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Treasurer Jim Chalmers said a lack of a clear definition of superannuation has led to some disastrous policy proposals.Credit:Alex Ellinghausen

Australians have about $3.3 trillion in superannuation,and legislating what that money can be used for was a Labor election promise.

In a speech to the financial services industry in Sydney on Monday,Chalmers will say enshrining a definition of superannuation in law is vital to protect it against future disastrous policy.

“We’ll move to end the super wars once and for all,and make sure that future changes to the system are compatible with its very objective,” Chalmers will say.

“Doing that requires that we embed super’s purpose into law.”

The government said its consultation paper,which will be released on Monday,suggests the following definition of superannuation:“The objective of super is to preserve savings to deliver income for a dignified retirement,alongside government support,in an equitable and sustainable way.”

Labor has been critical of the early pandemic policy that allowed Australians to withdraw up to $20,000 from their super fund ahead of retirement.

Roughly $36 billion was withdrawn in 2020,and there were concerns that tens of thousands of women had beencoerced by abusive partners into taking money out.

It’s exactly those sorts of policies that the government wants to protect superannuation against,Chalmers will say,according to a draft speech.

“Some of the most disastrous policy proposals we’ve seen in recent years – like allowing billions to be withdrawn from balances during the pandemic – have come about,in part,because our predecessors were navigating the super landscape without a compass,” he will say.

“This made us vulnerable to wrong turns and wrong decisions.”

Chalmers will say defining superannuation will give funds a sharper focus on providing good results for members.

Legislating a definition for super was first recommended in the2014 Financial System Inquiry report. It said clearly defining the industry’s objectives would allow the government to better target and stabilise policy settings.

The former Coalition tried to legislate a definition for super in 2016,but the bill lapsed in the Senate.

Assistant Treasurer Stephen Jones said late last year that enshrining a definition for super would protect it against “raids” for housing or university debt.

Opposition financial services spokesman Stuart Robert has previously said the Coalition supported a broad objective for superannuation but said allowing people to use super to buy a home would also work with an enshrined definition.

At the election last year,the Coalition unveiled a policy to allow first home buyers early access to up to 40 per cent of their superannuation (to a maximum of $50,000) to help with a deposit.

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