CHAPTER TWO
CHOICE
Theory
2.1 As outlined in Chapter One, the Government's policy motivation
to allow financial institutions to offer RSAs is to encourage an expanded
level of consumer choice.
2.2 The Government would appear to be committed to the argument that
expanded consumer choice will have the flow on effect of providing employees
with a greater degree of control over their own superannuation.Before
exploring a number of concerns with the RSA bills in Chapter Three,
it is appropriate to engage in some discussion surrounding the theory
and rhetoric of choice.
2.3 2.4 Choice is an expression of the theory of the individual. As
the role of the individual is heightened in the community, a corresponding
need for a variety of choices to be articulated may arise. Individuals
will increasingly desire the ability to express their own ideas and
needs demanding a number of alternatives to be offered, in order to
express this changing nature of society.
2.5 The development of this social, economic and cultural phenomena
may lead to both a dispersion and disintegration of cohesion and consistency
throughout both systems and policy. An individual's capacity to determine
and choose their own destiny is contingent upon the recognition of the
declining ability of the community to formulate a cohesive and consistent
response to an external force.
2.6 Integral to this theory is the nexus between responsibility and
choice. For individuals to take responsibility for their choices it
is fundamental that they are able to comprehend what the choices are
and what these choices will mean in the longer term.
2.7 For example, if an individual is not able to foresee what will
occur if they do not save for their retirement, it is not correct to
say that they have made a choice between saving and not saving and thus
are capable of being responsible for their decision.
2.8 If individuals are to bear the ultimate responsibility for their
decisions it is fundamental that they are in a position to make informed
and effective choices. However, if choice is merely a mechanism set
in place to highlight the fact that there is no government co-ordination,
then surely both the individual and the community must then question
the true commitment to choice and the individual's right to determine
their own future.
2.9 Choice as a concept is premised upon the assumption that individuals
have an unfettered ability to determine all possible alternatives, are
able to evaluate these and have the tools within their means to make
informed decisions.
2.10 In the event of any or all of these factors being constrained
or hindered, it must be accepted that the individual's ability to make
a true choice has been diminished. In examining the RSA bills it is
essential that the concept of what constitutes a real choice is contrasted
against the rhetoric of an individual having a perceived choice.
2.11 To have a choice implies access to information and some criteria
against which to compare this information. It then follows that the
individual must be sufficiently informed in order to comprehend key
concepts and themes.
2.12 The issue of education is even more important when dealing with
technical issues such as financial products and / or superannuation.
Education provides the individual with a vital tool with which they
can assess the validity of information.
2.13 Together with the issue of education is the need for information
to be capable of easy comparison. This aids the consumer in evaluating
information and then being in a position to be able to make an informed
choice.
2.14 The third issue that is fundamental to the concept of choice is
that an individual must be in a position to freely determine their preferred
option.
2.15 The rhetoric of choice can, and has to some extent, blindly accepted
the metaphor of the 'level playing field' and the ability of an individual
to be in a position to bargain effectively and freely.
2.16 Free and unfettered choice is a pure theoretical construct that
has little connection with the day to day realities of a person's individual
circumstances. It is therefore necessary for policy initiatives to recognise
that 'choice' however it is dressed up will only ever be a chimera of
the real thing.
2.17 Given this, it is therefore critical that whatever options are
available to policy makers to enhance the delivery and operation of
a choice regime are maximised.
2.18 In this context, a government sponsored education campaign is
critical if the Coalition is to match its rhetoric with substance. The
Opposition members of the Committee strongly recommend that such a campaign
be implemented.
2.19 To this end the Opposition members find a suggestion by Mr Peter
Downes of Jacques Martin extremely helpful. Mr Downes suggested that
the levy currently raised by the ISC from superannuation funds might
be used to sponsor an education campaign. He stated:
I understand that there is a surplus there now [ in the pool
of levy funds] and that would seem to me to be a good way of spending
the money in the interests of government, the membership and the industry.
[1]
Footnotes
[1] Evidence, Mr Peter Downes, Jacques Martin
21 February.
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