LVO demolishes compulsory super on Radio 2GB

Yesterday afternoon I gave an interview on Radio 2GB’s Drive program talking compulsory superannuation. The interview starts from around the 44 minute mark and runs for around 12 minutes.

In particular, I rip into Labor’s, the union’s, and Paul Keating’s call to raise the rate of compulsory superannuation to 12% or 15%, arguing that it would wreck the federal Budget, lower take home wages, heighten inequities, and fatten the rent-seeking super industry.

Unconventional Economist

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

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Comments

  1. compulsory superannuation is a kind of private taxation,
    it’s just that money collected doesn’t go into budget but rather into pockets of privately run funds where mates gamble with “someone else’s money”

    • … and when they do well, it’s because they’re brilliant managers, and deserve their fees, but when they do poorly it’s because of the economy and there’s nothing they could do, but they still deserve their fees.

      Heads they win, tails you lose.

  2. reusachtigeMEMBER

    Real achievers don’t need or even have superannuation! They own real assets like Australia’s number one asset class – property!

    • But because they are forced to have superannuation, they buy property in superfunds as well, to avoid having a lazy balance sheet and diversifying into low-return high risk assets.

  3. This is a silly argument IMHO – with totally illogical premises. Savings are a great thing. Totally agree with Keating. Put a contribution cap for higher earners if you must…

    BTW- modesty a great thing. “Demolish”??? Hubris?

    • Is forcing people to trade stock with compulsory super really saving in any meaningful way? It creates nothing of value, merely inflates the stock market, and in future there will simply be more “savings” to buy the same amount of stuff, so these savings lead to price rises, or as people pull money back out, this stock market falls and these savings just evaporate.
      Maybe the desire for increase in super is to cover this fall for the boomers.

      • HadronCollision

        Exactly, the compulsory nature of it is the issue. Have some tax incentives to encourage people, sure, but don’t make it compulsory. I’d rather put post tax $ on my hosue mortgage thanks.

      • This same mechanism only results in higher everything costs at retirement if everyone has compulsory super. Saving only works when done by a few rather than everyone.

  4. alwaysanonMEMBER

    I got this text the other day. Apparently I need to contribute 9.5% but if I contribute too much (which 9.5% of my pay is) I then also need to pay an additional 15% tax on all my contributions. “Hi
    We’ll soon send a Div293 Notice of Assessment to your myGov account. MyGov will send you an alert when it arrives. Remember to check the notice as it has important information about tax on your super contributions. Find out more at ato.gov.au/division293”

  5. Has Australia’s savings rate improved since compulsory super came in & has it improved further following successive rate increases?

  6. why aren’t annual super contributions just taxed at the same rate as income?
    0 to $18,200 Nil
    $18,201 to $37,000 19c for each $1 over $18,200
    $37,001 to $87,000 $3,572 plus 32.5c for each $1 over $37,000
    $87,001 to $180,000 $19,822 plus 37c for each $1 over $87,000

    Same on the way out at retirement age.