The Inside Word

Rome wasn’t built in a day – or three years!

I had the privilege of recently attending the annual Conexus Financial Superannuation Chair’s Forum with the Chairs of Australia’s biggest and most significant superannuation funds.

The superannuation industry now holds over AUD$3.6 trillion (that’s a very big number – $3,600,000,000,000.00) of our national savings in the form of super and will grow to be about AUD$5.2 trillion by 2030. To give that perspective, Australia’s GDP is about $1.484 trillion, which is about 10% larger than official estimates for 2023.

With such large funds under management of behalf of working and retired Australians, comes a great deal of responsibility to protect and grow the wealth of people into retirement, along with a dash of power and influence in markets and policy. So it’s no surprise that high on the list of issues for the super funds is risk including cyber, growth, good governance and member experience in terms of advice and claims. 

This is the new frontier of super funds needing to deliver on their obligations to provide quality advice and help transition people from accumulation into retirement and give every Australian the best shot possible at being either fully independent from the age pension or only needing part of it.

The challenge for super funds, as member-based organisations, is how to meet these obligations and challenges at scale. Fine if you have thousands of members and can deal with inbound calls through a call centre, but if you have millions of members then platform technology is the only solution.

The Albanese government has been busy in this field pushing hard for better services in advice, modernisation and improvement of life and insurance claims processing, plus applying regulatory pressure to ensure the quality of advice and making it affordable, not just the 5% that get advice now. The technical challenges are many and all the right attitudes and words are being spoken to get on with helping Australians not only to accumulate super through the Superannuation Guarantee, but also through retirement with the retirement covenant.

So where does this leave the Albanese government, considering what the big ticket items are going into the next 10 months before Christmas and the all-out campaign for re-election in 2025. My guess is three big themes, all being prosecuted now, and all strategically linked.

The first is the cost of living issue and trying to ease the genuine pain families are feeling at the checkout, the bank, the rental agency, the bowser and everywhere else. Labor has begun that battle with more of stage three tax cuts going to middle Australia and what seems to be a master stroke given the opposition has been wedged into supporting the changes. Either way, with hundreds of thousands more people benefiting directly and for longer, the government is chipping away at cost of living issues without adding to inflation with plenty more still expected.

The second is industrial relations and reforms that mean more workers getting paid properly and also getting their super payments on time and the same day as being paid. This seems a no brainer but to date has eluded governments of all persuasions. This will be a big theme and winner for Labor looking to shore up its base and beyond with tradies and others.

The third, and probably biggest issue that has killed governments in the past, is poor economic management, perceived or real, and nonsensical budgets dripping with hubris. Everyone is reminded of the disastrous Abbot- Hockey budget of 2014 through the ABC series Nemesis, and how much damage was done in a first term first budget that attacked the so called “leaners vs lifters”. Australians are wise to hubris and being blamed through harsh policies for broader economic woes or being singled out for special treatment. This is not a mistake that Labor can afford and will remember from missteps of the past.

The task at hand for any first term government having won the election battle is to be clear about its objective and stay on message for three years. This is hard to do but what happens next sets the tone for the party internally and externally. So far Labor is taking a structured and calculated approach to dealing with the difficult issues of how to put a roof over your head and feed your family, while taking small steps towards tax and industrial reform. As the saying goes, Rome wasn’t built in a day, but I would caution that it did burn down in one.

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