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Super’s purpose is preservation, not solving other problems, Jones says
The government’s plan to enshrine an objective for superannuation in legislation is key to ensuring the system works to preserve retirement income, Assistant Treasurer Stephen Jones said, stressing that Australia’s $3.3 trillion trove of retirement savings cannot be used to solve other problems.
“This is about ensuring that government uses the right tool for the job,” Jones told delegates at the SMSF Association’s National Conference 2023 in Melbourne in a keynote address February 23.
“And there’s no denying that over the last decade, there have been plenty of areas of government policy that need addressing, and we’re doing it”, he added, citing skill shortages, education and health funding, and housing affordability as central challenges.
“But if superannuation becomes the answer to all those problems, then it will be the answer to nothing. If it is the purpose of super to fix all those other issues, it will end up fixing none of them.”
Treasury on February 20 unveiled its plan to legislate an objective for Australia’s superannuation scheme, seeking stakeholder feedback on proposed wording that would say super exists “to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.
Noting that the superannuation system “has been nothing less than transformational in Australia over its 30 year history”, Jones emphasised that no area of public policy should be “set and forget” – and that having a “destination” will help frame the conversation around the purpose of super.
“With an agreed destination enshrined by Parliament, we can embark on a journey to a more prosperous retirement future for working Australians,” he said.
Jones also said the public reaction so far to the government’s proposal has reiterated the importance of legislating an objective for super.
“It is easy to forget the success of superannuation has been hard-fought and at times uncertain. The attacks kept coming – attacks on the proposition of preservation. Ideas around using superannuation for all sorts of things, whether it’s housing, education, health care – just lift the lid on those proposals and what they generally all point to is another area of government policy failure.
“Governments through lazy thinking look at $3.3 trillion in funds under management and say, let’s grab that and use that for another purpose. That’s not what the objective of superannuation is and it’s not the purpose of superannuation, and we have to stand collectively to oppose that.”
He compared would-be super raiders to “modern-day Edmund Hillarys, [who] look at the Mount Everest of superannuation and want to raid the retirement incomes of working Australians simply because it’s there”. He added that the government is “not trying to revolutionise anything” – the proposed objective is simply about solidifying the “engineering and architecture” of the system.
Jones acknowledged that the budget is under increased pressure, while the public expects services from the government that it needs to be able to do “within the funding envelope”. Reforms to make the system more sustainable will also be key.
Moreover, attempts to use the superannuation pool as a solution to other problems “fundamentally undermine the system”, Jones said. Referring to “all the various guises of early access to super”, he stressed that superannuation depends on preservation, and restricting access until retirement.
The pandemic-era program that allowed early release of super saw $36 million withdrawn from personal super accounts, Jones noted, saying the consequences of that move “are going to be felt for decades to come”.
And the proposition of allowing superannuation to fund home purchases is a “bad idea” in general, but would be “disastrous” in the current fiscal environment. “Throwing more money out of superannuation funds onto the housing fire at any time would be inflationary, but right now it would be an unmitigated disaster.”
