Treasonous ACTU lobbies to lower workers’ take home pay

By Leith van Onselen

The treasonous ACTU has backed Paul Keating’s call to lift Australia’s superannuation guarantee (i.e. compulsory superannuation contributions) from 9.5% to 12%, claiming it would ensure workers retire with dignity:

…the average superannuation balance today for men is $112,000 and women $68,000 and only 20 per cent of current retirees are fully funded…

It is those inadequate levels of retirement savings that led to the Rudd-Gillard Government promising to raise the compulsory superannuation guarantee from 9 per cent to 12. That was due to take effect in July next year until the Abbott Government put the brakes on, so we won’t see super at 12 per cent until 2025. Too late for many.

The increase to 12 per cent is far from radical policy — when super was first introduced under Paul Keating, it was intended to increase to 15 per cent over time.

That plan was skittled under the Howard Government, which left it at 9 per cent.

Seeing a pattern here? Every time we’re on the verge of increasing super to a level that would provide Australians the dignity in retirement they deserve, it has been delayed and de-prioritised…

It’s time for Australia to be more ambitious.

Our retirement system is the envy of much of the world, but it is far from perfect and it was designed to increase to 12 per cent or more some decades ago.

We must fulfil the original promise of superannuation and ensure it is truly universal and provides for an adequate retirement.

Does the ACTU not realise that compulsory superannuation is paid for by workers (not employers) via lower take-home pay (less disposable income), with harmful implications for people on lower income earners?

Don’t just take my word for it – the Henry Tax Review drew similar conclusions:

Although employers are required to make superannuation guarantee contributions, employees bear the cost of these contributions through lower wage growth. This means the increase in the employee’s retirement income is achieved by reducing their standard of living before retirement.

Which is why the Henry Tax Review explicitly recommended the superannuation guarantee be retained at its current level, not raised to 12%, so that it didn’t adversely impact lower income earners:

The retirement income report recommended that the superannuation guarantee rate remain at 9 per cent. In coming to this recommendation the Review took into the account the effect that the superannuation guarantee has on the pre-retirement income of low-income earners.

Fair Work Australia has also acknowledged that workers pay for super, noting that wage increases were “lower than [they] otherwise would have been in the absence of the superannuation guarantee increase”.

And for anyone still with doubts about who pays for super, consider this 2010 interview with Bill Shorten when he was Minister for Financial Services & Superannuation in the former Labor Government:

NEIL MITCHELL:

Okay. When superannuation goes up from 9 per cent to 12 per cent, who pays?..

BILL SHORTEN:

What happens with superannuation is that people’s pay goes up anyway. It goes up each year, by and large. What will happen is that superannuation, the increases to superannuation, will be absorbed as part of people’s pay rises… they get a pay rise, of which some will probably go in super, yes…

NEIL MITCHELL:

Okay. So you’re saying that the superannuation increases will be paid for by absorbing money out of the wage increases.

BILL SHORTEN:

That’s the evidence…

NEIL MITCHELL:

Well, so, just to get it clear, business will not be paying an extra dollar, right?

BILL SHORTEN:

No, I can’t see that business will be paying any more in the future than they otherwise would have been if the superannuation changes hadn’t gone through. But what I do recognise is that a portion of what would have been employees’ increases will go into compulsory savings, which is concessionary taxed.

Let’s also remember that raising the superannuation guarantee would cost the Federal Budget another $2 billion a year. Moreover, the budgetary costs of compulsory superannuation actually exceed savings to the federal budget – a point explicitly acknowledged by the Henry Tax Review:

“An increase in the superannuation guarantee would … have a net cost to government revenue even over the long term (that is, the loss of income tax revenue would not be replaced fully by an increase in superannuation tax collections or a reduction in Age Pension costs).”

The Grattan Institute’s latest report similarly concluded that “both the short and long term, superannuation tax breaks cost the budget more than they save in pension payments”:

While adequacy of retirement savings for lower income earners is indeed an important issue, this would be best addressed by the ACTU lobbying to make superannuation concessions progressive. This way, these low income workers could enjoy a boost in their retirement savings without also incurring a reduction in their take home pay.

But simply raising the superannuation guarantee without fixing the underlying problems will merely heighten the inequities already rife in the system, while lining the pockets of industry.

Given the ACTU has its fingers in the Industry Super pie, maybe this is its intention?

unconventionaleco[email protected]

Unconventional Economist

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith is an economist and has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

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Comments

  1. Like everyone in the Financial Planning Super Industry (ACTU is part of FIRE sector) they always say more to super is best. They will never say less is best. Tickets will be clipped so best to be holding the clippers!

  2. I just can’t believe people still believe in superannuation when the proportion of people relying on the aged pension isn’t really decreasing after all this time and the tax revenue forgone by the Federal Government costs more than if we just gave everybody the pension!

