The Professional Planner/Challenger Superannuation Guarantee roundtable

The Federal Government’s plan to lift the Superannuation Guarantee (SG) from its current 9 per cent to 12 per cent unsurprisingly has widespread industry support. But it might be a surprise for some in the industry that the plan does not have universal and unequivocal community support.

Legislation giving effect to the increase was introduced into Parliament today.

Opposition to the move predictably comes from the other side of politics. The Shadow Minister for Financial Services and Superannuation, Mathias Cormann, was involved in a Senate Estimates hearing on the day of a roundtable hosted by Professional Planner and sponsored by Challenger, but the Opposition Leader’s chief of staff issued a statement.

It said: “As you know, the Coalition’s position is clear and we do not support the super increase funded from the mining tax.”

But reservations also have been expressed by those representing low-income-earners and workers with broken employment patterns (particularly women) – and out in the electorate, raising the SG is far from the sure-fire election winner some think it should be.

Eva Cox, the well-known feminist and convenor of the Women’s Equity Think Tank (WETT), is another opponent of the plan, but purely on equity grounds.

“Why don’t I support the increase? Because, I think the system itself is unfair because it puts an enormous amount of money into the pockets of the rich, and much less into the pockets of the less well off,” Cox says.

“I can’t see any reason why public money should be forgone on that sort of basis, and I think putting it up to 12 per cent is actually not going to do anything about the equity issues; it’s just going to make them worse.

“I’m a long-term feminist, and convenor of [the] Women’s Equity Think Tank, but at the moment I’m also attached to the Aboriginal Unit at UTS [University of Technology, Sydney], and I don’t think it’s going to do a damn thing for people in that area, either.”

The general philosophy behind increasing the SG is simple, says the Minister for Financial Services and Superannuation, Bill Shorten.

“There is little benefit in working for a long time and retiring poor,” he says.

Small business might be expected to oppose the plan too, but the chief executive of the Council of Small Business of Australia (COSBOA), Peter Strong, says the council frankly does not care if the SG is 9 per cent or 12 per cent or even 15 per cent; what COSBOA objects to is the administrative burden the SG already places on small business, which will not be alleviated.

“Small business is about the real world,” Strong says. “And most small business owners, when they went into business, did not expect to become administrators for the Government and the superannuation industry. It’s difficult enough to run a small business without that burden and distraction.

“When we’re talking about superannuation we’ve got to make sure we don’t wear the cost – or if we do, it’s compensated, and that we don’t wear time-cost, and confusion,” Strong says.

“And there’s a way of doing that…as you may have heard: putting it in the tax system, rather than putting the onus upon the employers to do the collection and distribution of the money.

“The fact that small business collects money from large, multi-billion-dollar national financial institutions, and we do it for nothing, is amazing. And we’re forced to do it, by Government. It’s amazing, and we’re fined it we don’t.

“Everybody else in the system gets paid – everybody. The directors of super funds, in some cases we don’t know how much they get paid, but they get paid is my understanding. The paymasters of big companies, people in Treasury, people in finance, people in the Tax Office – they all get paid. But the [small businesswoman] on the Sunday morning, collecting the super, taking those four hours once a month, or once a quarter, doesn’t get paid, and it’s wrong.”

Strong’s proposal to remove the superannuation compliance burden from small business has the support of Nicholas Gruen, chief executive of Lateral Economics.

“Peter was making his point with regard to a sort of fairness idea: why ask employers to do this?” Gruen says.

“You could say exactly the same thing about income tax – and FBT [Fringe Benefits Tax] and all the rest of it. Those things embody certain kinds of social and political compromises, but I’m actually quite sympathetic to what you’ve said, because the criterion for me is not some kind of Olympian fairness, but economic efficiency, and I would imagine that what you’re suggesting is more economically efficient

“Now, I haven’t looked into it, but [I have] watched the nice idea of super choice be implemented with complete disregard for the way people actually function cognitively. There are lots of opportunities here, I think, for the Government, in trying to quite explicitly say: ‘We know people’s lives are too complicated. We know they resent that, it’s not all that easy to fix it up, because we live in a complicated world, but we can do some quite reasonable programmatic things to make things better’.

“And often that involves not just talking in slogans, but also thinking about systems.

“Having little businesses administering super choice doesn’t seem to me to make much sense, and simply saying to consumers, ‘You’ve got super choice’, without trying to attend to the sorts of cognitive inefficiencies that we’ve had in the system, hopefully, before the Cooper Review starts to clean some of those things up, seems to me to be pretty unwise.”

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