Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 218

Treasurer: super reform was difficult but we had no choice

Scott Morrison, Australia’s Treasurer, was interviewed at a conference on 1 September 2017 hosted by The Economist, called “Innovation as Competition: Australia’s Asian Future Summit 2017”. As it was not a prepared speech, there is no official record of his comments, although he gave a talk the previous day at Bloomberg, when some of the issues were similar.

After the interview, I asked him a question on superannuation engagement.

GH: Treasurer, one word we have not heard today at this Innovation Forum is a subject where Australia could claim to be a global leader and that is superannuation. Around the world, our superannuation system is the envy of everyone. Yet we still have an expectation that 80% of Australians by 2040 will draw some form of the age pension, and 90% of people don’t put extra money into super above the Superannuation Guarantee.

My first question, is the Government concerned by the lack of active engagement with superannuation and that people do not realise what their future outcomes are likely to be?

The second part is, even with those people who are engaged, when you reflect on the changes from 1 July, which you argue were driven by the desire to have a more equitable system, they were widely criticised by large parts of the industry and many people.”

Treasurer: “Well, first of all, that 80% figure. That’s true at a gross level, but the componentry changes in the Intergenerational Report show it basically inverts. The proportion we expect to be on the full pension and on the part pension after that period of time flips. The degree that people will rely on the age pension dramatically changes. We will have the same proportion of people on welfare, but the degree of reliance dramatically changes. That is an outcome of the scheme put in place 25 years ago.

There’s nothing wrong with making sure this scheme remains on track. The changes that I introduced this year were all about making the system definitely fairer, but sustainable. Australia has an aging population, and those in retirement age will become larger and larger as a proportion. We all know about the tax paid by those who have paid it all their lives, I acknowledge that, but the proportion of tax they pay after age 65 versus the working age population is obviously a lot, lot, lot less. So, if more and more people are going into a lower tax environment, and going into receiving payments on welfare, then the retirement income changes we made over two budgets were about getting that on a more sustainable footing. Whether it’s changes to the assets test for the pension or changes to the upper limits of our superannuation. That’s why we did it, and I think those changes were sensible.

I realise that for those who were impacted, it wasn’t something they liked, but with the fiscal environment we had and the demographic changes we were facing, I’m not sure what other choice we had. So that was a significant and difficult reform.

In terms of engagement with superannuation, I make these comments in terms of people’s ability to make additional contributions to super. When we went through the super changes, what was quite clear was that the caps and the potential balances people achieve and the limits we put on those were very high. For most income-earning Australians, those caps are stratospheric for them, they are not going to go close. When people are 50 to 55, they become a bit more focussed, that’s why we made some changes post the budget which better reflected giving some flexibility, particularly in those last 10 years before people go into retirement.

It does remain important in our economic system in Australia. I want there to be more choice, more accountability, better governance and my colleague Kelly O’Dwyer has been doing a lot of work in that area as well.

Greater choice. I keep coming back to this point. The strongest markets are those where the customer is the strongest, and that doesn’t matter whether it’s superannuation, telecommunications, utilities, electricity, gas, banking. All of those markets, we want to see the customer liberated. One of the biggest changes we can make which goes into the broader point about technology in this space is consumer data rights. For the Productivity Commission, that is one of the big blocks in productivity over the coming years. That is, giving customers control of their information. That is the building block every fintech, every technology and every company needs to be able to deliver a better service. That will change our economy, and it’s going to change the global economy.”


Graham Hand is Managing Editor of Cuffelinks. This article is paraphrased from a recording.


Leave a Comment:


Most viewed in recent weeks

How to enjoy your retirement

Amid thousands of comments, tips include developing interests to keep occupied, planning in advance to have enough money, staying connected with friends and communities ... should you defer retirement or just do it?

Results from our retirement experiences survey

Retirement is a good experience if you plan for it and manage your time, but freedom from money worries is key. Many retirees enjoy managing their money but SMSFs are not for everyone. Each retirement is different.

A tonic for turbulent times: my nine tips for investing

Investing is often portrayed as unapproachably complex. Can it be distilled into nine tips? An economist with 35 years of experience through numerous market cycles and events has given it a shot.

Rival standard for savings and incomes in retirement

A new standard argues the majority of Australians will never achieve the ASFA 'comfortable' level of retirement savings and it amounts to 'fearmongering' by vested interests. If comfortable is aspirational, so be it.

Dalio v Marks is common sense v uncommon sense

Billionaire fund manager standoff: Ray Dalio thinks investing is common sense and markets are simple, while Howard Marks says complex and convoluted 'second-level' thinking is needed for superior returns.

Fear is good if you are not part of the herd

If you feel fear when the market loses its head, you become part of the herd. Develop habits to embrace the fear. Identify the cause, decide if you need to take action and own the result without looking back. 

Latest Updates


The paradox of investment cycles

Now we're captivated by inflation and higher rates but only a year ago, investors were certain of the supremacy of US companies, the benign nature of inflation and the remoteness of tighter monetary policy.


Reporting Season will show cost control and pricing power

Companies have been slow to update guidance and we have yet to see the impact of inflation expectations in earnings and outlooks. Companies need to insulate costs from inflation while enjoying an uptick in revenue.


The early signals for August company earnings

Weaker share prices may have already discounted some bad news, but cost inflation is creating wide divergences inside and across sectors. Early results show some companies are strong enough to resist sector falls.


The compelling 20-year flight of SYD into private hands

In 2002, the share price of the company that became Sydney Airport (SYD) hit 80 cents from the $2 IPO price. After 20 years of astute investment driving revenue increases, it sold to private hands for $8.75 in 2022.

Investment strategies

Ethical investing responding to some short-term challenges

There are significant differences in the sector weightings of an ethical fund versus an index, and while this has caused some short-term headwinds recently, the tailwinds are expected to blow over the long term.

Investment strategies

If you are new to investing, avoid these 10 common mistakes

Many new investors make common mistakes while learning about markets. Losses are inevitable. Newbies should read more and develop a long-term focus while avoiding big mistakes and not aiming to be brilliant.

Investment strategies

RMBS today: rising rate-linked income with capital preservation

Lenders use Residential Mortgage-Backed Securities to finance mortgages and RMBS are available to retail investors through fund structures. They come with many layers of protection beyond movements in house prices. 



© 2022 Morningstar, Inc. All rights reserved.

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.