    I guess the $30 odd billion dollars in fees workers pay must help cover a crapload of lobbying… I agree with calls just to scrap and unwind the whole thing.

    • mild colonialMEMBER

      Me too. Sweeper wins on the Keating argument. What a shame, he was the most entertaining politician.

    • Completely agree that it should be scrapped. Tax concessions are already at $41B far eclipsing most other concessions and a huge drain on the budget. Then add in fees, poor advice and back room deals (see Chapter 5 of Game of Mates) and I think you couldn’t design a worse system if you tried.

    • The whole thing is a rort for rich people, which is why we have it. Most people get relatively little savings out of the superannuation system, especially once the FIRE sector fees are taken into consideration, and the folk at the bottom actually pay higher taxes on their super than on their regular income. In most OECD countries, superannuation is not taxed in the accumulation phase (although earnings might be), but the withdrawals in the pension phase are fully taxed as income.

      https://www.oecd.org/daf/fin/private-pensions/Tax-treatment-of-retirement-savings-Policy-Brief-1.pdf

      Our 15% flat tax on superannuation (far below most marginal rates) with no taxation of withdrawals provides a massive subsidy to rich people, as does our ridiculously high reasonable benefit limit. High income earners in retirement can also benefit from franking credit refunds in cash, as if they really were low income earners.

      If we seriously wanted to fix the system we could go to a universal pension and/or change to an Exempt – Exempt -Taxed system. People would get a tax credit for tax already paid in the accumulation phase, with tax retrospectively charged on withdrawals from the beginning of the pension phase. Once the tax credit was exhausted, any income from superannuation would be fully taxed. The reasonable benefit limit could be brought down, by a lot if we go to universal pension.

  3. Yeah – let us not save for our retirement! Shock horror – less take home pay!!! Never mind the fact there would be substantially higher taxes if we didn’t…

    This is a nuts argument. And Keating is dead on the money.

    • Doesn’t it depend on how much the worker is paid? If the average lollypop holding see CFMEU member gets paid $150,000 then isn’t the proposed position a better outcome? It merely represents the strength of that union and the weakness of others. This is nothing new. In the 1930s the unions tended not to support the unemployed as they represented the workers, not the unemployed competition. The problem older workers face is getting insufficient concessional contributions.

    • ErmingtonPlumbing

      Did you not read the article Reasearchtime? The budgetary costs are the same.

      People can and should still save for their retirement but as a Freedom loving Capitalist and crusader for lower taxation why do you think wealthy people with large super balances should pay a lower rate of tax than someone digging a hole every day,…wearing out their back and body?

      We have a progressive tax scale and ALL income, weather Lazily aquired sitting on ones Ar$e recieving investment returns or hard earned, should be taxed exactly the same IMHO.
      Shouldn’t stop those that can from saving.

      Our Mandatory Superannuation system is nothing more than a privatised tax farming operation that delivers the truly wealthy, people who never were going to be a “drain” on the pension system anyway, enormous windfalls,… but for the majority an outcome little different weather we scrapped the whole system or not.

    • An average wage earner is never going to have enough super to retire on, so will rely on the pension either way.
      The wealthy who are getting the vast majority of tax concessions will have too many assets to get pension super or not.
      Not sure how the system is really reducing taxes in any meaningful way.

      • Yep. The maths is easy – you work for 40 years, then retire for 25-30 years.

        So 3/7 of everything you earn you need to keep to spend in retirement. That’s about 40%.

        If you throw in some investment earnings on the savings, maybe you’re down to 30%. Nobody saves that much. Indeed, it is not possible to save that much for an average earner.

      • “Yep. The maths is easy – you work for 40 years, then retire for 25-30 years. So 3/7 of everything you earn you need to keep to spend in retirement. That’s about 40%.”

        It is not as simple as that. Most people are spending 30% of their income on their mortgage. Their kids have moved out so their are no education/clothing/food costs for the kids – another 10%? Then, for the last 10 years most people do not travel or eat out much. Put some solar on the roof and their is almost no power bill. You will retire with a new electric car, so almost no maintenance or fuel costs (solar remember). And you can live on less than 20% of your pre-retirement income.

      • So provided you are relatively wealthy and can afford to spend extra pre retirement in buying stuff you can retire on a smaller % of final salary. OK, but what about median wage earners and below who have no hope of affording a new car at retirement, and can’t afford solar, and may not even be able to buy their own home but are life long renters?

      • Yep, Super relies on a couple being able to buy and pay off a house over their working life time. So the system breaks down if people can’t afford to buy a house. I think the long term renters were always going to be reliant on the age pension.

