Australia's superannuation sector in trying to digest the Productivity Commission's 700-page report with its 31 recommendations need to keep in mind the massive structural problems it is trying to fix.
The fundamental problem that has perplexed the Commission is how could Australia's superannuation marketplace and financial system regulators APRA and ASIC have allowed a situation to develop where chronically underperforming super funds are able to continually defy gravity and not just survive, but thrive?
This problem is so pervasive that Australia's best super funds routinely achieve investment returns outcomes two to three times better than the worst super funds regardless which time period or type of investment strategy you assess.
Yet in the midst of this the superannuation system has been allowed to operate largely shielded from competition and protected because of government compulsion that makes its unlawful for consumers to not buy its products.
While the PC acknowledges previous governments have intervened in the market addressing areas such as fee disclosure and transparency requirements, and by lifting governance standards, the PC argues that millions of Australians have been poorly served and penalized by high fees or foregone savings.
To get a sense of the PC's resolve in this regard you only need to glance at some of their final report's opening statements:
"Rivalry between funds in the default segment is superficial, and there are signs of unhealthy competition in the choice segment (including product proliferation)."
"While some funds consistently achieve high net returns, a significant number of products underperform, even after adjusting for differences in investment strategy."
"Evidence abounds of excessive and unwarranted fees in the super system."
"Compelling cost savings from realised scale have not been systematically passed on to members as lower fees or higher returns. Much scale remains elusive with too few mergers."
"[While] the system offers products that meet most members' needs, but members lack simple and salient information and impartial advice to help them find the best products."
"Regulations (and regulators) focus too much on the interests of funds and not members. Subpar data and disclosure inhibit accountability to members and government."
"Policy initiatives have chipped away at some problems, but architectural change is needed."
"Default should be the system exemplar. Members should only be defaulted once, and move to a new fund only when they choose."
Faced with these gargantuan policy challenges, the PC's flagship recommendation for a Best In Show shortlist of consistently top performing super funds may seem over the top and the mechanism to decide this shortlist cumbersome.
But if critics have a better idea to fix the core problem confronted by the PC, namely consumers naively landing in poorly performing super funds, now is the time to air it.
We also need to appreciate why the government tasked the PC with this challenge in the first place: because superannuation is compulsory and this bestows on the government an obligation to ensure the system works and justifies its annual $70 billion operating costs.
This is why the PC's statement that the system appears to operate more in favour of the industry itself is particularly damaging.
Coming on top of the Royal Commission inquiry, the financial advice FASEA reforms and controversial Federal Court rulings that will redefine financial advice, the PC's report paints a picture of profound market and regulatory failure.
The PC report is, of course, a report to the government, not by the government. Several of the report's premises will no doubt face challenge if and when legislators try to respond to the report in the parliament.
But anyone, especially anyone in one of the 23 industry and professional associations servicing the superannuation and financial advice sectors, who thinks this is just another meaningless inquiry report is in for a shock. Even a cursory look at the 2018 APRA fund inflow figures - with the amount of funds at stake - will attest to that.