Minister for Financial Services Stephen Jones says he is confident he can balance policing the superannuation sector while also being a strong advocate for it, as another federal election looms on the horizon.
Speaking at the Investment Magazine Chair Forum in Sorrento, Victoria on Wednesday night, Jones said he was “100 per cent up for a fight” to defend the superannuation sector.
“We’re walking into another electoral cycle, so every kooky idea that you’ve heard over the last decade – sometimes remarked that every policy problem in Australia will be solved by getting teachers to teach and superannuation to pay for it,” Jones said.
“If you do those two things, just about every policy problem in Australia can be resolved. We expect another round of kookiness to come through and we’re gearing up to fight back on that stuff whether it’s in housing, or blow the whole system up.”
The past several years have seen a range of policies either implemented or suggested, such as the early release of superannuation scheme during the Covid-19 pandemic, the First Home Super Saver Scheme, and the suggestion from the Centre for Independent Studies think tank to liquidate the Future Fund to pay down government debt.
“There is an issue in housing and if we make superannuation the answer to every policy failure or issue the government is presented with it will be the answer to none of them,” Jones said.
“All of you know the problem with using superannuation as the answer to [the housing] problem. It’s an issue and we have to fight it off.”
Jones noted the experience of political heavyweights in the room like Cbus chair and former Federal Treasurer Wayne Swan, and former Parliamentary Secretary to the Treasurer Bernie Ripoll, in dealing with political attacks on super and financial services.
But Jones’ larger concern was the blowback to Labor’s own policies, which the party believes do offer better outcomes for Australians.
“If its pay-day super or the advice piece, it is our learning after 18 months of government that anything that has the word ‘superannuation’ in it just draws the crabs in the senate,” Jones said.
“It could be completely non-controversial, but it becomes a political lightning rod, so we’ll work with the sector to ensure we get out sensible reforms through parliament.”
Good cop/bad cop
The minister offered up a mixed bag of commentary: praise to a room of industry fund chairs deeply embedded into the political system; and a repeat of where funds need to improve, particularly on the issues of member experience and delivering advice to members.
Research from Conexus Financial, the publisher of Investment Magazine, and CoreData has highlighted how poor the member experience is for industry funds, which lag their retail counterparts.
Asked whether it was risky to take on the role as a government that is trying to fight for super but also be a critic and antagonist of those same funds that wield heavy political influence, Jones said he could handle both worlds.
“I’ll leave others to comment on whether it’s misconstrued, but I think it’s necessary to, and you’ve got a responsibility to, say here’s where we need to lift our game in this area, and if we don’t it will become a bigger problem,” Jones said.
Driving the purpose
Jones said Labor’s agenda for the next election would draw on the words contained in draft legislation for the purpose of superannuation.
“Preserving savings to deliver income for a dignified retirement alongside government support in an equitable and sustainable way,” Jones said, quoting the bill.
“What’s our objective as a government? That’s our objective: to deliver on that promise.”
Jones said the government is looking at “every link in that chain”, including ensuring that super is paid to employees as and when it is due.
“Every dollar of that somewhere between $3 billion to $6 billion of unpaid super is theft,” he said.
Asked whether these issues resonate with the general public in his electoral seat of Whitlam, near Wollongong in NSW, Jones said his constituents’ biggest concerns in financial services relate to the banks (whether their local bank branch is closed, interest rates rising or whether their complaints are going to a human) and whether their insurance premiums have gone up.
“Superannuation comes a distant third in what’s front-of-mind for them and that’s going to shift because of that five million number [of people in or approaching retirement] I’ve been talking about,” Jones said.
“Superannuation will come much more significantly into focus for the people I represent in parliament.”
Retirement solutions
Amid Jones’ attempt to balance the good cop/bad cop act to a historically friendly sector, the minister reminded the chairs attending the forum that should be a priority for their funds to meet the obligations that have been handed them to improve lacklustre member services and deliver better retirement outcomes.
The Retirement Income Covenant was legislated by the former Coalition government, which Jones said he philosophically supports but added the regime needs to go further in terms of what super funds are required to do, which is why an increased flexibility to give advice facilitated by the Quality of Advice Review reforms is essential.
“When the former government legislated the Retirement Income Covenant I always thought, ‘great, hurts nobody’,” Jones said.
“I don’t think it helps many, because just having that obligation without looking at all of the links that are required to put in place [a] retirement income strategy is wishing into the wind. I always thought nailing the advice piece was going to be critical.”
Jones said the industry isn’t currently adequately prepared to support members in retirement and requires a “rapid shift”.
“You will say ‘that’s legitimately fine for the government to say because you’re part of the problem’ and I agree,” Jones said.
“There’s regulatory reform that’s needed to ensure, in the area of advice in particular, that we are better to enable funds to do a significant part of the heavy lifting in providing information and advice to members. We can say when we talk about the service stuff it doesn’t begin and end at the advice end of things, it goes beyond that.”