    • Lies ErmingtonP. Pure and utter fiction. It has been demonstrated that any Government largese lose substantial funds from the point of tax to distribution. In one state in the US, it was 90%. Howard knew this when he did the baby bonus, and he estimated the approximately half would be lost via government bureaucracy.

      Savings is critical for retirement, otherwise tax rates would have to be north of 40-50% for the average worker. Its far higher than that in some parts of Europe now, and will only get worse.

      UE is propagating an illogical and ludicrous preposition, that monies magically appear in the future without cost! Rather I contend, what ever the extra 3% lost now will be an order of magnitude higher cost later on.

      Compound interest is the most powerful force in the Universe… AE

      • ErmingtonPlumbing

        Not as powerful as it once was with ever diminishing “investment returns”/interest rates.

        Is there a correlation with the expasion of the percentage of the population becoming “investors”/savers and falling rates of return,…mmm?
        I do wonder.

      • Who would have thought that an ever increasing pool of investment would reduce returns.
        I guess it also comes down to the fact that the amount of “money” only effects the price of things.
        Unless you are stockpiling food and goods, you aren’t actually saving anything and will need to buy a proportion of what is being produced at retirement for your use. If the supply is not available then you won’t be getting anything with you savings no matter how much you have. Everything being consumed at a given point in time needs to be produced at that point in time or kept from the past. Saving money doesn’t achieve that.

      • ErmingtonPlumbing

        But bjw didn’t you read Researchtimes discription of the Magic of compounding below!
        With Enough compounding no one needs to work!

      • RT, the magic of compounding does indeed have merit — but only when you don’t have a central bank setting short-term rates (right now near 0%). Since the GFC savers (the world over) have been robbed blind in order to bail out debtors. Compounding at 0.5% per annum is not going to see anyone comfortable in retirement.

        Sorry, but this is just another nail in the coffin of all the Keynesian, fiat money supporting morons. These self-same people are trying to suggest solutions to a problem that was created by the very policies they support. Lunacy.

    • Yeah – let us not save for our retirement!

      People saved without super.

      Of course, that required surplus to save, but surplus has been steadily whittled away for decades as wages stagnate and labour share shrinks.

      Hence “saving” must be made compulsory (for the plebs – nothing more than a tax dodge for the wealthy), because necessary expenditure can just be handled with an ever increasing debt.

      The pension will be cheaper than gifting the finance industry and a host of other middle men ticket clipping privileges. Much the same way the health and education systems are.

      Good for everyone except ticket clippers.

    • @Researchtime — Well said. The ACTU is spot on for the simple reason that 9% is not enough to put aside!
      “Keating’s plan was skittled under the Howard Government, which left it at 9 per cent.” That little $hit wrecked it.

      Australians in general are fairly ignorant (to put it mildly) or stupid not realising the need to SAVE for RON.
      RON being later on when earnings have ceased for whatever reason. Other Nationalities have been raised & brought up with regular saving being a normal part of living. Not Australians. For most it’s spend today & tomorrow will look after itself.

      Well tomorrow doesn’t look after itself & compulsory saving is a great idea & essential for a reasonable life when older.
      $$$$$$$ need to be sent ahead without excuse – – No option because human reasoning will otherwise always have some excuse NOT to save. The Australian Super Scheme is a World beater. The best.
      There is on BIG problem is the huge & corrupt Industry that is leeching huge fees for doing SFA ! That has to be Fixed.

      I advise anyone earning a better than average salary to take control & have your own S/Fund (SMSF)
      Minimal cost & simple to run – no real experience needed.
      Pay now or Pay later – that’s the choice & paying later is not a nice place to be.

      • Running a SMSF is anything but simple and cheap

        Most people in position to do so don’t have the wherewithal – unless they use something like an MB super type thing to outsource the investing

  4. I’d just like to remind people that the current interest rates(and those of the last 6 years) have a big bearing on this situation.
    In retirement it is more important in this environment of falling house prices and falling stock markets, to be very conservative investors.
    The old age pension for a couple is equivalent to having $1,800,000 in a term deposit and as this site believes interest rates will decrease further, then the aged pension will rise to the equivalent of $2,000,000.
    Most people on reaching retirement will pay their mortgage off and be able to get the aged pension.
    Those that are better off will choose to buy a better home and go on the aged pension, because unless you have a lot more than $2,000,000 in super you will not generate enough money to safely exceed the aged pension.
    Please don’t write back and argue that the sharemarket will provide…it is very dangerous and not at all attractive in these times when you are actually retired.

    • This is exactly right.

      Lift interest rates so that real interest rates are not negative, and suddenly super will be functional.

