The heat is on Bill Shorten’s superannuation ministry to find a substantial portion of the $5 billion the government now needs to meet its promised $1.5 billion surplus.
Moreover, Shorten knows he can pull the money out from what is, ironically, an under-represented constituency with surprising ease… the question is, will he initiate a move that is palpably unfair to millions of people attempting to self-finance their own retirement?
Shorten found out just how easy it was to nip and tuck the existing system in last year’s budget when the government broke a promise to superannuation savers… and nothing happened.
Despite flagging that there would be a concession introduced on superannuation contributions for those aged over 50 (which would have allowed those ‘nearing retirement’ to put in double the ‘cap’ of $25,000 per annum if they had less than $500,000 in total savings) the Gillard administration without warning announced the move would be ‘delayed’ by two years.
At a stroke Bill Shorten discovered two things:
1. There is ample room for sucking money out of the $1.4 trillion superannuation industry if you go about it in a subtle fashion – i.e. one that does not translate easily into a tabloid headline or a radio 'grab'.
2. Crucially, though superannuation is awash with ‘representative groups’, they almost always represent the superannuation industry's professionals. The reality is that there is nobody with anywhere near the same clout to represent those at the bottom of the system… savers and superannuants.
In fact, when the Cooper Review was putting its original team together for the most recent inquiry into superannuation they had real difficulty finding somebody to represent ordinary savers who could sit opposite powerful professionals from industry funds, retail funds and other lobby groups. (The inquiry eventually settled upon Meg Heffron, a specialist in DIY super funds.)
Among the lucrative options open to the minister this year are cuts to co-contribution arrangements and specific facilities within DIY super funds. For Shorten the political peril in being the minister who may become best known for cutting into superannuation is that some middle class voters, which he must garner if he is to ultimately lead the Labor Party, may never forgive him.
But Shorten also knows that institutional investors are specially graced by the immense – and ever growing – money flows from the superannuation guarantee charge (due to rise from 9 per cent to 12 per cent). Big superannuation funds, the noisiest faction in the superannuation debate, can be kept sweet as long as this gift that keeps on giving is secure. To make a move on those who make the least noise may be awfully easy in this context.