A group of Liberal MPs has gone against their party’s official position and prominently stated in the financial press their opposition to the legislated increase of employer super contributions. They argue that increased super contributions will result in no wage rises.
The current super guarantee sits at 9.5 per cent of salary and is due to increase by 0.5 per cent per annum from 2021 until 2025, bringing it up to 12 per cent, which was the then Prime Minister, Paul Keating’s, original design when super was introduced in 1992.
In spite of the fact that it has been legislated to increase to 12 per cent, there has been no increase to employer contributions since 2014 when the Abbott government postponed increases to 2021.
“It’s like climate deniers,” Keating said. “We’ve got a bunch of people in the Liberal Party who have always hated superannuation – they are super deniers. Someone said yesterday, pithily, they are like anti-vaxxers.”
Keating argued against the false dichotomy linking super increases to no pay increases. “If this is refused, essentially what a Liberal Government would be doing is pilfering, stealing, robbing the workforce of 2.5 per cent of income,” he said.
Of course superannuation represents a potential shift of wealth to workers who are represented by their industry fund. As industry funds continue to grow, they become more significant in the ownership of big companies and their might will be felt at the board level when decisions are made.
Importantly, this is happening already, with some industry funds demanding better environmental policies, gender balance on boards and fair pay and conditions for their workforce before they make any investment in a particular company. A general trend sees many super funds divesting from coal, tobacco, armaments and companies that earn revenue from pornography. It is likely that this trend will continue as workers’ accumulated wealth increases and packs more of a punch. Affordable housing and infrastructure are other long term investments being taken up by industry funds.
And as a result of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (the Hayne Royal Commission, concluding in February 2019) exposing the myriad sins of retail super funds, thousands of workers have moved across to industry funds. This has brought the accumulated wealth under management in industry funds to $632 billion according to Bernie Dean, CEO of Industry Super. “First, as some observers have put it, your funds have been given a clean bill of health by the Royal Commission,” Dean said.
Keating was also critical of the government’s early release of superannuation scheme for those experiencing hardship during the coronavirus pandemic. “Of the income support in Australia to date during the COVID crisis, $32 billion has been found and paid for by the most vulnerable, lowest-paid people in the country,” Keating said. As a direct result, this policy has entrenched inequality between Australian generations, he said.
Treasury has estimated that by the time the scheme ends on 31 December 2020, $42 billion will have been withdrawn from super accounts.
To be eligible for the early withdrawal scheme, applicants must be unemployed or eligible for the JobSeeker or parenting payments, Youth Allowance, or the Farm Household Allowance, or have had their working hours reduced by more than 20 per cent since 1 January 2020.
The scheme is based on self assessment and Keating is critical of the lack of oversight. Former Labor MP Greg Combet, now Industry Super Chair, agrees, calling the early access to super scheme a “free for all”.
Keating believes the government should have responded differently. “The national response should have been a fiscal response,” he said. “Not the burden of the income support and maintenance of living standards coming from people’s long-term retirement savings.”