Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 312

Senator Hume imposes moral obligation before SG increases

SG; super guarantee

SG; super guarantee

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.

 

6 Comments
David Williams
June 28, 2019

Whatever we do with super, people are still appallingly under-educated about how the rest of their life (their longevity) could pan out. Any review of super should start with correcting this as a primary objective.

stefy
June 27, 2019

More changes coming. Will it ever end?

Chris
June 27, 2019

Another major inefficiency is the time delay in SGC payments being made to the super funds. These payments, which belong to the worker, are being used to help employers' cashflow - that is not what was intended.

nick
June 26, 2019

Wonder if she took the moral high ground when she worked in the banking and finance industry.

Warren Bird
June 27, 2019

Give it a break!

For goodness sake, is everyone who has ever worked in banking and finance now automatically under a moral cloud because of the sins of a small portion of the industry? As serious as those sins were, the vast majority of their colleagues were/are appalled and disgusted by the things that were done; the vast majority just got on with doing a good job, looking after customers; the vast majority do not deserve such slurs.

I do not know Ms Hume personally, but I suspect she of all former bankers is not deserving of a such a slur. Not mentioned in the intro was her nearly 5 years as a Director of the Royal Children's Hospital in Melbourne.

Whoever you are 'nick', it's easy to throw slurs at people you don't know, but a tiny bit of research might have led you to think twice about this one.

Jennifer Harris
June 27, 2019

Warren Bird....well said

 

Leave a Comment:

     
banner

Most viewed in recent weeks

10 reasons wealthy homeowners shouldn't receive welfare

The RBA Governor says rising house prices are due to "the design of our taxation and social security systems". The OECD says "the prolonged boom in house prices has inflated the wealth of many pensioners without impacting their pension eligibility." What's your view?

House prices surge but falls are common and coming

We tend to forget that house prices often fall. Direct lending controls are more effective than rate rises because macroprudential limits affect the volume of money for housing leaving business rates untouched.

Survey responses on pension eligibility for wealthy homeowners

The survey drew a fantastic 2,000 responses with over 1,000 comments and polar opposite views on what is good policy. Do most people believe the home should be in the age pension asset test, and what do they say?

100 Aussies: five charts on who earns, pays and owns

Any policy decision needs to recognise who is affected by a change. It pays to check the data on who pays taxes, who owns assets and who earns the income to ensure an equitable and efficient outcome.

Three good comments from the pension asset test article

With articles on the pensions assets test read about 40,000 times, 3,500 survey responses and thousands of comments, there was a lot of great reader participation. A few comments added extra insights.

The sorry saga of housing affordability and ownership

It is hard to think of any area of widespread public concern where the same policies have been pursued for so long, in the face of such incontrovertible evidence that they have failed to achieve their objectives.

Latest Updates

Strategy

$1 billion and counting: how consultants maximise fees

Despite cutbacks in public service staff, we are spending over a billion dollars a year with five consulting firms. There is little public scrutiny on the value for money. How do consultants decide what to charge?

Investment strategies

Two strong themes and companies that will benefit

There are reasons to believe inflation will stay under control, and although we may see a slowing in the global economy, two companies should benefit from the themes of 'Stable Compounders' and 'Structural Winners'.

Financial planning

Reducing the $5,300 upfront cost of financial advice

Many financial advisers have left the industry because it costs more to produce advice than is charged as an up-front fee. Advisers are valued by those who use them while the unadvised don’t see the need to pay.

Strategy

Many people misunderstand what life expectancy means

Life expectancy numbers are often interpreted as the likely maximum age of a person but that is incorrect. Here are three reasons why the odds are in favor of people outliving life expectancy estimates.

Investment strategies

Slowing global trade not the threat investors fear

Investors ask whether global supply chains were stretched too far and too complex, and following COVID, is globalisation dead? New research suggests the impact on investment returns will not be as great as feared.

Investment strategies

Wealth doesn’t equal wisdom for 'sophisticated' investors

'Sophisticated' investors can be offered securities without the usual disclosure requirements given to everyday investors, but far more people now qualify than was ever intended. Many are far from sophisticated.

Investment strategies

Is the golden era for active fund managers ending?

Most active fund managers are the beneficiaries of a confluence of favourable events. As future strong returns look challenging, passive is rising and new investors do their own thing, a golden age may be closing.

Sponsors

Alliances

© 2021 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.

Website Development by Master Publisher.