    • there is absolutely no guarantee the aged pension will not be means tested
      nor will be indexed to inflation
      and maybe lifted to 70 or 75 yoa before eligibility
      the way we are going in the near future, say 5 – 10 years
      heaps and heaps of people will be dislodged from employment
      never to work again. Many as young as say 30
      What then?

      • How long can you live on 4 years salary WW?
        40 years of work gets you 4 years salary worth of super.
        average wage earners will never be able to fund their entire retirement with super.
        And before you start telling me of the power of compound returns I have been working for 15+ years and my super balance is closer to 1 years salary than 1.5.

      • bj you correctly describe what is going on
        you are being ripped off
        the fire mob all need to live like kings
        I dont know the mechanics of how this is gunna change
        but be assured the lubrication oil of the velocity of money
        is gunna seize many components for sure.
        Half a trill of oil leaked out in 10 weeks.
        the oil pressure red light is ON,
        soon it will automatically shut down the machine

      • @wiley,
        thought I’d add a little story time in honour of yours yesterday.

        It is tough times. Money can’t be found so everyone barters.
        The hotel proprietor agrees to give the butcher a room for the night for his meat.
        The Butcher gives the room to the pig raiser for a pig.
        The pig farmer exchanges the room for feed and fuel.
        The supplier of feed and fuel swaps the town’s prostitute some entertainment for the room
        The hooker uses the room.
        Everyone has achieved exactly the same transactions without a single $ in sight.
        That is unpossible. it’s a miracle,
        Care to comment?

      • Well the original story had a sheep farmer from up Mansfield Vic way who had just offloaded a heap of fat lambs at record prices and had, endured enough of the smell of lanoline and sheep poo and had come up here for a sniff of the sea breeze.
        Being a farmer he was upfront with the deposit on his inquiry, and left 2 x $50”s on the desk at reception whilst he went to inspect a room with both a view of the beach and the hinterland.
        Whilst he was doing this, the hotel manager took that real cash and whipped it around the various vendors as you describe, the velocity of money, but in each instance real money was transacted.
        When the money was returned to the front desk, is was still real money.
        The farmed decided that Noosa was the better option and moved on, taking the money with him
        What that story describes is both the use of the velocity of money, and the no of down stream persons who rely on the velocity of the initial cash, as there are in a credit based economy and the need to retain the integrity of the loop
        This river of credit-funds is all that is keeping the economy going.
        Should the sheep farmer decide to have a few, many, beers in Shepparton instead,
        Most of the GC falls over.
        This is where we are in our economy and why the half trill which has evaporated is important
        Even if that half trill was margin loans, etc
        PS I note SPC is back on the market??
        PPS note a number of clubs up here are buying booze from the wholesalers on the bc of the staff, cos the credit to the club has been cut off.

      • Money definitely makes the transactions easier to complete, given finding someone who both has what you want and wants what you have is a difficult thing, however the economy as described can continue without any money at all, for real goods and services can be bartered with no other requirements. The financial industry on the other hand is a purely fictional thing dependant on the falsehood that money is real, when it is fundamentally just a convenient way to undertake accounting for bartering, or providing generic IOU’s depending on perspective.

      • bj correct
        and who knows what finagling goes on in the brokering industry
        where both money is fictional as is the valuations and prospects of companies
        an rc into the stock brokers in straya would see em all in jail
        and most company directors.

      • Further, it states under s 6DD of that Act that evidence  or documents given before the Royal Commission are not admissible in any Court, except for offences against the Royal Commission.

        RC sees no one in jail. It is all specifically excluded from criminal court cases.

      • the rc exposes the evidence (on oath)
        then the ca lawyers go to work
        if you wish to see how it was in the days of the Colosseum
        go watch a couple of ca lawyers rip up these banksters and fire people
        will be delightful.
        I’ll there.

      • The “evidence” whether on oath or not, is specifically legally excluded from use in any criminal or civil case. It may as well not exist.
        “are not admissible in any Court” is pretty clear.

      • the questions used by the prosecution are on record
        as is the response of the defendant s
        all the ca lawyer has to do is have the junior counsel repeat the questioning as was used in the RC
        simples. even a robot could do it
        now any deviation from the initial response will be bait for the media.
        “so Bert from Westpac now says black is white?” ?????????????
        WBC falls another 20%. too easy

      • Stuff gets auto spam filtered, and sometimes it takes a while to unblock, sometimes they never do.

        It’s always amusing to see people trying to claim they’re being personally persecuted by an automated keyword filter that’s probably only just advanced enough not to be triggered by “Scunthorpe”.

      • Money definitely makes the transactions easier to complete, given finding someone who both has what you want and wants what you have is a difficult thing, however the economy as described can continue without any money at all, for real goods and services can be bartered with no other requirements.

        You couldn’t run an economy more complicated than a schoolyard based solely on barter.

