This phrase was used by Greg Combet to describe the push by a number of Liberal MPs who are calling for a further freeze to the legislated increase to the super guarantee. Amazingly, the super guarantee reached 9% in 2002 and has moved up a whopping half a percent in only 18 years!
This delay was in spite of legislation moving the employer contribution up to 12%. Constant delays resulted in a freezing of the super guarantee and pushing out the dates for the increases, especially under the Abbott government. The argument, predictably, is that increased super contributions will come at the cost of lower wage growth and reduced consumer spending. These same noisy backbenchers are critical of super in general and of industry funds in particular. The phrase ‘union funds’ is often used to denigrate industry funds in spite of the fact that the boards of industry funds are based on an equal representation model where 50% of trustees represent employers and 50% represent members. Fair go for both sides!
So what will the next delay be based on? Now is not the right time, we can’t afford an increase or we are suffering hard economic times? When is the right time, according to government? Will they proceed to implemented legislated increases, or find another excuse to delay or cancel them?
All the evidence I have read suggests the 12% super contribution, over a working lifetime would provide the worker with an adequate retirement package to replace a substantial percentage of their pre-retirement salary. Paul Keating has consistently advocated for a 12% super contribution, as has Industry Super Australia (ISA). This world class superannuation industry was based on a gradual contribution increase to 12%.
And the further question arises, does the early release of super break the basic premise that super is a tax-benefited scheme to encourage workers to save for their retirement only? Or will it become a scheme to help purchase houses, to pay for university fees (top price humanities degrees), or to pay for a new car? So far, approximately 2.6 million Australians have applied for early release of super under the COVID -19 legislation, for a total of $18 billion withdrawn at the end of the 2019 financial year. And the withdrawal is open again this financial year for another $10,000 maximum withdrawal. Certainly, this government won’t have to face the consequences of this significant drain on member accounts over time. Or, should this matter have been dealt with by JobKeeper rather than by super fund withdrawals? Is this legislation the thin edge of the wedge? The noisy backbench may not like the fact that over time, industry super funds will have substantial holdings of Australian companies which will allow them to have a strong say over how these companies are managed – how they treat their staff, how they deal with gender balance (especially at the board level) and how they design policies for environmental sustainability.
The self-proclaimed ‘savants’ of super fail to realise some basic facts which attest to the success of the national plan for retirement savings. It currently holds about $3 trillion for a population of approximately 25 million. It provides the nation with a source of infrastructure and Aussie corporate investment rendering us a much stronger nation economically and a model for other nations who aspire to have a retirement savings system as strong and efficient as ours. It has assisted us greatly during the GFC and will undoubtedly help to spur economic growth after the COVID-19 crisis.