Minister for Financial Services Stephen Jones has told the Conexus Retirement Conference super funds should not expect any changes to the regulatory framework to improve centralised data access.
A key theme of the conference was whether the government had the capacity to improve the legislative framework to better use data from Centrelink and the ATO. Several super fund executives said a lack of collaboration between agencies and funds is hampering member engagement.
However, the minister knocked back the suggestion the government needs to make changes and said there wouldn’t be enough time before the election next year to get that done anyway.
“Just being as pragmatic as I can and looking at what’s ahead of us over the next six months, I’d encourage you to work with the regulators to see what you can do within the existing framework,” Jones told the 14 largest super funds in the country attending the conference, a joint initiative of Investment Magazine publisher Conexus Financial and The Conexus Institute*, at Old Parliament House in Canberra.
“Frankly we’re not going to get to it at any stage over the next six to nine months,” he said.
“That’s not a statement on how important it is, it’s a statement on how many things you can do at once.”
In regard to the reduction of tax concessions for super balances over $3 million, Jones said the government was still comfortable with making those changes.
“Doesn’t mean you can’t save more, it just means the generous tax subsidy shouldn’t flow … at the same level beyond $3 million,” Jones said.
In the meantime, Jones said the system was still reliant on the age pension, with the average superannuation account balance at retirement being around $200,000.
“For a long time, we’re going to have a blended retirement income system, and we’ve got to make it work for most Australians,” he said.
Advice driven
When it comes to solving the broader issues related to retirement in the financial services industry, Jones said this will be driven by advice, not by product.
“I’ve been using the figure five million Australians at or approaching retirement; it’s actually closer to six [million] now,” Jones said.
“Nobody can say we’re well set up for that. Nobody. There’s pockets of good, but nobody can say across the industry we’ve got it nailed.”
Jones said the industry is not meeting present needs, let alone the need that is “rapidly running at us”.
“To the extent the government and regulation is an obstacle is to that, you know what we’re doing,” Jones said.
“It’s mostly around advice. The issue here is about 70 per cent advice, 30 per cent product, so let’s get all the settings right.”
It is understood Treasury is under immense pressure to get the drafting of the second tranche of legislation right on its first attempt, given previously admitted drafting errors in the tranche one bill and little time available for consultation with industry bodies and stakeholders.
But despite the need for haste, the minister said he was still open-minded to feedback.
“Just don’t campaign for a worse result,” he said.
The minister said that while the DBFO reforms will change the legislative framework to help with member services, he noted that funds have already been put on notice to lift their standards and there is plenty of space under the law to do so.
“I’m not going to keep banging on around service standards right across the board, there needs to be lift around that really horrible part of the job of managing death claims,” Jones said.
“The extent that regulation is an issue, we’re working on that, but there’s no regulatory obstacle [preventing] them to pick the phone up and answer calls and provide reasonable answers to reasonable questions right now.”
Small runway for reform
As the current Labor government reaches the end of its current term, Jones described the Albanese government as “very active and reformist” which is headed towards the “pointy end” of Parliamentary sitting schedules with a large suite of national legislative priorities.
“We’ve got about seven sitting weeks left in this year and a hell of a lot of stuff competing for Parliamentary time,” Jones said.
“We’ve got an aged care agenda, NDIS reform, Future Made in Australia, we’ve got out four super–related bills before Parliament.
“We’re really at the business end of the season. We’re still adamant about pushing through the reforms that I’ve been talking to you about.”
A Newspoll published on 11 August showed a 50/50 split in voter intentions between the Coalition and Labor.
“This is Australia where every election is a contest, if you look at the last election result…it was quite an atypical Labor win,” Jones said.
“We picked up seats we’ve never held before, and we intend to hang onto them. We intend to prosecute our agenda. As the Prime Minister is fond of saying: if you want a reformist Labor government you’ve got to have us for a few terms because it takes time to get the roots of reform embedded into the earth.”
Jones argued it was important for Labor to retain government to solidify any reforms.
“It’s a lot harder to prosecute something that’s been reversed,” Jones said. “We absolutely need another term.”
The minister highlighted proposed legislative reforms in credit markets, regulating buy now/pay later products, making it easier for consumers to find better mortgage and savings rates, consumer data rights, and cybercrime and scams, along with the multiple advice and super related reforms.
“Like any parent, I’ve got no favourite child,” he said.
“It’s all important stuff [I’m] just focused on making it happen.”
The retirement conference also heard that the industry faces an existential threat from the potential popularity in the broader electorate of policies put forward by the Coalition that use super funds to help members enter the housing market.
“It’s not an answer to any of the problems that Australia is facing,” Jones said.
“It’s not an answer to supply and it’s not an answer to affordability. The entry price to a good policy or political debate is the solutions have to actually work, and it won’t.”
However, Jones said he was confident the policy could be “met and beaten” at the election.
“I wouldn’t be at my game unless I thought that it could be met and beaten,” Jones said.
“If super is the answer to everything, it’s the answer to nothing.
It’s not the answer to every other policy plan the government confronts.”
* The Conexus Institute is a not-for-profit think-tank philanthropically funded by Conexus Financial the publisher of Investment Magazine.