      • I call BS on your story WW
        What sheep farmer is going to beer up in Shep from Mansfield instead of beers at Noosa or Kirra SLC
        Maybe a few quiet reds at Tahbilk

    • And this is why the welfare system is headed for bankruptcy — it is unsustainable. Most Govt funded pension schemes promise way more than they can sustainably deliver PLUS they are not PRE-funded — they tend to be Pay-As-You-Go schemes i.e. they are paid for by existing and future taxpayers. Just wait till the day you have 10 million taxpayers funding the state pension of 20 million retirees. ‘Do the math’ as the saying goes. And that’s just the pension — throw in free/subsidised healthcare and you have a financial catastrophe in the making. 10yrs from now (or less) the reality of the situation will have been laid bare.

      • Just wait till the day you have 10 million taxpayers funding the state pension of 20 million retirees. ‘Do the math’ as the saying goes. And that’s just the pension — throw in free/subsidised healthcare and you have a financial catastrophe in the making. 10yrs from now (or less) the reality of the situation will have been laid bare.

        Even better, imagine we reach a technological point where maybe only a few thousand people can produce enough to sustain a population of tens of millions ! How awesome would that be ?

        Oh, wait, for you that’s a nightmare scenario.

      • Ah, smithy. Glad to see you’re still a paid up member of the ‘virtue will trump all’ school.

        ‘Math’ and common sense have been banished for good (thankfully).

      • What are the “maths” on automation being able to produce most of what we need without any human involvement ?

        What’s the ratio of food producers to food consumers today vs a few hundred years ago ? Is this good or bad ? How about if the same result is applied to manufacturing in general ?

      • Oh, is the machines will replace the horse ‘n cart and lead to mass unemployment argument?

        Hysteria and nothing more. It defies commonsense that machines will produce everything and most humans will be unemployed – for screamingly obvious reasons.

  5. If people wish to save for their retirement they should be at least be given the choice to save, at least to some extent, in the form of a deposit account at the RBA.

    That is the only account that is inherently safe.

    It will not charge fees or pay much or any interest on balances but that does not matter as security is what it is offering.

    If government still wanted to force people to save for retirement it could do so by requiring a second MyRBA retirement account with compulsory deposits made by employers. Only specific types of withdrawals would be permitted before retirement.

    For example – transfers for investment might be permitted provided all interest and principle could only be returned to the fund. Approval of suitable investments may also be required. First mortgages, bonds etc.

    No stupid insurance policies get bundled in either.

    Result?

    A very simple, secure, low cost saving option with the potential for people to make some low risk investments if they choose.

    Whether even this option should be compulsory is a good question.

    Probably not as it should be thought of as an addition to a basic pension not as a substitute for a pension.

    It might be enough to make it a default that a worker can choose not to continue.

    • ErmingtonPlumbing

      Part of the Universal superannuation design is to Co-opt the population into thinking that investment returns deserve to be taxed at a lower rate than worked for, earned income,…it doesn’t.

      ALL income should be taxed the Same.

      • Correct which is why i did not mention taxation.

        How any investment returns are taxed is a longer discussion. Even if you want to tax investments, dividends etc at the marginal tax rate of the worker what I propose still beats the current model by a country mile.

    • ErmingtonPlumbing

      As for its mandatory nature,…why shoukd a 19 or 20 year old be forced to hand over a sizable percentage of their income to rapacious financial services institutions to keep and play with for the next 50 fking years! To only then be trickled back to them as a piddling annuity (if the industry gets its way there will be no lump sum of your money for that new car or Rhine river cruise)
      Its fking unbelievable scam!

      Meanwhile the Govie has an up to 1 million dollar guarantee on wealthy peoples bank accounts but, please correct me if I am wrong, but not on peoples mandatory 50 year super balances.
      That can all be blown by some gambling over paid investment manager,….fking disgraceful!

      • I assume this is not directed at my proposal as the proposal addresses the points you are raising.

        If you only wish to save you will have not be dealing with anyone other than the RBA.

        As to what 18-19 year olds should do is hard to say. For the most part they are probably best off saving and buying a low cost house like their grandparents did before the deregulation of the banks turned housing into a casino.

      • EP, seriously took you for smarter than that. Yes, taking a big hunk of money at 20 years of age, growing it for another 40 years makes a massive difference. It is the fundamental driver of all finance. Richard Russell gives an excellent summary:

        Rule 1: Compounding. …Remember, compounding only works through time.

        But there are two catches in the compounding process. The first is obvious — compounding may involve sacrifice (you can’t spend it and still save it). Second, compounding is boring — b-o-r-i-n-g. Or I should say it’s boring until (after seven or eight years) the money starts to pour in. Then, believe me, compounding becomes very interesting. In fact, it becomes downright fascinating!

