Over the next 15 years, total assets in the superannuation system are expected to exceed those of the banking sector. Superannuation is not only critically important to the quality of retirement for millions of retirees, but also a source of capital and debt for the business community.
Designing the prudential, regulatory and taxation frameworks will need thought and foresight and an inclusive, consensus building approach, to achieve the necessary changes to the design and structure of the industry so that it continues to deliver to fund members.
This is particularly the case in an era of digital, demographic, economic and political volatility.
Industry super funds understand and support this. Jointly governed by unions and employers, they are a successful model of consensus. Union and business leaders have recognised the need to collaborate to deliver the best outcomes to fund members.
The Productivity Commission report into superannuation this week confirms that not-for-profit funds – such as industry super funds – "systematically outperformed" for profit funds. It finds 'default' funds outperform funds that people chose themselves. These findings are profound and have far-reaching consequences for the regulatory design of superannuation.
Unfortunately, rather than constructively respond to the findings of the Commission's draft report, representatives of the Business Council of Australia and the federal government have resorted to ideology that is out of place in a mature debate about our retirement income system.
For example, asked seven times this week by Sky News' David Speers whether to accept the Productivity Commission draft report finding that not-for-profit super funds "systemically outperform for-profit funds"; and/or "industry funds are on average outperforming retail funds", minister Kelly O'Dwyer simply could not bring herself to do so.
BCA Executive Andrew Bragg's response to the release of the report was to urge the Senate to pass legislation to change the governance of industry super funds and again misrepresent the sector.
Their response is consistent with their vocal advocacy of dismantling the governance model of industry super funds and the connection between superannuation and the workplace. This is despite the evidence that the not for profit sector with the representative trustee model of governance and default status at workplaces have consistently been the best performing funds. The responses appear ideological and not evidence based.
The politicisation of superannuation is demonstrably preventing a mature and open debate about how to improve our retirement income system.
There is no need for it to be this way.
In 2016, Industry Super Australia publicly backed O'Dwyer's progressive changes to the taxation of superannuation. These changes made the system fairer and more sustainable – delivering to 3.5 million lower income earners, particularly women. This year, Industry Super Australia has worked constructively with the government and the BCA in promoting the Australian funds management industry and its capacity to invest in infrastructure in the USA.
The public interest is never served by extreme positions. Over two decades, unions and employers working together for a common goal has delivered strong returns to millions of workers and provided a sound foundation for a consensus approach.
The opportunity for the government and BCA to collaborate is also there, rather than be left behind in an ideological dead-end.
David Whiteley is chief executive of Industry Super Australia.