Bill Kelty joins compulsory superannuation liars

Former secretary of the Australian Council of Trade Unions (ACTU), Bill Kelty, has joined Paul Keating in re-writing the history of Australia’s superannuation guarantee (compulsory superannuation).

Kelty, like Keating, is now claiming that lifting the superannuation guarantee from 9.5% to 12% would not lower workers’ take-home pay. From The AFR:

The super guarantee is due to rise to 12 per cent by 2025 but a number of Liberal backbenchers and the Grattan Institute have been pushing for it to remain at 9.5 per cent.

Mr Kelty said the “silly group” of backbenchers who had “never negotiated a wage rise in their lives” should be ignored…

The idea that pausing the super guarantee led to wage rises was laughable, he said. Instead, the money would end up in the pockets of shareholders.

“I do not know one employer who says, ‘I note the super guarantee has been deferred, I’m going to give you a wage increase'”…

“Even if [the Coalition] moves to 12 per cent and goes to the next election saying we want to give low-paid people the option to take their super [as wages], it will be stealing money,” he said.

“It is a terrible thing to do to young people. It is a terrible thing to do to low-paid workers.”

These claims by Bill Kelty completely contradict how compulsory superannuation was established under the Prices and Incomes Accord signed between Kelty (as secretary of the ACTU) and the Hawke Labor Government.

This accord was developed with the specific goal of tempering wage growth in exchange for social security payments and superannuation.

The Government paper announcing the establishment of compulsory superannuation in 1992, Security in Retirement: Planning for Tomorrow Today, explains this goal explicitly:

A major challenge for retirement incomes policy is the need for current consumption to be deferred in favour of future income in retirement …

No loss of remuneration is involved in meeting this national challenge. What is involved, rather, is forgoing a faster increase in real take‑home pay in return for a higher standard of living in retirement.

So too did Paul Keating in 2007:

The cost of superannuation was never borne by employers. It was absorbed into the overall wage cost. Indeed, in each year of the SGC growth between 1992 and 2002, the profit share in the economy rose…

In other words, had employers not paid nine percentage points of wages as superannuation contributions to employee superannuation accounts, they would have paid it in cash as wages…

When you hear conservatives these days speak of superannuation as a tax on employers they are either ill-informed or they are lying. The fall in unit labour costs and the upward shift in the profit share during the period of the SGC is simply a matter of statistical record. It is not a matter of argument…

Does Bill Kelty also suffer from amnesia?

Raising the superannuation guarantee from 9.5% to 12% would simply ensure that nominal wages grow by less than they otherwise would, with the difference going into workers’ superannuation accounts. This is how the system was specifically designed when Bill Kelty and Paul Keating established the superannuation guarantee in 1992.

It is also why the Henry Tax Review, the Australian Treasury, the Parliamentary Budget office, and the Grattan Institute have all cautioned that raising the superannuation guarantee would lower workers’ take-home wages.

Stop lying, Bill.

Leith van Onselen

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.

Latest posts by Leith van Onselen (see all)

Comments

  1. Entrenchment. He’s defending his legacy; doesn’t want policy rewritten. MB is doing a good job shining the light on this.

  2. I am wondering whether they might be right. Wage growth is very low, and there there will be ‘stickyness’ to lowering wages. So increasing the super guarantee will increase overall wages (take-home + super) more that not increasing the super guarantee (take-home only).
    Worth a thought???

    • ErmingtonPlumbing

      Little consolation for an 18 year old who is to hand over “their” money to a rapacious financial services industry to “hold” for the next Fking 50 years!
      An unbelievable rort we have all been indoctrinated into accepting.

      • You are correct, but if the super guarantee was removed completely, would wages go up by 9% to compensate?

      • Ermington; Spot on your one paragraph sums up the whole situation. These instruments are designed for the ones who profit from them. The only reason super is good for individuals is the low tax rate & forced savings( communism). A 30 year old still has to give the money to a rich crook for 37 years to gouge out of in a low tax environment, a 40 yr old 27 years. 27 years is a semi lifetime a lot can happen in 27 years.

        Then there is the little talked about inconvenient truth that super actually costs taxpayers more than providing a pension. A trillion dollars sits idle and out of rotation in the economy, savings are good but anti growth and lightly taxed compared to GST circleation. Tax savings by putting money into super at 15% costs more benefiting the wealthy over the bottom 50%(as usual).

      • I have a dream.

        One day soon Tony Blair of New Labour and WMD fame will circumnavigate Australia Pong Su style in his yacht purchased will the ill gotten gains of a war criminal and ALP traitor. On a rescue mission he will pick up distressed members of his New-ALP coterie in Australia. Suffocating from lack of relevance, they will swim out to their hero (like the apocryphal Harold Holt to the waiting Chinese Submarine). Scooping up Bill Kelty, Paul Keating, Shorten, Wong, Anthony Bended-Knees and the hyper-annoying but well named Tony Burke, together they will f*#k off into the sunset, waxing lyrical about their terrific record when it comes to reforming economies and changed ALP values to embrace financialisation and open boarders. Only after that might the ALP be able to get back to business. But until these failed legends in their own lunch box put themselves out of our misery, they will be as scarecrows in the field trying to attract votes from the birds.

    • truthisfashionable

      Pretty sure most EBAs (think that’s what they are still called) that a union has negotiated are wage or base plus super. So increasing the super portion has no effect on the wage component.

      For those who are on common law contracts, maybe won’t be so fortunate if the super component increases and the employer keeps the total package at the same amount.

  3. When you hear conservatives these days speak of superannuation as a tax on employers they are either ill-informed or they are lying.

    And when Kelty says superannuation is a tax on employers (shareholders) is he ill-informed or lying?

  4. nanutarraMEMBER

    If the government raises the 25k threshold we would all be happy.
    I know it was a big tax dodge for the rich but fvck me give the worker a chance for a nice retirement.

    • Of course the wealthier would be happy if they could put $100K in super at 15% instead of 49%. Great for those 50 years old and above just retire early and not pay a fair share of tax for a decade or more.

      It would be great but extremely unfair. Everyone owes a fair percentage of their earnings to provide the safety and infrastructure to conduct business. We all owe it to our fellow Aussies for not allowing us to conduct business in peace and be paid for our services under the law.