        In order to emphasize the power of compounding, I am including the following extraordinary study, courtesy of Market Logic, of Ft. Lauderdale, FL 33306.

        In this study we assume that investor B opens an IRA at age 19. For seven consecutive periods he puts $2,000 into his IRA at an average growth rate of 10% (7% interest plus growth). After seven years this fellow makes NO MORE contributions — he’s finished.

        A second investor, A, makes no contributions until age 26 (this is the age when investor B was finished with his contributions). Then A continues faithfully to contribute $2,000 every year until he’s 65 (at the same theoretical 10% rate).

        Now study the incredible results. B, who made his contributions earlier and who made only seven contributions, ends up with MORE money than A, who made 40 contributions but at a LATER TIME. The difference in the two is that B had seven more early years of compounding than A. Those seven early years were worth more than all of A’s 33 additional contributions.

      • @Research,
        Compounding works both ways, and most people would get a greater net benefit using the money going into super to pay out their mortgage and reduce the compounding interest they are paying on the debt that is being charged at a higher rate than investment returns likely to be achieved.

    • Hole in your story
      many will not have the opportunity to save for retirement
      save, indicates contributions made over time
      the time component is not guaranteed.

      • No hole in this story.

        The pension remains universal so if you dont have time nor desire to save you still get that.

        What I propose is a 100% secure way of saving. You cannot get safer than central bank liabilities within the public monetary system.

        And saving in central bank liabilities is saving NOT investment as the RBA does NOT invest so there are no investments returns to distribute to account holders.

        And if you dont trust that there are plenty of other asset classes that are easy to own and hold their value.

        One that comes to mind glitters.

  6. “the average superannuation balance today for men is $112,000 and women $68,000 and only 20 per cent of current retirees are fully funded…”

    I’m happy with the fact that having accrued almost all of my current super from a job that doesn’t pay much more than the minimum wage (I’m nowdays self-employed), the balance is very significantly higher than those figures. A lot higher.

    This is no doubt arising from the facts that..
    *the hours were permanent, full-time and stable for the entire 20 years I was there
    *it is a government super fund

    The problem does not seem to lie with the existence of superannuation itself but rather, a parasitic industry that has grown up alongside other parasitic industries, made possible by the now decades-long fashionable consensus that everything should be privatised/ opened up to “competition”.

    • interested partyMEMBER

      Agree on the parasites.
      It took a while for the para’s to streamline the process to capture the most they can but they have the process down pat now……to the point now that when a new system is put forward [cough’ndis’cough] it is completely rorted before it gets rolled out.

    • Can you live for 30 years on the balance? Or will you be claiming a pension at some point?
      I’m also guessing that your not much more than minimum wage was in reality around median wages or above given typical balances.

  7. Should add that had I elected to stay where I was until preservation age, I would have gone not that far short of doubling that.

  8. interested partyMEMBER

    I find it very amusing that all the experts above have not mentioned a home grown food supply in their comments.
    I supply 3/4 of our food needs of a 1/4 acre block……drink rainwater via tanks……and have 200 kg’s of fish ( protein ) swimming in the pool. Chooks give us eggs and compost to grow the above fruit/nuts/greens etc.
    How much super do I need? or let’s put it another way…..can the above be described as true wealth.????

    Folks…..Feel free to copy the model….it’s the gift that keeps on giving.
    When you don’t have to reach for the cash to feed yourself……all of a sudden the cash you do have seems to just sit there and not drain away so fast…..[[[[[ interest returns ………. the music in the musical chairs.]]]]]

    • Fish swimming in the pool!

      I often wondered why people didnt do that after the pool stops being used regularly. What kind of fish are you growing?

      1/4 acre block!

      That explains it.

      The future of Australia is eating tinned food in a Skybox watching shows where real food is the hero of the dish.

      • interested partyMEMBER

        Pfh….barcoo grunter…also called jade perch. They eat any and everything so 1/2 their tucker is vegetation grown on site, the other 1/2 excess fruit, and rolled oats as a top up. No commercial pellets or food source.
        As we speak, we are harvesting the poop from the pool floor and feeding bananas with it. The bananas are going nuts.

        Keep in mind that this is a fully blown permaculture system. There are passionfruit, chokos, snake beans growing on wires overhead around the pool perimeter and are watered via the pool water. Taro and mint in grow beds sitting on the pool edge.
        No chemicals on site….. apart from chook/fish poop and compost.

        One other thing…..city living is a choice.

      • “One other thing…..city living is a choice”
        Only for some. Where do I get my free country house and land? Or job near it so I can afford it?
        The reality is that most people have to live in the city, and some have a choice.

      • ErmingtonPlumbing

        @ Interested Party,….Respect.

