An adequate retirement income

Yesterday in Sydney YourLifeChoices was privileged to attend a one-of-a-kind National Reform Summit. Jointly hosted by rival newspapers, The Australian and the Financial Review, the one-day summit was the culmination of months of consultation between core ‘summiteers’ – a tripartite group of organisations encompassing business, civil society and trade unions.

Channelling the previously successful National Economic Summit convened by the newly elected Hawke Government in 1983, yesterday’s summit invited key participants to identify the challenges, and canvas possible solutions across four major economic issues:

  • productivity growth and workforce participation
  • fiscal policy
  • tax reform
  • sustainable retirement income policy.

Representatives from participating organisations (including the Business Council of Australia, Australian Industry Group, Australian Council of Social Services, NSA, COTA and Youth Action) were invited to present on the above four pressing economic challenges. As evidenced by the final communiqué, there was a strong degree of consensus from most delegates despite their very different ideological camps. Business delegates stated loud and clear their belief in the importance of equity and opportunity for the less well off. Meanwhile the social services sector and union representatives shared their support for economic growth and balanced budgets.

It was, however, by no means a love fest, with right-wing regulars, such as News Ltd columnist Henry Ergas and the Institute of Public Affairs (IPA), defending to the death the need for the current (generous) tax concessions on superannuation. But the final group statement reinforced the core belief of the vast majority of speakers, that nothing should be ‘off the table’ when it comes to discussing taxation reform and retirement incomes policy.

This will prove a challenge for both major political parties that have already ruled out either changes to super (LNP Coalition) or changes to Age Pension entitlements (Labor). Yet the National Reform Summit delegates have stated that both parties should share their proposed reform agendas and independently-verified costings well before the next election. Watch this space!

View the proceedings at the National Reform Summit here.

Opinion: No agreed goal, no chance

Eight-plus hours of economic debate by the brightest brains in the country confirms what we already know – a lack of clarity on the purpose of Australia’s retirement income system remains the main hurdle to any progress towards a simpler, fairer or more sustainable system. This is not said to denigrate the very worthy efforts of those you took part in yesterday’s summit. But we might as well call a spade a spade. We are still no closer to understanding the various ‘parts’ of retirement income – Age Pension, superannuation, private savings and family home – than we were before. And until, as suggested by COTA Australia, that there is a comprehensive review of the way these parts might best combine, then we will not advance the cause at all.

The basic inequities of our current system were highlighted at the summit. And it was clear that with mandatory occupational superannuation forming the backbone of future retirement income, those who earn less will always have less, resulting in a much poorer retirement.

Think women, carers, the long-term disadvantaged, less educated, unemployed and those suffering from ongoing ill health. So it would be an heroic assumption to believe that the prospects of these groups will improve anytime soon. As Peter Martin noted in Tuesday’s The Age, that for women in particular, the system is fundamentally flawed.

Some of the delegates, including Ian Narev from the Commonwealth Bank and Andrew Thorburn from NAB, represented super funds and financial planning groups. So it was surprising that the topic of trust and the performance of planners went unmentioned. It may have been an oversight – or simply sensitivity towards these bank CEOs. Either way, it was a massive oversight in a forum dedicated to understanding how to improve retirement income outcomes for all.

What was heartening was that the National Reform Summit was (almost) a pollie free zone – with the exception of a video message from the Prime Minister, a short, albeit off topic, address from the Treasurer and something that sounded suspiciously like an election speech from the Opposition leader. Happily no further elected representative appeared, and the eminently sensible and farsighted Reserve Bank Governor Glenn Stevens, shared his thoughts on the critical importance of growth and how it can make other economic goals achievable.

So where does this leave the goal of a sustainable retirement income?

Good question, but there’s only a disappointing answer.

Sadly, despite all the good intentions, it’s not much further advanced. Unless the Abbott Government or Labor Opposition is prepared to seriously discuss the entire retirement system – and put every aspect back on the table – we are set for more short term, politically-opportunistic policy mishaps.

What do you think? What does sustainable retirement mean to you? Do you think a summit will encourage quality debate that leads to better policy?