Needed financial reforms

With the aging demographics our current superannuation model will limit the future monetary policy options. It will likely see a continual accumulated asset sell-off (in particular housing). This extra supply should be expected to depress asset prices in Australia for the next 20 years as baby boomers retire. The current focus on limiting immigration will further reduce demand for housing assets.

While many individuals in the past have tended to prefer to be cash poor, relying on the old age pension to buy home brand canned food, we are not sure that baby boomers are that way inclined.

Consequently without further refinement and improvement in Superannuation Australian wealth will fall. The large Superannuation pool in Australia provided a buffer during the GFC. It also created an important illusion for millions of Australians that their retirement was being taken care of and thus many individuals did not rush to the doors in panic.   The ramifications of a poorer performing and shrinking pool of wealth will be a system that may not cope with the next extreme market events as easily as it did in 2007/08. Future crises will likely required larger Federal Government spending funded through increasing the deficit.

By addressing the needs of all Australians to have a secure and comfortable old age we also protect the bottom line of the Federal budget.