Introduction
I would like to acknowledge the Gadigal people, the traditional custodians of this land, and pay my respects to the Elders past, present and emerging.
On Saturday, we mark the 30th anniversary of Keating’s landmark Redfern Address and in that spirit I reiterate the Albanese Government’s commitment to the Uluru Statement from the Heart and a voice to Parliament.
I acknowledge any First Nations Australians with us today and thank them for their contribution.
I also want to thank Colin Tate and the team at Conexus for the great work they do in bringing thought leaders together to discuss policy in financial services and superannuation.
Superannuation agenda
It’s a great privilege to be able to join you today and share a few thoughts on the Government’s superannuation agenda.
Prior to the election, I was asked on numerous occasions to outline Labor’s plan for superannuation.
My answer was always simple. To make it stronger.
While simple, this has not always been the goal of every government.
Although popular and undoubtedly successful, superannuation has been a heavily contested policy space for 30 years.
Now, no policy is ‘set and forget’.
However, we want to ensure the contest around superannuation policy is directed towards strengthening the system, not destroying it.
Because superannuation is a pact between the present and the future.
And today, millions of Australians expect their superannuation fund to help provide them a dignified retirement in the future.
The strength of superannuation rests on 3 core tenets.
A political consensus.
Strong performance.
Member satisfaction.
While superannuation was built as a popular movement for working Australians, the political consensus has been tested.
The Superannuation Guarantee was attacked by some on introduction and even today there are still opposing voices to increasing the rate.
Universality is still contested.
And during the pandemic, we saw the disastrous decision to undermine preservation through the early release program. A decision that will be felt for decades to come.
These attacks will continue while there is no shared understanding of the objective of superannuation.
It’s why we have committed to an informed conversation about the objective.
It’s an opportunity to settle and legislate the role of superannuation in our retirement income system.
Settling the objective is also the first step towards tackling other issues that strain at the system and its sustainability.
This includes the existence of extremely high balance superannuation accounts which receive generous subsidies but cannot reasonably be connected to retirement income.
The performance of funds is also being addressed.
As a whole, the superannuation system has done a good job in generating returns for members.
However, the results have been very uneven.
The Productivity Commission’s inquiry put a spotlight on underperformance and overcharging which was the catalyst for overdue reform.
And most of this was very good reform.
Yes, I have asked Treasury to review the Your Future, Your Super laws.
However, this is to strengthen performance standards, not to dilute them.
This leaves the member experience as the missing piece in the reform project which I will focus on today.
It should be the natural evolution of a competitive superannuation sector that is focussed on delivering for members.
ASIC findings
Tomorrow, ASIC will release a new report about their Review of Superannuation Trustees Internal Dispute Resolution Arrangements.
It needs to be a wake-up call for the industry.
It shows customer service is unacceptable in a sector that should be completely member-focused.
Almost 20 per cent of super funds reviewed failed to consistently respond to complaints within the mandatory 45 day timelines. 45 days.
And it is almost a 50/50 proposition whether funds will let complainants even know that delays are occurring.
Eighty per cent of funds were deemed by ASIC to have poor management of systemic issues that may affect consumers.
How is this acceptable?
Too often, I receive letters from members of the public who believe their fund takes them for granted.
Murray from the Sunshine Coast wrote to me to tell me that they tried to contact their fund to obtain a benefit estimate.
No one took the call and his complaint was never processed.
John wrote saying he wanted to strengthen the security of his data for fear of scams.
He was told two-factor authentication wasn’t possible.
It is not good enough.
The regulators’ focus on member service is welcome and encouraged.
The sector is on notice to do better.
Over the last 12 months, $150 billion was contributed to superannuation funds.
Answering the phone should be a non-negotiable.
The customer experience needs to improve across the board.
The Government and the regulators will take steps to lift the standards.
And in a competitive marketplace, it is on the funds to be better.
Diversity and competition
This week, we welcomed Vanguard into the super sector with its official launch on Tuesday evening.
This is a welcome development.
Vanguard has been a global champion of innovation.
It was 46 years ago that Vanguard launched the first index fund which has been a gamechanger in financial innovations.
We need to see such innovation in the super sector.
And we need strong competition between all our funds – the retail funds, industry funds, the whole sector.
We have a diverse superannuation sector with over 130 super funds and this is a strength of the system.
There is no magic number, but 130 shades of beige would make for both a terrible colour scheme and a weaker superannuation system.
It gives Australians genuine choice and guarantees essential competition.
But competition has to extend beyond the marketing department.
It has to drive better products. Better returns. And better service to members.
In this way, competition is good for members.
It is good for innovation.
And it is good for the economy.
Good for innovation
Let me talk specifically about innovation before closing.
The success of superannuation puts us on the global podium.
At $3.3 trillion, it is the world’s third-largest pension pool.
And this wealth is shared by 16 million Australians.
In the accumulation phase, the superannuation sector has delivered.
But this is only half the equation.
Like Steven Bradbury learnt 20 years ago, you are only as good as your finish.
The Government wants to see competition drive better retirement income products.
The majority of retirees draw down on their savings at the minimum required amounts.
But is that providing the best retirement outcomes?
I know that many retirees are risk averse. They would rather leave an excess than run out.
But isn’t that on super funds to do a better job of serving their members?
Know your members.
Know their needs.
Know their dreams.
More needs to be done to assist members in choosing retirement products that work for them.
That give them dignity and increase their happiness.
The Government will play its part. This year, the retirement income covenant came into effect.
This is designed to improve retirement outcomes, not just accumulation outcomes.
We will go further if needed.
But competition within the sector should do the heavy lifting.
Conclusion
The superannuation system is not a political plaything. It is the people’s asset.
And as the custodians of the system, the Albanese Government is committed to leaving it in a stronger position than what we inherited.
This starts with establishing a clear objective of superannuation.
It ensures that performance is strong and shared.
And it elevates the member experience to better standards.
Strong competition across the sector is a necessary input to produce better outputs by funds.
There is now an opportunity for funds that will be bold.
An opportunity to offer better investment strategies.
Better retirement income products
And, yes, better customer service.
You have the needs of 16 million Australians in your hands.
A stronger superannuation system will ensure they retire with dignity.