Why super levy rise is no good
YOU always know that an idea has legs when its opponents try to shut it down rather than argue against it.
Last week, Coalition backbencher after Coalition backbencher — eight of them in all — spoke out publicly against increasing the compulsory super levy.
I’m sure the Prime Minister would have preferred these MPs to voice their concerns privately but rather than being a sign of disunity as the usual group-think commentators tried to claim, the fact that backbenchers can speak their mind, and even cross the floor to vote against their own side if they feel so strongly about an issue, is a great strength of the Liberal Party. Labor on the other hand, penalises such free thought with expulsion.
Of course, it helps their cause that these backbenchers are on the side of workers by arguing now is not the time to lift the compulsory superannuation levy from its current 9½ per cent to 12 per cent.
It’s the wrong policy, at the wrong time, and will do nothing to give workers a decent and long-overdue increase in what they’re paid today.
In philosophical terms also, it makes no sense for the Liberal Party to want to force employers to pay an extra 2½ per cent, of every employee’s wage, into compulsory super when the Liberal Party is the party of small business, not big business; when the Liberal Party is the party of freedom, not coercion; when the Liberal Party is the party of higher — not lower — wages; and especially when this is a policy born of Labor, not the Liberal Party, and designed to build the power of union-controlled industry super funds — which to date, it has.
Under most awards and agreements, union-controlled funds were built in as the default option and, as a result, have created a nice little honey pot for union officials.
And, as Labor strategists wargamed at the time, by investing in large public companies (which they have), union super funds would end up with serious clout, and their clout could be used to neuter the natural tendency of big companies to support the pro-business side of politics against the pro-union one. Which it has. What’s even worse is union-controlled industry super funds using their large voting blocks in individual companies, or across sectors, to demand virtue-signalling on issues like climate change, yet silence on policy areas that actually impact the company’s bottom line, like industrial relations.
It’s free-market disruption from the inside and the centre-right has only just started to wake up.
This is why I supported the idea that the Future Fund could enter this arena to give ordinary workers a place to invest their super — in the same fund as public servants — with excellent returns, and away from union control.
Sadly it was knocked back by the Turnbull government.
Over the past 25 years, compulsory super has gone from 3 per cent to 9½ per cent of wages and produced one of the world’s biggest money pools. Australian superannuation funds now hold $2.8 trillion in assets. That’s almost double Australia’s annual GDP.
Yet there’s been no reduction in pension dependence. About 80 per cent of retirees still get the pension, only slightly more often a part-pension rather than a full one.
And despite belonging to us, the government has raided our super whenever it’s got into a tight fiscal corner. Labor under Kevin Rudd did it, and then the Liberals under Malcolm Turnbull.
The one definite outcome of compulsory super is that wages are now 9½ per cent lower than they would otherwise have been, because your boss is paying 9½ per cent of your wage, not to you, but to a super fund on your behalf.
At week’s end, the government confirmed that there’s to be an inquiry into super and retirement incomes; but what’s the point, if it’s already committed to increasing the money you lose to 12 per cent?
In 2016, Turnbull’s changes to superannuation cost him a lot of political skin.
Scott Morrison, his treasurer at the time, doesn’t need to repeat that error.