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he West Australian Premier Colin
Barnett recently delivered a blunt
speech to the booming gas and
petroleum industry in his state. In his
address, Barnett stated that convincing
the community or government of the
merits of increasing the production of gas
and exporting it – potentially leading to
a diminished gas supply and a rise in the
domestic price – was a difficult narrative
to sell, even for a politician.
“You can’t say to people: gas production is
going up and, by the way, your supplies are going
down and the price is going up,” Barnett warned.
“Stop reading American management books;
Think a bit broader. The ultimate social licence is
not what you may think it is.” Barnett went on
to clarify that the ultimate social licence was, in
fact, getting agreement and alignment with both
the national and state governments in Australia.
“That’s the licence that counts,” he stated.
“That’s the one you must secure to develop
Australia’s natural resources.” While focused on
the gas industry, Barnett’s comments raise the
interesting question of what exactly a ‘licence to
operate’ means for the superannuation industry.
‘Social licence’ is, at best, a fuzzy term. Unlike
our licence to drive, there is no grand department
where companies and industries can line up to
have their ‘social licence’ stamped and renewed.
The best definition of social licence can be
described as stakeholder perceptions regarding
the legitimacy of a project, a company or an
industry. Using that definition, the superannuation
industry has a problem.
Over the past few years, superannuation has
taken a battering that shows no sign of abating.
In the last months alone, media commentators
have lambasted Australia’s superannuation
system, going as far as to say that superannuation
has failed. How did we get here? More
importantly, what we can do about it?
A starting point is to understand why stakeholders
may be criticising super. Rather than jumping
into a debate on fees, investment returns and
customer service, let’s take a step back and look
at the different groups of stakeholders that have
a problem with the super system – members, the
government, civil society and business – and try to
understand their concerns.
For superannuation members, the challenge
of super is that it is, at its heart, a product
based on the aspiration for a better life in the
future. Perhaps that is part of the problem. The
promise that superannuation is about holding
out, to make the future better, may be, in
itself, a source of stakeholder discontent. The
problem with an aspirational product is that, if
the reality falls short of the dream, the customer
is left more dissatisfied than if the product was
just an everyday consumer good, where their
expectations weren’t so high.
In the 20 years following the introduction
of the Superannuation Guarantee (SG), the
superannuation industry didn’t have to worry
too much about aspirations falling short, as the
majority of those in the system were yet to retire.
For those that have retired in the last 15 years,
there was an understanding that they were late
to super and, therefore, their expectations were
lower. However, as the baby boomers reach
retirement, we are dealing with a group that does
have aspirational expectations regarding their
super. For Generation Y and Z, who are entering
the workplace with the expectation that they
will retire at 70, many have a cynical view that
questions whether a better future is possible
The second key stakeholder is the government.
Superannuation has been cast as a two-pillar
relationship between members and funds. The
reality, however, is that super has always been
a three-pillar relationship between the member,
funds and the government. Over the last 20
years, the Federal Government has, in many ways,
demonstrated that they are a key part of the
By and large, however, governments have been
a silent stakeholder. When economic times were
good and the cost of superannuation on the
Federal Budget was manageable, the government
has largely left superannuation funds alone.
The future fiscal position for the government
is not so rosy, which is a major reason for
the Federal Government’s current focus on
superannuation. Over the next two terms of
parliament, we can expect to see more focus
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