A CAMPAIGN OF DECEIT
*** CHECK AGAINST DELIVERY ***
Superannuation is a great Australian achievement. It has built a $3 trillion pool of national savings which is providing Australians more dignity in retirement. It is providing ballast to the economy and that has been critical to keeping capital markets afloat during the Morrison Governments recession.
Our universal system of superannuation was hotly contested at its inception but is now recognised by most of corporate Australia as critical to the functioning of our capital markets and as a cornerstone of economic recovery. It is also recognised by ordinary Australians as critical to the challenge of ensuring that Australians own more of the wealth that Australia produces.
The conservative wing of the Liberal Party who are more motivated by ideology than good economics can’t see this. The moderates have come around to see that Superannuation is a good fit with Liberal values of self reliance. This was well articulated by former Prime Minister Malcolm Turnbull this week when he described our superannuation system as a great Australian achievement and reaffirmed his support for the scheduled legislated Super Guarantee increases.
What is different in the renewed attack is that the right wing ideologs are closer to the centre of economic policy.
So it is up to this generation to re-prosecute the case for universal superannuation.
Our Ageing Population is a fact
When we started our retirement savings scheme the ratio of Australian retirees to workers was 6 to 1. Over the next 20 years that ratio dropped to 5 to 1. Between 2010 and 2020 the ratio dropped to its present level of 4 to 1 and we are on track to 3 to 1.
This has not gone away. If anything the freeze on immigration will accelerate the trend.
In the 1980’s – 90's we realised it would be unsustainable for Australia to continue to fund pension payments at a level that kept pace with the populations expectation what was necessary for a dignified retirement.
The shift from 6:1 to 3:1 causes an obvious problem – fewer taxpayers supporting a growing group of retirees. But we are also living longer in our retirement years.
There’s another factor. Expectations of what is necessary to provide for a dignified retirement will increase in line with an improvement in living standards across the community. This is a fact that is often lost in the mist of the current debate. We didn’t create super so that it would replace a meagre government funded pension with a meagre privately funded one. We wanted retirees to have a better retirement.
There are only two pathways to meet this challenge.
The first path is to boost productivity and retirement savings. Boosting productivity will increase the economic output for every working age person. This must be done at the same time as staying the course on retirement savings.
The second path is to make people work longer by postponing retirement age (on current trends well beyond 70) and reducing their pension payments on retirement.
There is a fundamental dishonesty in the Government ignoring this. A deceit that undermines their economic credibility.
The challenge of shifting demographics has not been interrupted by the pandemic or the Government’s recession. It has got worse.
A Campaign of Deceit
The Superannuation Minister – who flips and flops between ambivalent and conflicted in her own portfolio – argues that there is no cost to young Australians draining their superannuation when a 30 year old will be $95,000 worse off at retirement.
The Prime Minister and Treasurer are keen to promote unlikely allies – large charities and a few left-leaning economists – in its ideological campaign to cut superannuation. What they won’t tell you is that these groups at the same time are calling on the government to increase the pension. Not by a small amount, but a very large amount. The naivety of their call is the Morrison Government wants to do the first but not the second.
The Liberals won’t increase the pension. They’ve already made several attempts to cut it and this year, they’ve frozen the pension.
With super cuts and the pensions frozen, there is a gaping hole emerging in the future capacity to support every hard working Australian in their retirement.
That’s why we should stay the course. As former Treasury Secretary and ASX Chairman Ken Henry pointed out this week - superannuation is not a cyclical response to a cyclical economic challenge. It is a structural response to a structural shift in our demography and the Australian economy. These things won’t go away simply because it doesn’t suit the Morrison Government’s political and ideological agenda.
Superannuation is already making a huge contribution to retirement income.
It is important that the sector does more to explain the contribution that it is already making to retirement income. New APRA data reveals that superannuation is making a greater contribution to retirement income than the Government. It has provided $85 billion in retirement income to older Australians so far this year. This does not include the $33 billion that has been withdrawn through the early release scheme. To put that in perspective, the Government currently spends $50 billion per year on the aged pension.
Superannuation is already helping hundreds of thousands of retirees live a better life for longer.
If super is cut, or if the Liberals continue to force households to dip into their retirement savings in order to survive, superannuation won’t be there in the future to help out. That $85 billion in retirement income payments is going to have to come from somewhere else.
And based on past form – the Liberals will inevitably use that cost burden as an excuse to further cut pensions and cut services for older Australians.
Every Australian deserves to retire with dignity and security.
If you attack super, you attack the future integrity of Australia’s pension system.
So it’s time for a sensible debate. We had hoped that this was going to be forthcoming when the Government announced a review of retirement income policy. There is no reason to delay its release. It doesn’t contain recommendations only findings of fact. Surely if we are going to have a sensible policy debate it should be based on facts.
Labor agrees with the Business Council of Australia, who this week, joined ASFA and a long line of others who have called on the government to release the Retirement Income Review.