The rent-seeking boss of Australia’s largest superannuation fund, AustralianSuper’s Ian Silk, has urged policymakers to ignore the Grattan Institute’s “flawed and ideological” arguments for scrapping further increases to the superannuation guarantee to 12%. From The AFR:
“Those discredited arguments are echoing now as the opponents of super try and lay the groundwork to oppose the scheduled rollout of the superannuation guarantee (SG) from 9.5 per cent to 12 per cent,” he said…
Mr Silk was responding to Grattan research that found that lifting the super guarantee to 12 per cent would leave many Australian workers poorer over their lifetimes…
Mr Silk said good public policy should not be “based on easily rebutted, ideological arguments that have been smacked out of the park when raised over the last 30 years”…
“The super nay-sayers have been rejected since the 1980s and we now have a super system that is regarded as one of the best in the world for workers and retirees,” he said.
“This is quite apart from the significant drop in the call on the age pension, the reduction in the current account deficit and the impact of the SG on the cost of capital in Australia.”
Obviously, I believe that Silk is talking his own book. The Henry Tax Review explicitly acknowledged that compulsory superannuation costs the federal budget more than it saves in Aged Pension costs:
“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 Henry Tax Review also explicitly recommended against raising the superannuation guarantee, in part because it would rob lower income earners of much needed disposable income:
“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…
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”.
The Productivity Commission’s (PC) final report on the efficiency and competitiveness of Australia’s $2.8 billion superannuation system explicitly recommended “an independent public inquiry into the role of compulsory superannuation… in advance of any increase in the Superannuation Guarantee rate”:
RECOMMENDATION 30: INDEPENDENT INQUIRY INTO THE RETIREMENT INCOMES SYSTEM
The Australian Government should commission an independent public inquiry into the role of compulsory superannuation in the broader retirement incomes system, including the net impact of compulsory super on private and public savings, distributional impacts across the population and over time, interactions between superannuation and other sources of retirement income, the impact of superannuation on public finances, and the economic and distributional impacts of the non-indexed $450 a month contributions threshold. This inquiry should be completed in advance of any increase in the Superannuation Guarantee rate.
Let the PC decide the debate and silence the super industry rent-seekers once and for all.