Josh Frydenberg preparing for super crackdown

Josh Frydenberg is to respond to a report on super by the Productivity Commission. Picture: AAP

Federal Treasurer Josh Frydenberg heads off today for a 12-day trip to learn first hand about the slowing global economy and just how his counterparts offshore are responding.

First stop is Fukuoka in Japan for a G20 meeting of finance ministers and central bank governor, with the Bank of China’s Yi Gang and US Treasury Secretary Steven Mnuchin in attendance.

The Treasurer will then head to Europe for talks in the UK and Germany, in the wake of Prime Minister Scott Morrison’s trip.

Frydenberg rejects criticism that he has no long-term agenda for the economy, noting that infrastructure projects cited in the budget would create another 20,000 jobs Sydney’s WestConnex and NorthConnex projects alone.

Reserve Bank Governor Phillip Lowe and Frydenberg have attacked ANZ and Westpac for not passing on in full the 25 basis point rate cut handed down by the RBA this week.

Frydenberg said the banks have “misread public sentiment” and he was speaking up on behalf of bank customers.

After parliament resumes again in July, Frydenberg can be expected to respond to last year’s Productivity Commission inquiry into the superannuation industry.

He declined to put a date on his reply other than saying it would be after parliament sits.

The response is expected to make a series of changes aimed at curbing the power of the industry superannuation funds.

The industry expects these to include sweeping up the circa 10 million so-called zombie accounts, which have small amounts of funds as people move from job to job.

The industry has happily collected $2.7 billion in fees from these small funds.

Frydenberg and his super and financial services assistant minister Jane Hume are expected, according to industry talk, to end the nexus between union awards and default funds, to give employees more power over fund choice.

Default funds will stay with members for life as they move from fund to fund.

Governance changes will also be enforced to install at least one third of the board with independent representatives.

The industry believes the government is also opposed to plans to increase the superannuation guarantee from 9.5 to 12 per cent and is expected to formally freeze payments at near the present level. Frydenberg has said nothing on the issue other than noting he is committed to increasing the guarantee as planned.

The debate is over whether the present level is high enough to provide sufficient retirement income.