Senator Jane Hume is the new Assistant Minister for Superannuation, Financial Services and Financial Technology. In her 20 years before entering politics in 2016, she worked in banking, funds management and superannuation in roles at Deutsche Bank, Rothschilds, National Australia Bank and AustralianSuper.
In the last two weeks, she has given her first speech and interview, and while no new policies were announced, she gave a road map on what to expect for the next few years. Most significant was the requirement to meet a “moral obligation” for efficiency.
The moral obligation before SG increase
Interviewed in The Sydney Morning Herald on 25 June 2019, Senator Hume said:
“If a system is compulsory and it quarantines nearly $1 in every $10 that you earn for up to 40 years, it is imperative that the government make that system as efficient as possible … There is no time to waste.”
“Which is why we have to get rid of high fees, duplicate accounts, underperforming funds and unnecessary insurance, because that’s what makes the system inefficient.”
She nominated better outcomes for superannuation savers as her most important priority. Improvements must be made as a “moral obligation” before the scheduled and legislated increases in the superannuation guarantee (SG) rate from 9.5% to 10% in 2021, up to 12% by 2025.
Senator Hume’s first speech
Her first speech as Assistant Minister was at the Bloomberg Buy Side Forum, and here are some direct quotations:
“The Treasurer has stated publicly we are ‘positively disposed to a review of the retirement income system as recommended by the Productivity Commission.’ The Government will provide further information about the Review in due course.”
“The (Productivity Report) found a number of structural problems in the system and concluded that the prevalence of unintended multiple accounts, pockets of entrenched underperformance and the sheer complexity of navigating the system have eroded members’ trust in the system as well as their balances.”
“In an industry crowded with opinion makers, industry groups and lobbyists, it is important that consumers themselves have a stronger voice. As such, the government has announced our intention to establish a superannuation consumer advocate and will be consulting on the scope of its activities, funding and governance arrangements.”
“Currently, there is very little guidance on how retirees should draw down their savings when they reach retirement. The Government is addressing this by developing a retirement income framework, which includes a covenant requirement for funds to develop a retirement income strategy. The Government is also exploring ways of expanding the range of retirement income products available. Funds will need to consider the retirement income needs of their members, as well as provide guidance to their members to select the most appropriate retirement solution for their circumstances.”
Following the Bloomberg event, she told The Australian:
“We made some pretty significant reforms in 2016 and I don’t think there is any intention that we would do any more at this stage.”
This suggests changes will be more about implementing work already in the pipeline, but the Liberal Party also made promises in 2013 and 2014 not to change superannuation taxes but then Scott Morrison as Treasurer implemented numerous changes.
So watch this space for the review proposed by Josh Frydenberg, and a revisit of recommendations from both the Productivity and Royal Commissions.
Graham Hand is Managing Editor of Cuffelinks.