The Superannuation Guarantee has turned 30 and it’s been one of the most significant social and economic policies of modern Australia. That doesn’t mean the system is perfect or that there isn’t more to be achieved but turning 30 does give us time to pause for some celebration and reflection. It would be difficult for anyone to reasonably and objectively argue that Australia and its people aren’t better for the creation of our superannuation system and its outcomes to date.
To measure that success, we need to ask if the core promise to build security in retirement has been met? A fair conclusion is yes. It’s unimaginable that the status quo of the Australia of the early 1980s before award super when no more than 30 per cent per cent of the population had superannuation, and even fewer women had coverage was as good as it got.
A system where most Australians had to rely on a fairly basic age pension to fund their old age hardly seems fair and equitable and, for this reason, I for one will be forever grateful to the Labor government of the time and the union movement for their foresight and determination.
Could there be improvements to the system? Yes, after 30 years it’s still a giant social and economic reform that remains a work in progress for the nation. This milestone provides us with an opportunity to look to the next 30 years and start anew on shaping the role superannuation plays in the economy of the future and in developing a new social contract for the Australian people.
Time to work collaboratively
Public support for the system should never be taken for granted. As the nation’s savings pool has grown to a globally relevant scale, scrutiny has legitimately increased and will no doubt continue to do so.
Several of the structural issues requiring reform have been identified. Codifying the objectives of the system, affordability in advice, innovation in the development of retirement products as a generation of workers move from accumulation into retirement and fixing some of the unintended consequences from the Your Super, Your Future reforms are all firmly on the agenda.
On the negative side, reforms to address and improve security in retirement for women need to be prioritised as they haven’t progressed far enough. The retirement solutions for women certainly don’t all rest within super. However, the industry should be adding its considerable weight and voice across policy portfolios, redoubling current efforts and supporting new ideas.
The benefits of insurance
Dealing with the growing problem of insurance also needs attention to ensure the system that is both affordable and provides adequate coverage. It was superannuation that gave many workers, particularly those in high-risk industries, affordable coverage for the first time. If the system isn’t going to do this in the future, then we must find a viable alternative and not end up with a country of underinsured workers.
Intergenerational equity, especially around improving accessibility of the owner occupier model of home ownership is not within the ordinary remit of super. However, if the nation can agree that this is a social goal worth pursuing and that it’s an essential part of security in retirement, then super needs to be part of the solution.
Not via knee-jerk policies but by contributing to a deep and sustained process over time that reorients our obsession with property towards favouring ownership over investment and tax arbitrage. Also through investments from the superannuation industry to increase the housing stock across Australia particularly in the social and affordable housing sector.
Building a sustainable system
The importance of building adaption and resilience against the coming climate impacts for infrastructure and the built environment, as well as civil society, communities and localities will only grow. Glimpses of the more hostile environment Australia faces in the 2030s or 2040s are becoming evident and will require a whole of society response, including leadership and investment from the superannuation system.
The superannuation sector also needs to get behind a sustainable financial system through supporting the Australian Sustainable Finance Initiative roadmap to achieve that. As an industry, we need to be part of building the economy of the future, one that takes a long-term and sustainable approach and invests for multi-generations of Australians.
One of the many side benefits of our superannuation system is the positive impact on Australia’s capital markets of a growing national savings pool. At a domestic level, the door may now open to developing new partnerships, structures and opportunities involving industry, banks and differing levels of government to deal with the many challenges we face as we decarbonise the global economy.
The foresight and long-term thinking that led to the establishment and growth of the system also needs to be re-applied to how our political governance, cities and systems operate. If a state government can conceive of a 30-year transport project for Melbourne, is the industry able to respond, to explore, support or create the opportunities that could arise? Long-term thinking by policy makers, new investment and risk sharing models build social dividends.
Internationally, Australia has developed global expertise in infrastructure and investment management. A nation punching above its weight in finance doesn’t make headlines, but it counts.
As former PM Paul Keating has noted, for the first time in its history, Australia is a net exporter of capital. For a middle power, seeking to extend its engagement, strengthen regional relationships and leverage its soft power in the Asia Pacific, having a fast-growing national savings pool, expertise and increasing offshore investment appetite has obvious foreign policy, climate and security benefits.
Sustaining widespread and enduring social support requires the industry to maximise members’ interests and security in old age. But how is that to be expressed? Renewing the social contract will require industry leadership that shares the foresight of the systems’ founders, but also recognises super must become more deeply embedded and visible in members working lives and in the society around them, long before they retire.
Super leaders looking to the next 30 years must ensure the industry has a positive voice and a positive presence. In an age of immediacy, pointing towards a faraway future is difficult but we must build our role in the long-term prosperity of Australian’s both individually and collectively.
View the Superannuation Guarantee: 30 anniversary webinar with independent directors Deborah Ralston and Cate Wood, Brendan Coates of the Grattan Institute, Nick Sherry of TWUSUPER, David Knox of Mercer and moderated by Fiona Reynolds.