        Do you top up your pool with mains/town water or Rain water only?
        Im wanting to grow my yearly tomatos (improved Apollos mainly) without chlorinated/ flurided water this year.

      • interested partyMEMBER

        “Only for some. Where do I get my free country house and land? Or job near it so I can afford it?”
        Where does the ‘free’ bit come from????? I worked as a self employed chippie for 30 years. As for jobs…..define your needs [ not wants] and start with that. As I have stated above; 3/4 of the food is self supplied. Add solar, water tanks, and sweat, and the bill you end up with is a “””required””” income that covers rates, vehicle costs, house insurance, and a small amount for what we cannot grow here……diary, grain, and things like that. I was astounded by just how little money is required [ income ] when all of the above is put in place.

        Look……the point is this. There is an alternative to what the superannuation system is telling you what you ‘need’. IMHO…..more money is not the answer. More resilience is.

        “The reality is that most people have to live in the city, and some have a choice.”
        You can choose your reality.
        https://holmgren.com.au/

      • interested partyMEMBER

        EP.
        I have used both……prefer to top up the pool with rainwater diverted off the roof… and when the pool overflows it runs into the banana circles. I can have a rain event of 75 mm in 1/2 hour and no water leaves the block. Creative plumbing. You would love it. Plants do better on rainwater…but you already know that I reckon.
        Harvesting the fish poop using one of these filters supplied via a home engineered airlift pump….brilliant ‘appropriate’ technology.
        http://www.dracodrum.com/

      • @IP ” I worked as a self employed chippie for 30 years.”
        So you were earning well above median wages I presume?
        Could you have done this prior to working for 30 years like that?
        It is only a choice if you have exceeded a certain level of wealth. A large proportion of society will simply never have that choice.

      • interested partyMEMBER

        “So you were earning well above median wages I presume?”

        No….not by a long shot. Patchy income but happy to have time at home with family. I admit some months were far more profitable than most.

        “Could you have done this prior to working for 30 years like that?”
        Yes….very achievable in hindsight. This system we have here is only 3-4 years old. I thought and acted just like the next bloke before that.
        The cost to do this is education and experience…..+ a willingness to step outside societies preconceived notions/expectations.

        “It is only a choice if you have exceeded a certain level of wealth.”
        We don’t agree on this point. Maybe the definition of wealth is the difference here?

        “A large proportion of society will simply never have that choice.”
        A large proportion of society will never consider the alternatives……

    • Nice one. I had previously researched creating my own small farm, and then realised that fruit and veg really not that pricey. I can also mostly catch my own protein (fish) at least until lefties ban it.

      There is one deal breaker though. That is the current US healthcare predicament where those over 50 cannot afford private healthcare and if diagnosed with a serious illness end up choosing between death or selling the home.

      • ErmingtonPlumbing

        As a species with the organisational capacity to identify and decipher our own genetic code, split and fuse the Atom, place people on the surface of the moon, send probes beyond the Heliosphere, develop AI and Robotics and produce a food production and distribution system that feeds billions,…we can sure as fk maintain a Universal free healthcare system.
        All arguments to the contrary are total BS.

      • Sure ermo, but the choice is universal health care or a few more luxury yachts and private jets.
        Think of the wealthy. Cause they sure aren’t thinking of you.

      • bjw on the money. I also expect that younger generations who were deprived of the opportunity to own their own home and raise their own families, are not going to be receptive to paying higher taxes to support the generations that screwed them over.

      • interested partyMEMBER

        I reckon I am just a bit logical……smart? not so much. The trail of mistakes behind me tells me all I need to know about myself.

      • +1
        I’m getting started on converting a few acres of our cattle farm to avos nanas macas mangoes pecans etc. would love to chat more

        I should get chooks again ( we had 12 at one stage ) but Brown snakes and Wedgies (and no guinea fowl didn’t help )

    • You can’t just come out and say that point blank, you’ve got to apply some lube and ease people into it.

      • Unfortunately lube supplies have been exported to China by the lube cartel, and forced lube prices out of reach of the common man. So it’s nothing or make do with a bit of saliva, if the sun hasn’t already dried you out.

  9. Surely to what extent super is paid for by workers (in the form of lower wages) v paid for by business in the form of lower profits is not something that could be simplistically dismissed as ‘it’s all paid by workers’ v ‘it’s all paid by business’. To figure out to what extent who is paying for higher super would require extensive research and econometric analysis. I suspect that such research, if it ever exists, would indicate that it depends on market power, ie, in industries where workers have a lot of power, it would mostly be paid for by business in the form of lower profits, in industries where workers don’t, it would be predominantly paid for by them in the form of lower salaries.

