Australian Financial Review
Home Personal Finance Superannuation & SMSFs Jul 15 2016 at 12:15 AM Updated Jul 15 2016 at 12:15 AM
by James Frost
Former ANZ chief executive Mike Smith has rounded on the Turnbull government’s superannuation changes, describing the new measures to wind the clock back and cap contributions as slapdash and misguided.
The career banker, who was at the helm of ANZ from 2007 to 2015, is the latest in a line of financial services heavyweights to take the government to task as it stares down a restless backbench over its controversial super policy.
“I think they are a little confused frankly,” Mr Smith said. “Being retrospective on some of these things, that’s just crazy,” he said.
Mr Smith has joined the backlash from the Liberal Party’s electoral heartland and government MPs, as well as many in the wealth industry who have argued that some of the government’s proposed super changes were doomed because they were too difficult to implement.
Conservative MPs such as Tasmanian senator Eric Abetz, Kevin Andrews and WA senator Chris Back on Thursday challenged Prime Minister Malcolm Turnbull over his conduct of the election campaign and the superannuation policy.
Mr Turnbull tried to shut down opposition to the changes on Wednesday, including the most controversial measure – the $500,000 lifetime cap on super contributions backdated to 2007. He said the government would be presenting the same budget measure to Parliament that it took to the election.
Mr Smith said the decision to wind back the clock and cap non-concessional contributions from 2007 needlessly introduced an element of uncertainty into retirement planning.
“What you should say is ‘OK, well they’re grandfathered. But anything you do in future, you have to do it on this basis’. That’s how legislation should work.
“Otherwise, people just never know where they stand and that uncertainty doesn’t do anything for the underlying confidence in the economy,” he said.
Mr Smith, who steered one of Australia’s largest banks through the financial crisis, says that although the rationale for the changes is valid, the approach and execution of the changes left a lot to be desired.
“I get what they’re trying to do, they’re trying to make the system fairer, I have no problem with that but I think there are better ways of trying to do some of the stuff. I think it’s got to be much clearer.”
He echoed the sentiments of the Financial Services Inquiry chaired by former CBA boss David Murray that recommended a wholesale banning of geared property investment by super funds but the government has failed to show an interest in it.
“The question to ask is should you be allowed to leverage super funds? Frankly, that’s the question to ask. Is that an appropriate thing to do?”
“But rather than mess around with the sides, you should grab the bull by the horns and say ‘OK, this we will not allow’, say property into self-managed super funds, or leverage of any sort”.
Mr Smith, who appears inside the August edition of Smart Investor magazine in The Australian Financial Review today, has also sought to defend his legacy at the bank as the architect behind the bank’s ambitious Asian growth strategy.
“I’m very happy with what we achieved,” he said. “We were able to make significant inroads at a time when others were withdrawing”.
He also had some parting words for the analysts who regularly came into conflict with the banker over the Asian strategy on results calls.
“These analysts are interesting, I mean none of them run anything and their own organisations don’t use them for advice so you wonder why the market does.”