Quality news, views and analysis of issues that affect and inform us in the Douglas Shire.

Crispin Hull / Sausages & Mash Super

COLUMNIST Crispin Hull breaks down issues with Australian super, and suggests alternatives to our current sausages-and-mash pittance....
superannuation

THE hypocritical class warfare by some Coalition MPs over superannuation is not – as the cliches would have it – “sickening” nor “breath-taking”. It is merely just to be expected.

Those MPs are sitting in the Canberra bubble with their $200,000 plus salaries plus 15.4% superannuation on top. And their advisers are all on at least 14% superannuation and salaries way over the average wage.

Yet they seemed determined to deny everyone else the legislated superannuation rise from 9.5% to 12%. They want to reverse it. And in typical political debating style have grabbed any old argument to support their aim of wrecking the scheme that would provide wage earners with comfortable retirement income.

The latest was this week’s call by Liberal MPs Jason Falinski and Katie Allen for the superannuation increase to be scrapped and the savings put into aged care.

Falinski, formerly a businessman, represents the seat of Mackellar which takes in Sydney’s northern beaches, one of the wealthiest places in Australia.

Allen, represents Higgins which takes in the wealthiest parts of Melbourne, such a Toorak and South Yarra.

Other equally illogical and irresponsible suggestions and actions that raid the super accounts of those on low and modest incomes were the $20,000 Covid hardship response; giving victims of domestic violence early access to super to escape their predicament; and giving access to super to help provide a deposit on a first home.

Falinski has also argued that super should be used for private health insurance.

They, and a lot of their Coalition colleagues, cannot bear the idea of a well-thought-out universal scheme to provide decent retirement income for the masses and hate the idea of employees having an equal say in the management of those funds.

The list of Coalition possibilities for misuse of super have a common thread – to provide for things that governments should do anyway: unemployment support; aged care; affordable housing; protection against domestic violence; and universal health care. And they are all directed at people with low balances who will desperately need the superannuation later.

Ideological class warfare prevents them from understanding the obvious: the superannuation should be to provide a comfortable retirement and nothing else. 

Coalition MPs have also supported other specious arguments against increasing superannuation. These include that 9.5% is enough to provide for retirement; that the rise is bad for business and the economy; that all it does is reduce wages by a commensurate amount and lock money away which workers want now; that compulsion is wrong and if workers want to add to savings, they should do so voluntarily.

In fact, 9.5% would only provide a sausages-and-mash retirement, just enough to disqualify someone from the aged pension without providing a good retirement. In short, enough to relieve the tax burden of the aged pension so the wealthy can pay less tax.

Increased super is not bad for the economy, to the contrary. One of the side effects of super has been to build up a pool of $3000 billion of Australian capital for Australian businesses to access. About 75% of super is invested in Australia. It makes us less reliant on foreign capital and boosts exports.

An Acil Allen report a week ago demonstrated that an increase in super would boost savings and therefore increase economic activity and increase wages in the medium to long term. Those pushing the argument that it is bad for business and the economy only look at the short term.

Finally, without compulsion does anyone seriously suggest Australia would have $3000 billion worth of superannuation invested for the long-term good of Australia. Without compulsion, people would not have saved. They would have spent nearly all of the money on cheap consumer imports which by now would have broken and ended up in landfill.

Instead of attacking the superannuation of people on low and medium incomes with low balances, a more justified attack would be on the tax breaks given to those with very high balances. Why should tax concessions be given to the earnings made on amounts in a superannuation account above, say, $2 million?

What about abolishing those concessions and using the savings to fund aged care? After all, they are not needed to fund a decent retirement because those opposing a rise above 9.5% say that just 9.5% would do that. Yet that so-called adequate 9.5% would get you a fund well under $2 million.

If 9.5% is to be the baseline why not remove the hypocrisy and remove all tax concessions on contributions above that and remove the tax concessions on all the earnings from those contributions. That money could be used for aged care without impacting decent retirement.

The Superannuation Scheme is not perfect. But those weaknesses should not be an excuse to whittle back the scheme particularly as changes to come into force in July will help tidy it up.

We should lift super to 12% as originally intended and now legislated to provide both comfortable retirement for all and to generate more capital for Australia to take advantage of economic opportunities, especially things like the change to renewables, electric vehicles and using our abundant renewable energy to refine Australian minerals here before export.

But no, the vision of the self-proclaimed brilliant economic managers and pro-business entrepreneurs in the Coalition is limited to tax breaks for existing businesses, favours for their donors and continued subsidies for old stranded industries with no understanding of building up Australia’s capital base so the country can invest in innovation and environmentally responsible economic growth and provide a return for the retirement income of all.

This article first appeared in The Canberra Times and other Australian media on 27 March 2021.


About the Author / Crispin Hull BA, LLB (Hons) | Property Convenor  |  ANU School of Legal Practice Lawyer of the Supreme Court of the ACT, on the Register of Practitioners kept by the High Court of Australia

www.crispinhull.com.au



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