The War on Superannuation.

Superannuation always was a dumb idea, from the very start. It’s not just that often super funds are terrible at doing what they are supposed to do: provide decent returns to account holders. It isn’t either that that poor job frequently costs account holders an arm and a leg; or that bosses steal the contributions their staff make to their super accounts; or that it creates a pot of money lots of greedy bastards have their greedy minds set on; or that it allows COALition governments to shower their supporters and only their supporters with all sorts of handouts, which then become untouchable.

Bad as all that is, it’s mere manifestations of the idiocy intrinsic in superannuation, not the main reason why it’s a really terrible, terrible idea.

Superannuation is terrible because, under the cloak of high economic theory – fake on top –  its main goal was to transfer the financial costs and risks of retirement, from the Government, to workers. It accomplished that.

To make that atrocity sound good, workers were fooled into believing they are no longer workers, but miniature Gordon Gekkos, who will make a killing through financial speculation: just because a paper says you have money, real stuff pops up into existence and you can buy it (think of GameSpot).

Only a high-school dropout with delusions of grandeur, like Paul Keating, ideologically obsessed with the idea there was a way to bypass class struggle, could believe that was a good idea: the Prices and Incomes Accord, of which superannuation was a part. Workers give up wage increase demands in exchange for, among other things, forced savings.

And now that we’re stuck with super and our retirements depend on it and wage growth ceased, the COALition is intent on carrying the story to its logical conclusion: neither wage growth nor retirement savings growth.

So, we are forced to defend super, not because it’s a good idea, but because it’s the only thing we got. Thank you very much, Keating. My take is more critical of super than that of the ACTU’s Chloe Ward, but she sums up the situation well:

 

Setting the record straight on super and wages
By Chloe Ward

 
The Coalition is waging an undeclared war on compulsory superannuation.
 
From attacks on high-performing industry super funds, to the reckless decision to allow people to withdraw superannuation during the Covid-19 crisis, the Federal Government is set on making Australians poorer in their retirements.
 
Some of these are silly. Liberal MP Tim Wilson continues to make a name for himself—and not a good one—with thought bubbles on social media, including calls for workers to use their income to buy a house, rather than putting it into superannuation. Other attacks are more insidious. Late last year, the Government announced plans for an annual performance test that look like they were designed to punish the not-for-profit sector. In December Ian Silk, CEO of AustralianSuper, cast suspicion on the so-called “reforms”, saying many attacks on industry super were “basically politically motivated by people looking to give themselves a bit of profile, in the hope of advancement”.
 
Senator Jane Hume, the Minister for Superannuation, is at the centre of war on super. In the past Hume has blamed the superannuation system for poor wages growth, and called on retirees to draw down more of their super. Last week, Hume gave her strongest hint yet that the Government will dump its commitment to a legislated rise in the superannuation guarantee to 12 per cent.
 
Instead of the legislated increase, the Government is considering allowing employees to be paid out a portion of their superannuation above the current compulsory super rate every year. They say this would put cash in workers’ pockets. They also say they are backed by economic theory, which says higher superannuation suppresses wage growth. But this is bad economics, and bad policy.
 
Both the McKell Institute and the Australia Institute have found that there [is little] evidence that superannuation suppresses wages—or that suppressing super will increase wages. The social costs of decreasing super are enormous. Former Prime Minister Paul Keating, the architect of Australia’s compulsory superannuation scheme, called the idea of opt-in super “a piece of warped social engineering” that will leave Australians poorer in retirement.
 
So what do we do? Australian Unions are fighting to protect the legislated super increase. That’s one step. Another is to get clear in our heads the real sources of wage stagnation in Australia, and what to do about it.
 
Before the global financial crisis, Australians could expect average wage growth of over four per cent a year. For the past ten years, it’s been closer to two per cent, and declining. After the shock of the coronavirus crisis, economic forecasters are warning we could be waiting up to five years to even get back to that pitiful, two per cent rate.
 
Amongst the many, complex reasons for sluggish wage growth, there is a clear link between workers’ bargaining power and increasing wages. With the decline of secure employment, changes to the structure of workplaces, and some of the toughest anti-strike laws in the OECD, workers’ ability to bargain for better wages has been on a long, slow decline.
 
Unions are the home of collective bargaining—for good wages, decent work, and fair conditions. To improve wages, we need strong unions. This is why your support for Australian Unions is so important.
 
The Federal Government doesn’t want you to understand the real causes of wage stagnation. Coalition MPs want an excuse for political games, designed to undermine compulsory superannuation. Despite what they say, we don’t have to choose between superannuation and wage growth. We can have both. Just not under this government.

Update

3/02/2021. Corrected what seems to be a typo.