Paper ‘Legislating the objective of superannuation’. The Treasurer announced that the consultation process created:

‘a significant opportunity for Australia to leverage greater superannuation investment in areas where there is alignment between the best financial interests of members and national economic priorities, particularly given the long-term investment horizon of superannuation funds.’

The consultation paper leads us to this opportunity along the path from the Murray Inquiry in 2014 which recommended that the objective of the superannuation system should be:

‘to provide income in retirement to substitute or supplement the Age Pension.’

The path navigates the lapsed 2016 Superannuation (Objective) Bill to the 2020 Retirement Income Review which recommended that the objective of the superannuation system should be:

‘to deliver adequate standards of living in retirement in an equitable, sustainable and cohesive way.’

Which leads us to the Treasurer’s objective upon which consultation is sought:

‘The objective of superannuation is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.’

The Consultation paper displays its inclusive intentions by also providing us with ‘alternatives to the sentence structure’ of the objective and its underlying concepts:

The objective of superannuation is to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.

The objective of superannuation is to support savings to deliver income for a dignified retirement, in an equitable and sustainable way.

There is enormous directional momentum in the dimensions of trust law, APRA pronouncements and government fiscal policy behind each of these words and there will be much unpicking of them in the months ahead. The meaning of ‘equitable and sustainable’ may be one of the first for attention. Senator Lambie has been quoted recounting her own early access to super, Barnaby Joyce has been reported advocating for giving members access ‘to their own money’, the Leader of the Opposition has pre-empted the Labor budget announcing that the consultation is ‘code for taxation’.

However, aside from the early sparring jabs, what smacks you right in the eye is the Treasurer’s executive summary headline to leverage superannuation investments where there is ‘alignment between the best financial interests of members and national economic priorities’. Whilst these words are not in the Treasurer’s consultation objective, they are perhaps the influential elephant in the room at this early stage.

Ahead of us is the bracing challenge of navigating to a purpose that balances the best financial interests of a member with our national economic priorities (perhaps improved social infrastructure and achieving our goal of net zero emissions by 2050). The ramifications of potentially vesting trustees with duties that temper, filter or conjoin financial best interests with national economic priorities are difficult to underestimate.