Wayne Swan urges Labor to embrace David Murray’s 2014 superannuation suggestions

The Cbus chairman says the stalled recommendations of the financial systems inquiry should be revisited now that the election has put a pause on the superannuation wars.

Wayne Swan, pictured after being appointed Cbus chairman, says the superannuation sector has a pool of capital waiting to invest in green energy if the policies are right. Picture: Dan Peled

Cbus chairman Wayne Swan has called on the new Albanese government to pass legislation preventing future administrations from interfering in the sector.

The former federal treasurer said laws to enshrine the purpose of super would be necessary to head off proposals like the pre-election plans by former prime minister Scott Morrison to allow first home buyers to dip into their superannuation to buy a house.

“We saw, in the dying days of the election campaign, the failure of the attempt to dismantle preservation with the proposal on super and housing,” Mr Swan said in an interview. “The change of government provides the sector with a really good opportunity to future-proof the fundamentals of the system.

“Hopefully, now, we can get on with the job of strengthening the foundations of what is a very good system, free from the constant government attacks that have characterised the last nine years when it comes to industry super,” Mr Swan added.

Former Commonwealth Bank chief executive David Murray, in a landmark financial systems review concluded in 2014, recommended legislation to define the purpose of superannuation. The suggestion has been broadly supported by the industry ever since.

But, while draft legislation defining the objective of super was submitted to parliament in 2016, it was not passed due to political disagreements.

Mr Swan said legislation was needed to outline a clearly stated purpose for the superannuation system – one which was firmly focused on getting the best returns for super fund members with long term policy settings.

He said this would be needed to protect superannuation from future proposals to dip into superannuation savings to meet short term needs such as the move to allow people to draw down their superannuation during Covid-19.

Mr Swan said superannuation was “not the answer to every underfunded problem in our community.”

He said he believed that a Morrison government would have continued down the path of using superannuation as a source of funds for other policies if re-elected. “It would have gone on and on, because they are philosophically opposed to having a comprehensive national retirement income scheme,” he said.

He said proposals to allow people to draw down superannuation – like that introduced during the Covid-19 pandemic – hurt people with the lowest balances.

“The people who have suffered the most from the undermining of the system in recent years are people in funds like Cbus- the funds where people generally have lower balances when they retire,” he said. “They are the ones who get crushed by the proposals for early withdrawals. They have a dramatic impact in the long run on their retirement income.”

Mr Swan said the $3.4 trillion superannuation sector now had some “breathing space” to look at strengthening its future with the election of a government which was not out to chip away at the foundations of the compulsory superannuation sector.

“We have got some breathing space down to be at our best and really have a laser-like focus on member interests free of all, the propaganda and politically inspired attacks on the system.”

He said he believed a re-elected Morrison government would have also been tempted to renege on the plans to move the superannuation guarantee from the current 10 per cent to 12 per cent.

But he said the industry had demonstrated its potential to assist the economy by recapitalising companies when they were cash strapped during the pandemic-induced market downturn.

He said the sector now had a pool of “patient capital” to invest in the green energy sector if the policies were right and was also ready to invest more in social and affordable housing.

Mr Swan said he felt there was a need for a discussion around some of the benchmarks being used by the Australian Prudential Regulation Authority for its Year Future, Your Super performance comparisons. “I would like to see APRA refine the regulatory environment in a consultative way, rather than the combative way it has been handled by the previous government,” he said.

“We need a mature discussion about the overall (superannuation regulatory) framework and what improvements are needed.

“Hopefully we can do it with bipartisan support which is what we should be looking for.”