“We have leakage at the top of our membership, usually with high-net-worth people. And I know that none of these members have got there because a financial adviser has said: ‘You should be in Media Super because it makes a good return each year and it’s really cheap.”
Responding to this, Shorten flagged a “prospective ban” on conflicted remuneration structures in the industry. Ways of implementing this would be fleshed out in consultations with the industry in the first half of 2011 among other reform topics: such as his response to the Cooper Review, due before Christmas.
He aimed to produce draft legislation in the middle of 2011 and sign off on new laws in Spring. The new regime would be created in a way “which tries not to see too many losers in the short-term,” he said.
Mark Delaney, deputy CEO and CIO at the $32 billion AustralianSuper, reminded the roundtable attendees the industry exists to fulfil a public duty and that its participants should not lose sight of what they’re trying to achieve. “We’re all proud of what we do, but what we’re also really trying to do is to get a bigger share of public duty,” he said.
“If we’re going to do a better job of it, we’ve got to get more money going in, we’ve got to get better returns, we have to take less money out in costs and we’ve got to protect consumers so they don’t get ripped off along the way. The task isn’t all that hard: it just requires us to focus on the bigger picture and not our own self-interest.”
Alongside adequacy, the concessional attributes of super must also be enhanced and sold to Australians, said John Brogden, CEO of the Financial Services Council. He said the amount of voluntary contributions into master trusts fell from $36 billion in 2006 to $12 billion in 2009. This decline was partially due the financial crisis, but was also the result of a loss of confidence in the system and what it can deliver to members.
Don Russell, chair of NSW State Super and an economic advisor to former Treasurer Paul Keating when superannuation was introduced, said tax preferences within super should be maintained for people of all wealth levels to make the system attractive to the broad sweep of Australians.
For people on low incomes, super was one of the few mechanisms through which they could save through a tax-preferred method, he said. But high-income earners could save tax-effectively through gearing, and if there were no tax benefits for saving through super they may have “second thoughts” about the system.