    Those who believe the ‘only’ answer is that it is paid for fully (100%) in the form of lower salaries, ask yourself this — if payroll tax was abolished tomorrow, do you really think that the full (100%) amount of saving would be passed on to workers in the form of higher salary? If the answer is no, then why should the *full* impact of super be taken away in the form of lower salary?

    • Can you please point me towards the industries where workers have a lot of power in australia, I’m looking for a new career.

  10. Keating is in love with the idea of compound interest. But why do it at a concessional level for individuals – why not have a great sovereign wealth fund worth trillions that… ohhh. (waves at Norway)

    Of course the politicians sold off our assets to set up their own private wealth fund for their own super.

    • Wouldn’t really work in a country with large migration (like Australia), given that you would dilute the per capita wealth pool every every time you let a migrant in.

      In other cases can work very well (eg Norway), but even if Australia became low-migration, it would find it hard to generate funds into the scheme in the way Norway has, given that Norway has not been shy in taxing the hell out of oil producers — in contrast to Australia, which could hardly get anything but a highly watered down mining tax (and even that for a short period).

    • Because everyone can’t get wealthy from compound interest at once. If everyone is making the same returns then everyone has more money, but no more goods and services are produced, so all that happens is everything costs more nominally and no one is any better off. It only works as a mechanism to transfer wealth to those receiving it from those who don’t.

      • That might have truth in it in a closed economy, but given that the world is a big place, and a substantial fraction of funds are invested overseas, returns generated can give the opportunity to consume more imports

    • interested partyMEMBER

      aj……..you are a thinker. Tell me this.
      Can compound interest hit a limit? and if it does, are we there yet?

      • Absolutely, the striking thing about Keating and his compound growth model is his boomer blind-spot that we can all just keep growing like some bat-sh7t cancer forever.

    • Keating’s justification for super is always compound interest. “The interest on the interest” as he keeps rambling on about it. My point was, even if that is the case, the way it’s structured is still dodgy.

      The big problem with super is it doesn’t reward unpaid labour that benefits society, it doesn’t reward low paid but essential services, it actually does sweet fa for anyone but the already rich and the rentseekers feeding off it. It should be scrapped.

      • Never been a fan of Keating. Most countries have some kind of retirement schemes, whether they be private, public, or a combination. Some funded, some unfunded (‘pay as you go’), some compulsory, some not etc etc. I think the first step is to stop accepting the arrogant bleating of Aus having the ‘best retirement system in the world’ (though fee gougers would certainly think it is) and take an open-minded, flexible approach as to where our policy should be heading.

        And then I’ll wake up.

        Side note — some measure of pre-funding is necessary (though not necessarily in the form of a super type scheme with compulsory individual accounts) — surely you don’t propose that the whole future schemes be unfunded?

      • Privatisation of essential public services is always about improving the lot of the rich while disadvantaging the poor, education, health, roads, electricity, or in this case pensions.

        ” some measure of pre-funding is necessary ” not really, provided your population isn’t collapsing you can simply fund it from taxes.
        Pre funding doesn’t provide any additional workers to do things for the retired people, it doesn’t create any additional natural resources to create things from. The reality is a society creates a certain amount of stuff at a given time, and that stuff is distributed by some means to the members of the society. A number in a bank account somewhere makes no difference to this fundamental fact.

      • Pre-funding, as noted above, can create additional funds, despite your assertion that investment returns are a zero sum game (domestic investments can increase productivity and hence incomes, overseas investments which provide returns allow more to be spent on imports in the future). Ultimately the question is this — will the general income pool of non-retirees rise at a faster rate than investment returns? Only if the answer to this is an unequivocal yes can pre-funding be dismissed.

      • If the investment is rising faster than incomes, then there is by definition a greater pool of money chasing the same resources, and they therefore cost more so there is no net benefit. The ability to conduct productivity boosting projects is not dependent on a retirement scheme to provide investment. Back in my day the electricity producers were all government owned and revenues could be used to provide pensions. I don’t think allowing Super funds to buy the electricity providers, make a profit and then use the profits to pay for pensions is a particularly useful concept. Changing ownership structures doesn’t change the fundamental dynamics of providing and consuming things.

      • If savings/investments makes no difference (according to your unsubstantiated argument), then using such logic, debt should make no difference. Hence government should only finance its spending through borrowing, right?

  11. We need to do away with superannuation altogether, except to the extent that some businesses provide (eg the highly paid partners at top accounting firms). for which there should be no tax concessions.

    This measure would open up the availability of more funds flowing to other funds management businesses, such as MB, who mostly charge massive fees to manage people’s money (MB being an exception to the over-charging of fees).

    But more importantly it would provide a lot more funds to be diverted towards propping up the real estate sector at a time of downward pressure on home prices. This important measure would also help stabilise the banking sector against a possible deluge of bad debts on mortgage loans (at least for a while).