27 May 2019
Greg Combet has called for the “traditional battlelines” over the union- and employee-backed industry superannuation sector to be “put aside” in the best interests of members, signalling his desire to work with Scott Morrison over looming reforms to the $2.7 trillion retirement savings system in the wake of Labor’s unexpected election loss.
In comments made to a closed-door briefing last Wednesday for industry fund executives, Mr Combet, a former Labor minister and current chairman of Industry Super Australia, said the sector needed to take a leading role in overhauling the default super sector and “properly” meeting the recommendations of royal commissioner Kenneth Hayne, which is likely to break the ties between the super sector and the industrial relations system.
“We want to work with the government,” Mr Combet told the executives, according to speaking notes obtained by The Australian. “I want to make clear. I think this is a very important case for collaboration.
“It is just so important that some of the traditional battlelines over industry super are put aside. Can we please just put it aside and work for the benefit of people in this country who depend upon the superannuation system for their retirement savings? The principal thing that we need to continue focusing on, and engaging in discussion about, is essentially member outcomes.”
The comments were made as the re-elected Morrison government geared up to take aim at the superannuation system, after a series of legislative speed bumps over the past two terms of parliament.
Josh Frydenberg has indicated the government is likely to pursue a wide-ranging review of the superannuation system, as recommended by the Productivity Commission, which will potentially examine whether the compulsory contribution rate should be lifted from 9.5 to 12 per cent of wages, as planned. An inquiry was also likely to focus on generous tax concessions built into the system, which are projected to cost the federal budget more in foregone revenue than the system saves in age-pension outlays until at least 2070.
The government will also act on the royal commission recommendation to dismantle the current default system enjoyed by the industry fund sector that allocates the savings of the least engaged members to funds anointed through the enterprise bargaining system. Mr Hayne recommended “stapling” savings to a member in order to end the proliferation of multiple accounts in a system where one in three super accounts are unintended multiples, which, when combined with a significant degree of poor performance, is costing savers almost $3 billion a year in lacklustre returns and fee gouging.
The Treasurer has hinted at reviving legislation limiting the number of union or employer-group appointees on super fund boards, which has repeatedly faced a Senate roadblock.
Mr Combet said it was time to start “sorting through the system” to ensure workers were being tipped only into “high-quality, good-performing products”.
“We need a set of performance benchmarks that start to provide a greater focus on the … chronically underperforming funds, so no matter what they are, they start to be weeded out of the system,” Mr Combet said.
Michael Roddan – Reporter
Michael Roddan is a business reporter covering banking, insurance, superannuation, financial services and regulation.