Professor Warwick McKibbin is an ANU Public Policy Fellow at Crawford School. Professor McKibbin was a member of the Board of the Reserve Bank of Australia from 2001- 2011. He teaches Modelling the World Economy: techniques and policy implications (IDEC8127).
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The debate about changes to superannuation is crafting “policy on the run” and creating uncertainty and anxiety in the community, according to one of Australia’s foremost economists.
Chair in Public Policy Professor Warwick McKibbin of Crawford School, told Ross Greenwood on radio 2GB that the current discussion about possible changes to Australia’s superannuation scheme is creating unintended consequences.
“It’s fine to have a debate about what might be wrong with the current system but [not] to decide policy on the run,” he said.
“It seems to me to be rushed, to be debated without details, and it’s creating a lot of uncertainty and a lot of angst. For instance, [among] self-funded retirees – who are already suffering because of the financial crisis and low interest rates. So I think it’s very poor policy design, whatever the basic principle might be.”
He added that before any decisions are made, there needed to be a thorough public examination of any proposals to change the scheme.
“It should be an informed debate, there should be consultation and there should be a fair bit of expertise brought into it. It shouldn’t be done quickly, and it shouldn’t be done in the way that the government is doing it because it creates so much uncertainty and so much concern – floating an idea without saying how it will be changed. Uncertainty is the worst thing you can do to savings and investments.”
McKibbin said that if the government was keen on redistributing income, there may be more effective ways of doing that than through changes to superannuation.
“It should all be based on the premise of ‘what is the purpose of the super scheme that we have?’ If we’re worried about income distribution, then we have to consider that. But it may not be in the superannuation scheme that we do that. It may be better to do that through lump sum transfers, where it’s very transparent about who is getting what. And it needs wide consultation between industry and government and the voters as to whether this is the right way to do it,” he said.
To listen to the interview: http://www.2gb.com/audioplayer/8272