Tremendous battle has nothing to do with coverage, and every thing to do with energy
The controversy about retirement incomes and tremendous has as soon as once more reveale the Liberals’ deep, ideological hatred of superannuation.
Don’t be fooled for a minute into considering what’s constructing into the largest assault on superannuation for many years by the federal government has something to do with coverage.
If it did, Josh Frydenberg wouldn’t have leaked components of the retirement incomes review, by a panel led by former senior Liberal staffer and Treasury official Mike Callaghan, to pleasant journalists on the Monetary Overview and The Australian forward of its launch final week, or held a media occasion to debate it 40 minutes earlier than the discharge of the particular report on Friday.
Few folks on any aspect come to the controversy about superannuation with real disinterestedness. Some unbiased, extremely regarded economists — Brendan Coates on the Grattan Institute, and now Saul Eslake — argue in opposition to additional rises on the premise that they’re pointless and can detract from wages progress.
Everybody else, just about, has a vested curiosity. And the curiosity doesn’t come greater and uglier than that of the Liberal Occasion.
As Crikey has defined for a very long time, the Liberals spent years attempting to tilt the tremendous system in opposition to trade tremendous funds and in favour of retail funds that was owned by the large banks.
That was pushed by the large donations they acquired from the banks, and by a hatred of trade tremendous funds.
However as their makes an attempt to assist retail tremendous funds blew up of their faces, the Liberals’ hatred of trade tremendous hardened into one thing much more poisonous: a rising resentment of your entire superannuation system and the best way that it reroutes energy away from them and into the fingers of enormous tremendous funds — trade, retail, company and public sector.
The Liberals are frightened of the rising energy of tremendous funds and the best way funds of all stripes have used it to pursue insurance policies like net-zero emissions targets — opposite to its personal enterprise mannequin of taking donations from giant companies in trade for influencing coverage.
The Liberal coverage on retirement incomes is due to this fact fairly easy: kill tremendous. It’s solely a barely extra subtle model of the Nationals threatening to destabilise your entire monetary system as a result of banks are refusing to lend to their coal trade donor mates.
Not all tremendous can be focused, in fact: each Liberal MP attacking tremendous has a 15.4% tremendous contribution price. Don’t count on them to chop their tremendous contributions again to 9.5% any time quickly.
The Liberal plan to kill tremendous has two components: first, cease will increase in obligatory tremendous funds, presumably together with the rise to 10% scheduled for simply seven months’ time. Then, “open up” tremendous in order that members can draw down on their balances — which has confirmed extremely profitable within the context of the pandemic.
Each can be offered as being all in regards to the pursuits of members. The removing of additional will increase in obligatory tremendous can be all about wages progress and the nice of the financial system post-COVID. Opening up tremendous can be offered as giving Australians higher freedom and permitting younger Australians to get into the housing market.
In each instances, the arguments introduced are lacking key items of knowledge. The wage stagnation that Australian staff have endured for years has nothing to do with tremendous rises, however a lot to do with authorities insurance policies. It’s this authorities that has demonised unions, refused to help minimal pay rises, supported penalty price cuts, turned a blind eye to the epidemic of wage theft for years, and slashed its one direct, highly effective device for rising wages — public service pay rises.
The wage worth index for the yr to September was simply 1.4%, a brand new file low. The Reserve Financial institution doesn’t count on wages progress to succeed in 2% once more till not less than 2023.
Halting additional obligatory tremendous rises received’t do a factor to revive even the tepid wages progress of latest years. As an alternative, it would successfully switch revenue from staff’ retirement accounts to companies, as a result of there’ll be no magical compensating wage rise if tremendous is saved at 9.5%.
If the federal government actually cared about wages progress, it might dump its new (and largely ignored by the media) linking of public sector wages to personal sector progress, which ensures total wages progress can be considerably decrease in coming years (the typical distinction between personal and public wages progress since 2016 has been 0.3 factors a yr). And it might help minimal wage rises.
And serving to Australians raid their tremendous will simply pump more cash into the housing market, driving up costs accordingly — and leaving younger folks with no retirement incomes to point out for it. However that would be good for Information Corp, which owns 61% of realestate.com.au, and 9 Leisure, which owns 58% of Area.
If the federal government actually wished to enhance affordability, it might axe damaging gearing. However that assumes the Liberals are serious about coverage outcomes. The one final result the Liberals need is to destroy tremendous.
The overview additionally laments the price of tremendous tax concessions, that are “projected to develop as a proportion of GDP and exceed that of age pension expenditure by round 2050. This is because of earnings tax concessions. The rise within the SG price to 12% will enhance the fiscal value of the system over the long run”.
The most costly ever change to tremendous tax remedy was by Peter Costello in 2007, when he eliminated tax on tremendous earnings for folks over 60 and the superannuation surcharge. Mike Callaghan was Costello’s chief of staff when these modifications commenced in 2007. Too dangerous Mike didn’t say one thing then.