2015 has been an interesting, productive and engaging year in public policy. It is great to see the increasing influence the actuarial profession has on decision-makers on such a range of critical topics, reflecting the diversity of areas that we practice in. Topics have ranged from substantial reviews of the private health insurance value proposition to a White Paper comparing Australia’s wealth and retirement income across the population.
“And so today I would like to express my thanks to the Actuaries Institute. This is a very important body of people. I don’t know how many actuaries we have in the room but it’s an extraordinarily demanding qualification to get….. And for the Institute therefore to take on this work on the back of our Inquiry to add value to what is going on in the superannuation system is really very valuable and I would like to thank them and wish the Institute well in launching this report to add to the quality of our superannuation system.”
David Murray, Chair of the Financial System Inquiry
Wayne Byres, APRA Chairman
As Head of Public Policy, my role is to drive public policy development and engagement with key stakeholders and to ensure ‘significant’ pieces of work are developed each year. As part of this role, I am fortunate to work with some of the finest strategic thinkers in our profession – and I would like to give a personal thank you to them for their tireless contribution. It is important to ensure the views put forward represent the broad membership and this is achieved by working closely with Public Policy Council Committee’s (PPCC), chaired by Michael Rice and with the Practice Committees.
“I would like to take this opportunity to thank you for the valuable contribution the Actuaries Institute has made to the reform agenda during my period as Assistant Treasurer.
I have really appreciated your participation, sharing of ideas and expertise.”
Hon Josh Frydenberg MP
The most important benefit derived from the actuarial profession’s involvement in public policy is that we can contribute our unique expertise to formulate appropriate solutions to key challenges facing Australia. Ultimately this facilitates public policy outcomes that benefit Australia’s financial system and community wellbeing. Actuaries also become better known for the value we can add and it also creates a sense of professional pride.
Strategic goal – More influence and better known
As part of the 2015-17 Strategic Plan, we set out a preferred future in 10 years where:
- the profession would be widely known for its expertise, respected for its contribution to matters of public interest and influential in contributing to relevant public policy ; and
- qualified actuaries would be known as trusted advisers, respected and in demand for their unique skills, adaptability and commercial acumen.
In line with this goal, a public policy framework articulating our overarching purpose, our criteria for selecting public policy issues, our public policy principles and our engagement strategy was developed. PPCC also identified the four key long-term themes and issues that will determine what research and policy positions to focus on in order to help frame, inform and guide public debate. The key themes identified are
- Challenges of an Ageing Population.
- Financial sustainability and positive consumer outcomes.
- Societal challenges.
- Technology opportunities and risks.
Engagement with key stakeholders
Successfully engaging in public policy goes beyond producing reports and means ensuring regular engagement with key stakeholders. Key engagements this year have included:
- Meeting with Treasury representatives, Ministers and their Chief of Staffs and Shadow Ministers in Canberra in March, September and December 2015.
- Meeting with the Secretary to the Treasury John Fraser in March.
- Meeting with the Productivity Commission to discuss their report on housing decisions by the aged.
- Participating in Federal Government Private Health Insurance Roundtable.
- Meeting with APRA, FSC, ICA andASFA to discuss current issues.
Key developments in public policy in 2015
There were a number of key developments in public policy with associated Insights sessions held to ensure we had a chance to engage with members. These topics included the following.
‘For Richer, For Poorer’ White Paper
We were very pleased to have David Murray, Chair of the Financial System Inquiry (FSI) launch our ’For Richer, For Poorer’ White Paper in September 2015. The paper analysed a cross-section of age, gender, income and marital status inputs to build an intergenerational profile of the superannuation and retirement income system. This paper was written by Rice Warner in collaboration with a superannuation control group and HQ. The report was sent to key Federal ministers and opposition MPs, as well as Treasury officials, and was followed up with personal briefings down in Canberra. The paper gained extensive media coverage and the Senate Economics Committee has requested it be posted on its website.
