Shadow Minister for Financial Services Luke Howarth has described himself as a supporter of compulsory superannuation and profit-to-member super funds, revealing he was a satisfied member of AustralianSuper.
Howarth told a Financial Services Council event in Sydney on Wednesday that when it comes to superannuation, “I believe in it, I think it’s a good thing, it’s a good investment vehicle, it’s there for retirement and I support it”.
On the sidelines of the event, Howarth clarified to Investment Magazine that it means he supports the compulsory nature of super, but with the added stipulation that he still believed it should be accessible for other purposes such as the First Home Super Saver Scheme.
Howarth’s comments come despite scepticism about the compulsory super system from some of his Coalition colleagues in Parliament and rank-and-file members of the Liberal Party. It also flies in the face of expectations that Howarth would prove to be an SMSF sector loyalist and critic of industry super in the role.
Shadow assistant minister for home ownership Andrew Bragg told the Investment Magazine Insurance in Super Summit earlier this month that anything that is compulsory should be regularly reviewed, including superannuation and insurance inside super, which he described as being, in many cases, “junk”.
“The idea that…Canberra can solve everyone’s personal financial outcomes I think is very dangerous, risky thinking,” Bragg said.
“That’s why I would rather see people be encouraged to think about their own situation rather than have this set and forget mentality.”
The outspoken senator also questioned whether the principle of “preservation” was in the public interest.
“I think we’d be much the poorer if we weren’t scrutinising all the things we do, particularly given the compulsory nature of a lot of these things that we’re discussing here today,” Bragg said.
Howarth echoed Bragg’s concerns about media reports of misconduct and alleged corruption in the CFMEU and that union’s links to Cbus, but he said he didn’t have any ideological issue with industry funds per se, other than the conflict of interest of using members’ money for union-supported political campaigns which generally target Coalition candidates.
“It’s been very clear the CFMEU needs to be deregistered and the regulators should be looking at some of what’s gone on there, but for me as a shadow minister, I’m not against industry super funds,” Howarth said.
“Superannuation is there for members; their money should be spent wisely…if you’ve got industry super sponsoring union events to the tune of millions of dollars is that really in the best interest of members?”
Howarth noted that when he entered Parliament he couldn’t contribute to his self-managed super fund, so instead became a member of AustralianSuper. “They were really good,” he said, adding two of his sons have since become members.
“I’m not anti-industry super fund, I just want a level, fair playing field [and] for it be independent,” he said.
Howarth said he “believes” in superannuation and should the Coalition win at the next election, he wouldn’t “be coming in to make any big changes or preconceived ideas in that regard”.
He added that the super system is a good way of reducing the age pension burden on the budget.
“I’m 52, I started salary sacrificing when I was 19 because my old man at the time said put away 80 bucks a month – which was a lot of money back then – and I’ve seen the benefit of that build over time,” he said.
Additionally, Howarth promised there wouldn’t be any “big changes in a negative way” to super from a potential future Coalition government – with one exception.
“We would get rid of Div296 if we get in in the sense that this idea of [taxing] unrealised capital gains is rubbish,” Howarth said, referring to the controversial provision in Labor’s upheaval of the marginal tax threshold in super balances over $3 million.
Advice reform hardliner
Howarth re-iterated the Coalition’s position of adopting the Quality of Advice Review in full and criticised the government’s slow approach to implementing recommendations of Michelle Levy’s final QAR report.
The first piece of legislation – renamed Delivering Better Financial Outcomes – passed Parliament in early July, more than 18 months after the final report was handed to the government in December 2022.
“It’s been 593 days since [Minister for Financial Services] Stephen Jones was handed the Levy report and not a lot has been done in that time,” Howarth said.
“It’s well over 500 days since they put in the first tranche [of legislation] and we know there was difficulties there. The industry as well as the opposition worked with them to try and get changes there.”
Howarth said he doesn’t have a lot of confidence they will get tranche two right.
“It’s possible that once again they put it out when everyone’s about to go on leave at Christmas and put out a consultation period then and then come back and rush changes through,” Howarth said.
Consultation on the first tranche of legislation was released towards the end of last year and was just one of several other consultations that ran through the holiday break.
Howarth’s lack of confidence in Jones not only related to ideological differences, but also to several drafting errors that have plagued the legislative process so far, as well as the work the opposition did to back the last-minute amendment to the tranche one legislation.
“There’s not a lot of confidence they’ll get it right, but in saying that as the shadow minister in opposition, I hope for all of you that they get it right,” Howarth said.
“That’s what I want, for them to get it right and make your life easier and in turn make it easier for Australians to get the advice the advice they need.”
