There seems to be a number of serious reviews going on within Treasury at the moment which could have some serious ramifications for you. Most of you would have heard of the Henry review of the complete tax system and then there's the Cooper review of the superannuation industry.

And then there's the politics of the two sides of government. Labor looking for a social style (fairer for all) and the Coalition presenting a more enterprising incentive based slant.

Our super system, first outlined over 20 years ago by Paul Keating to provide some compulsory saving incentives together with other enhancements over the years, was designed to ease the government coffers and to ensure less government reliance. By and large to date, it has, despite its flaws, been an outstanding success.

So, who would have thought it would spawn one of the world's most lucrative financial services sectors?

The big four banks have moved in (partly explaining why Australia has 4 of the world's best / valuable 20 banks) and, as consumers, we suffer from the world's most expensive banking system.

However, our public super funds need to emerge from its slumber and expose itself to considerably more scrutiny.

While some industry funds have performed well over the years, some of the governance arrangements and systems are a throwback in time to the 1980s.

Accordingly, to industry sources there is around $1.2 trillion accumulated to date.

But according to the Cooper Review Report, super needs its own 'agenda and identity'. He concluded the industry needed three ingredients for success; scale, focus on maximum net returns and alignment with investor interests.

Scale: How can we have Asia's biggest super system but not a single fund ranked in the global top 100?

Australia's largest fund, Australian Super, with $30 billion (modest by world standards) has at least started to open itself up for scrutiny, but much more transparency is required. However, most aren't following suit. Most annual reports are brief and try to maximize reported earnings and mask charges and operational management information that public companies provide as a matter of course.

However for example, in most funds, members are not even told what the board and senior managers are paid. Part of the answer is mergers. Recommendation is to reduce from 75 to 20-30 funds. It is therefore hoped by merging and consolidating will bring greater accountability and governance.

In respect to structure, perhaps we can imagine a super industry that can rise above its sponsoring organizations and shake off the bank dependency.

Think about the impact the big 4 super funds would have if they were independent? The issues of debt and equity are often in conflict, yet here in Australia we have the same financial giants allocating both.

So, the super industry needs some tweaking in the public governance, accountability and scale areas while keeping its tax / saving concessions intact. I think we do want Australians to save for their retirement and to be more self-reliant. The government, however, has flagged it (Henry) would look at (another) redesign of super tax breaks, which they believe give disproportionate gains to high income earners.

The government uses the example of two taxpayers, one on $35,000 and the other $180,000 to demonstrate their point of disproportionate gains. But has the government considered how the $35,000 per annum taxpayer provide adequately for living and lifestyle expenses if they were afforded equal benefit gains?

So, while the industry may need some tweaking, the reviewers shouldn't lose sight of why super was created in the first place - as an incentive to save and be more self reliant - thereby helping the governments in the future (read future generations).

The Henry review has also flagged that ordinary taxpayers who complete their own salary and wage (relatively simple) returns will be able to do so more easily going forward with just a few clicks of a mouse. If this simplifies and reduces red tape then this is a good thing.

Hopefully the changes afoot are progressive , sensible , provide more efficiency, incentive and independence, accountability, transparency and clout ( via consolidation).

In summary , we want to maintain the savings / tax concessions and simply iron out the kinks in a professional, pragmatic way.

Keep your fingers crossed!

Tony Martin - Director, Advantage One