Distortions of the super truth
Paul Keating takes issue with Mike Steketee’s review of David Love’s Unfinished Business
WHEN the national affairs editor of a newspaper, with all the space otherwise available, reviews a book, smell a rat.
Mike Steketee’s ‘‘ review’’ of Unfinished Business: Paul Keating’s Interrupted Revolution by David Love, published in Review ( September 13- 14), was Steketee attempting to rewrite a bit of history, but this time through the device of calling into question the capacity of a fellow commentator, Love, to write economic history free of illusion or favouritism.
When it comes to matters to do with me, Steketee has form.
He and his leftie former mates at Fairfax, Brian Toohey, Marian Wilkinson et al, with whom he still shares common cause, would have hated the fact that Love, entirely at his own initiative and with his analytical ability and wide experience of the Australian financial system, has written a book generally praiseworthy of the financial reforms I introduced both as prime minister and as treasurer, especially universal superannuation.
Steketee says, correctly, that Love was ‘‘ a distinguished economic commentator; a former economics editor of The Australian Financial Review and the founder of Syntec’’, the most prestigious economic consultancy through the 1970s. Yet Steketee, in an arrogant distortion of the intellectual dynamics and considerations that went into Love’s book, says that ‘‘ Love was sold a pup’’.
The fact is that Love did commentate on the Australian economy throughout the ’ 70s and early ’ 80s. He reported on the years of hopelessness, when remedial economic changes were put on the backburner. Imagine in the ’ 70s, superannuation assets being what they are now at 100 per cent of gross domestic product: in today’s dollars, $ 1000 billion. Love knows, in Australian and Western world terms, how valuable and rare this pool of savings is, as he understands how the opening of the financial, product and labour markets changed the way Australia functions and the level of wealth those changes have induced.
Nevertheless, Steketee studiously ignores Love’s adumbration of the urgent relevance of getting superannuation contributions to 15 per cent of wages to avoid collapsing savings and a widening current account deficit.
He also ignores Love’s point that with superannuation contributions at 15 per cent we would have been in even better shape to ride out the American meltdown.
Let me assure Steketee that in no way did I pursue Love with his book. Love first inter- viewed me about changes to the financial system in 1999 and he published his book this year, nine years later, after having interviewed all those closely associated with the changes. Indeed, for many years Love was not at all certain he would even get to publication.
But let me deal with the other mistakes and obfuscations in Steketee’s piece.
He says that ‘‘ the nation in the future is unlikely to be able to afford the present generosity of the superannuation system’’. This is straight out of the Toohey hymn book.
Why journalists of this ilk have it in for universal superannuation — the right for working people to have a replacement income in retirement — is beyond me. In fact, contrary to Steketee’s claims, as Don Russell pointed out recently, during the rise of the superannuation guarantee charge from 3 per cent to 9 per cent, real unit labour costs in Australia actually declined, putting no burden whatsoever on business or the profit share. In other words, productivity paid for the lot. Steketee is either too dumb to recognise this fact or too dishonest to admit it.
He then talks about the inequity of the superannuation system following Peter Costello’s introduction of tax- free benefits for those 60 years and over. But Steketee fails to tell readers that Costello, in making his change, removed Keating’s ‘‘ reasonable benefits limits’’, the seminal device Keating employed to limit access to the tax concession for those on higher incomes.
Steketee, unable to hide his spleen, then uses his article to re- run the old lie that Keating did not really float the exchange rate; it was done by Bob Hawke and his adviser Ross Garnaut. For what it is worth, I have put on the record many times that Reserve Bank governor Bob Johnston and I decided to float the exchange rate as early as April 1983. The eight months between that time and when it was floated were taken up preparing the system for it and picking the moment when the spot rate could be thrown open without damage to the financial system or to the economy. Garnaut was popping up and down at the time like an enthusiastic amateur but the notion that the dollar could be floated on the whim of a government staffer can seriously be proposed only by someone as jaundiced as Steketee or as devoted to selfpublicity as Garnaut.