The report’s publication gives us additional credibility to continue to offer expert, factual and unbiased commentary on one of the most important public policy issues currently being debated – the future of our retirement’s income system, and related issues of the impact of an ageing population. It builds on an effort commenced in 2012 with the publication of our first White Paper ‘Australia’s Longevity Tsunami , What Should We Do?’ and the Health White Paper ‘Who Will Fund Our Health?’ at the end of 2014.
Financial System Inquiry
The Government released its response to the FSI report that was produced by the Murray committee. It is very pleasing to note that the Government has supported the four recommendations contained in the Institute’s submissions.
Appointed Actuary Review
APRA is undertaking a holistic review of the Appointed Actuary role for Life and General Insurance actuaries to ensure that the role continues to be relevant, valuable and effective. A working group chaired by the President was established to consider the role of the Appointed Actuary in consultation with APRA. Questions were canvassed through a Members’ online discussion forum, during August, and responses were then distilled by the Presidential Working Group. A summary of the consensus views was related verbally to APRA on 29 October, 2015. A discussion paper from APRA is expected in the first half of 2016.
The Challenge of Longevity Risk
For the first time, the Actuaries Institute, the American Academy of Actuaries, and the Institute and Faculty of Actuaries in the UK collaborated on a paper. This paper ‘The Challenge of Longevity Risk: Making Retirement Income Last a Lifetime’ released in October 2015 supports innovation by product providers amid a flexible regulatory framework.
Federal Government submissions
In our Pre-Budget submission, the Actuaries Institute highlighted areas for consideration in the 2015 Federal Budget. Immediately following the budget night lock-up in Canberra in May 2015, an information note to Members and a media release was distributed.
A submission to the Federal Government’s 2015 Tax White Paper was made in May 2015 focusing mainly on issues related to the impact of ageing and longevity.
Intergenerational Report – a submission was made in May 2015 to the Treasurer followed up by a meeting in September to provide detailed feedback on different aspects of our submission.
Economic Implications of Climate Change Policy Position
Council approved the Institute’s policy positionon the Economic Implications of Climate Change at its meeting on 8 December. The formulation of the policy was a comprehensive exercise including Actuaries Digital articles, Insights sessions and a Member survey. The results of the survey were compelling with 93% of Members believing the issue is relevant to the actuarial profession, 84% supporting the draft policy and a further 6% supporting the draft policy with amendments. The position was also endorsed by the PPCC, GIPC, BPC and SPC.
A working group will be set up in 2016 to explore the different positions further.
Housing decisions of older Australians
A housing working group was set up to develop a White Paper relating to housing decisions of older Australians – the paper will be released in early 2016. It also helped us to form our response to the Productivity Commission’s paper on a similar topic released on 1 December 2015. A Productivity Commissioner indicated that the Institute has thrown important light on its deliberations.
Other key submissions included:
- Submission to the Federal Government’s review of the Australian Private Health Insurance system.
- Submission to the Northern Australian Insurance Premiums Task Force Interim Report 2015 reducing insurance premiums in those regions of Northern Australia reporting insurance affordability concerns due to cyclone risk.
- Submission to the Royal Commission into Institutional Responses to Child Sexual Abuse regarding the redress scheme design.
In total, 20 submissions across superannuation, life insurance, health insurance and general insurance were produced from the Actuaries Institute in 2015.
What’s ahead for 2016?
The year always throws up some surprise issues to deal with but some of the key public policy issues we know will be considered in 2016 are:
- Financial System Inquiry recommendations, in particular determining the objectives of the retirement income system and the development of Comprehensive Income Product for Retirement.
- Review of the Government’s response to the Productivity Commission’s report into the housing decisions of the aged.
- APRA discussion document on the role of the Appointed Actuary.
Our next White Paper, expected in April 2016 will focus on the disruption of insurance due to increasing amounts of information and the move to more individual risk rating.
Once again thank you to all those who have contributed to our formulation of policy this year. John McLenaghan (HQ Public Policy Adviser) and I have enjoyed working with you and we look forward to working with you again on productive public policy outcomes in 2016.
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