Legislating super for housing just became harder

ANALYSIS

In the hours immediately following Parliament rising for the Christmas/New break and after including legislating the Objective of Superannuation in its guillotine, a succession of superannuation funds and lobby groups publicly lauded the decision.

Those same superannuation funds and lobby groups had, a week or so earlier, been lamenting the likelihood that Senate politics and the policy agenda of the Liberal and National Parties would not allow the legislation to pass before Christmas or, indeed, not before Federal Election.

The importance of the legislation to superannuation funds and super lobby groups is that it makes any attempt by a future Liberal/National Party Coalition Government to legislate for the use of superannuation for housing that much harder because it defines the objective of superannuation as being preservation for retirement.

As Association of Superannuation Funds of Australia chief executive, Mary Delahunty said:

“The passage of the Superannuation (Objective) Bill 2023 enshrines the objective of super being ‘to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way’.

“This will ensure future policy decisions are rigorously assessed for alignment with this legislated objective,” her statement said.

“Notably, the Bill introduces a requirement for policymakers to produce a statement of compatibility for any proposed changes to superannuation, reinforcing long-term stability and ensuring reforms are measured against a guiding purpose.”

The passage of the legislation does not, of course, preclude a future Coalition Government from bringing forward new legislation to open up the use of superannuation for housing, but it does almost guarantee that there will be vigorous debate.

It is also worth noting that the welcoming of the legislation was not confined to the industry funds lobby. The legislation was also welcomed by the major ‘for profit’ superannuation players including Insignia Financial.

Indeed, Insignia Financial chief executive, Scott Hartley said that if Australia was serious about getting members engaged with their retirement savings sooner, it should rename the system from superannuation to retirement income.

“The Government should also prioritise legislating affordable and accessible advice to help more Australians as they approach retirement and improve the advice process by creating efficiencies for comprehensive advisers to help more Australians,” he said.

The Super Members Council (SMC) which is representative of the major industry funds welcomed the fact that “the legislation says super’s role is to preserve savings to provide income in retirement in an equitable and sustainable way”.

“Importantly, the Bill safeguards super’s preservation policy – the key policy principle that the purpose of super is to deliver retirement income – in legislation. And it reminds the current and future Parliaments that any policies that undermine preservation are contrary to the purpose of super,” it said.