The IPA agrees we need to depoliticise superannuation policy and put it on a long-term footing. We are not convinced, however, that a council of eminent Australians is the best way to achieve this. We also question whether unelected representatives should be doing the job of elected officials.
While we get frustrated at the short-term thinking of politicians, this does not mean that politicians should be taken out of the system. Rather, politicians should have the long-term vision on superannuation and not shirk from their duties as elected officials to govern the country.
We also question whether such a council of eminent persons can ever be depoliticised. Politicians will decide the members of the Council, possibly with an eye to their own constituents and supporters. The Council could thus end up seen as purely a political vehicle, without the requirement to put its decisions to Parliament.
Charter of Superannuation Adequacy and Sustainability
One role of the custodians is to set the Charter of Superannuation Adequacy and Sustainability and ensure all future legislation is in line with this charter.
The charter will be developed against the principles of:
- Certainty
- Adequacy
- Fairness
- Sustainability
In theory, these are fine principles. But are they the only basis for a charter? More importantly, what exactly do those terms mean? They could be politically interpreted to bolster the positioning of one political viewpoint over others. If we sign up to these terms, it is important that they are truly apolitical.
Certainty
Certainty – the ability to plan or adjust to superannuation change with confidence – is a good principle for the charter. All too often, policy changes are made on the run, sometimes for external purposes, such as plugging Budget holes.
Yet this government has introduced a number of changes to superannuation without prior notice and with truncated time to review proposed legislation. For instance, when they suddenly proposed additional taxation for those earning more than $300,000, Australians waited almost a year for draft legislation and then had a single week to comment on 50-plus pages of legislation.
So one has to wonder: if governments want to force through legislation, would a charter stop this from happening?
Adequacy
The discussion paper suggests that adequacy should aim for retirees to receive 70 per cent of pre-retirement income. Many would agree this is a fair assessment of adequacy. It is also important that it means that what is adequate is not a set figure but a set percentage of pre-retirement income.
Fairness
This is where the recommendations get more political in nature. What is fair to some is unfair to others. A group of taxpayers can easily be singled out as getting an ‘unfair advantage’ when it simply takes advantage of the current laws.
The Government is suggesting that fairness in superannuation equates to denying certain benefits to wealthy Australians. Not all would agree that this equates to fairness.
Sustainability
Sustainability is another difficult, politics-laden issue. Some say the costs of superannuation tax concessions make them unsustainable. Others argue we should net off the cost of concessions against the resulting reduction in government pension spending.
The discussion paper also argues – and we agree – that sustainability means administrative simplicity and reducing the cost and time burden on business.
Conclusion
If politicians avoided constant superannuation tinkering and took a long-term view on superannuation policy, we would need neither charter nor council.
This government’s tinkering with superannuation worries many people. A new charter is unlikely to stop future governments doing as they see fit. And in the end, that is the role of politicians and government.
The IPA questions whether such an important democratic function as deciding superannuation policy should be outsourced to others – even eminent Australians.
