Welcome to 2020, where the hectic pace of work established over the last few years seems likely to get even faster. The implementation schedule for the Royal Commission recommendations looks very intimidating and the delivery of last year’s policy changes such as Putting Members’ Interests First and Member Outcomes are in full swing. But the first cab off the rank this year has been the completion of the consultation period for the Government’s Retirement Income Review. The latest—and let’s hope the last review for some time—into Australia’s superannuation system, this time looking specifically at establishing a fact base for the system’s adequacy, sustainability, cohesion and equity.
Fundamentally the Review must describe and promote the important role superannuation plays in lifting the living standards of Australians in retirement.
The Review panel has the opportunity to establish a credible and conclusive fact base that will position Australia’s retirement income system for future success. This can only be achieved if the facts about the lived experience of retirement are taken into consideration.
The Review must consider the facts about how rising food and energy prices hit retirees hip pockets, the facts about provisioning for burgeoning health and aged care expenses and the facts about how much it costs to live a financially secure and decent life in retirement.
That’s the real retirement fact base and that’s what Australians need the panel to assess. Anything less risks ongoing policy instability and uncertainty. I encourage the Review panel to look broadly at the system, go beyond analysis of fiscal and budgetary implications, and to tackle the vexed issue of retirement income adequacy.
We know that the fiscal cost of the system compared with our international counterparts is very low and that it is sustainable over the long term – the data is incontrovertibly clear about this.
The focus should be on what the system delivers and how we bridge the gaps particularly for low income earners so that all Australians can live a decent retirement. That is the end game here and it makes sense that it should be a core focus area for the Review. ASFA has long advocated for removing the $450 per month earnings threshold, adding SG to paid parental leave and maintaining the low-income superannuation tax offset.
Going to 12 per cent doesn’t represent an extravagant standard of living for retirees. It’s about getting 50 per cent of Australians to around 70 per cent of average weekly earnings by 2050.
Australians know what their superannuation is for – it is there to deliver a dignified standard of living that respects the contribution retirees have made to the nation across their working lives and affords them the respect they deserve in a country like ours.
This should be embedded at the heart of the system to end the constant changes and tinkering to meet annual Budget imperatives.
If it is to deal with facts, the Review must look at and reject the non-fact base of some of the system’s habitual detractors.
ASFA is committed to a rational, impartial and evidence-based approach to policy analysis and we will continue to engage with the Review and all the other policy initiatives to come in 2020 on that basis.