Superannuation Industry

It is somewhat ironic that the Federal Government of Paul Keating which undertook the Hilmer review of Competition Policy also introduced the policy of compulsory superannuation. 

The Hilmer reforms drove policy reforms through a number of sectors including agricultural industries with reforms to statutory marketing authorities.  A new Regulatory regime was introduced with substantial reforms to the Trade Practices Act.  While the Hilmer reforms are generally regarded as a success in increasing competition throughout the economy and therefore contributing to higher economic growth, a number of industries managed to escape the reforms. 

The Hilmer report was released in 1993, not long after the commencement of compulsory superannuation for all Australians in July 1992.  The introduction of superannuation is rightly regarded as one of the great achievements of the Hawke/Keating Government. 

Despite the success of compulsory super, it has created a massive gravy train, secured by Government mandate to financial industry professionals.  It is great industry to be in where this money just rolls in every month for the industry to invest and skim the cream off the top.  And what is more the Government has legislated an increase in the level of super from 9 percent to 12 percent by 2020. 

The fees generated for now massive pool of superannuation funds is about $30 billion annually and growing steadily.  Market competition has obviously failed to generate the competitive marketplace necessary to reduce these fees so the Government must step in. 

It must be a great business to be in where the money literally rolls in the door every month and you get to clip the ticket on all of it.  If ever there were an industry that had lost its social licence (whatever that is) then this would be it.