The Morrison government is wanting to block federal legislation to increase compulsory super for reasons that are purely ideological.
Australia has one of the best superannuation savings systems in the world, with over $3 trillion (and rising) accumulated so far, despite the downward pressure on contributions and earnings resulting from COVID-19.
This huge pool of savings provides immediate economic benefits, as it supports local investment and job creation. We don’t have to borrow expensive money from overseas. It is a massive buffer against the local impact of global financial problems.
Federal legislation is already in place to gradually increase compulsory super from the current 9.5% to 12% in 2025. (Paul Keating’s original vision was to increase it to 15%.) This will eventually deliver a significantly more secure retirement to workers, with less reliance on the Age Pension.
Those who support neo-liberal economic models and trickle-down economics are quick to deny the fact that the super savings pool actually creates worthwhile jobs through local investment.
But the federal Morrison government has already begun a campaign to head off these increases, led by politicians who already have comfortable super packages waiting for them when they exit parliament. The primary reason for this opposition is ideological. Three trillion dollars is a big pile of money, and it is not controlled and managed by government or big business – that responsibility lies with the trustees of super funds, including industry funds whose trustees include unionists and small-business owners.
This is anathema to those who support neo-liberal economic models and trickle-down economics. They are quick to play down or deny the fact that the super savings pool actually creates worthwhile jobs through local investment. As such, the usual arguments against the move to 12% are now being trotted out.
Chief among them: ‘Now is not the right time.’ The Abbott government stopped planned increases to compulsory super in 2014 on this basis, claiming wages would increase, leading to a stronger economy. In fact, wages flat-lined, company profits rose and the economy was floundering.
Another common argument: ‘It is unaffordable and jobs will be lost.’ You have to wonder how we got to 9.5% without wrecking the economy! Increases to 12% are to be phased in over the next five years. Productivity gains will make the increases affordable, just as they have in the past. The superannuation system should be continuously improved. It is immensely valuable to Australia, helping to create more employment and significant wealth.
Note: This article is in no way intended to provide you with personal advice and you should discuss your own circumstances with your authorised financial adviser.