Kevin Rudd joins superannuation liars club

Former Prime Minister Kevin Rudd has joined the superannuation liars circle, claiming that it is “bullshit” that increases in the superannuation guarantee (SG) comes at the expense of lower take home wages:

Former Prime Minister Kevin Rudd baulked at the suggestion it would depress wages.

“Pigs might fly,” Mr Rudd said.

“That is the biggest bullsh*t argument I have heard.

“We’ve had the Morrison government rip out $40 billion plus from people’s existing superannuation accounts…

“Well, that’s all very fine and dandy but when those working people go and retire in the decades ahead they will have gutted their retirement income.”

“Bullshit”, hey Kevin?

Then why did Bill Shorten as Minister for Financial Services & Superannuation under your Government twice acknowledge that compulsory SG rises are paid for by workers via lower wages?

First in a speech:

“Because it’s wages, not profits, that will fund super increases in the next few years. Wages are the seedbed of the whole operation. An increase in super is not, absolutely not, a tax on business. Essentially, both employers and employees would consider the Superannuation Guarantee increases to be a different way of receiving a wage increase”.

And also when interviewed by Neil Mitchell:

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 recall that the Henry Tax Review, which was commissioned by Kevin Rudd, also explicitly stated that increases in the SG would be paid for via lower take-home wages:

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.

Because of this, the Henry Tax Review explicitly recommended against lifting the SG because of its punitive impact on 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.

The rest is history. Kevin Rudd ignored the Henry Tax Review’s findings and legislated to lift the SG to 12% anyway. But Kevin Rudd has conveniently forgotten those details.

Whenever former Labor party hacks like Kevin Rudd claim that the Coalition is working against people’s standards of living in retirement, they might want to remember that it was the Rudd Government that increased the eligibility age for the Aged Pension from 65 to 67:

So basically, Kevin Rudd chose to fatten his industry super mates, at workers and taxpayers expense, by increasing the SG while at the same time restricting Aussie’s access to the Aged Pension – Australia’s genuine non discriminatory retirement pillar.

The only one bullshitting here is Kevin Rudd.

Unconventional Economist
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Comments

    • PaperRooDogMEMBER

      Yes, talk about how to loose any credibility you may have! It didn’t work back then when workers were in a stronger position and companies profits flowed to workers a little better than now. That is why I say all wages must be lifted by law every time supa is increased, though best not to increase supa in current economic situation & arguably never. (Maybe the government could try and drive industries via tax & policy settings that will provide long lasting income streams in innovative productive industries rather than non productive housing & providing corporate welfare to energy, mining etc, just relying on population Ponzi is lazy, stupid and self defeating)

  1. Display NameMEMBER

    It’s sad that Rudd and Keating would sell out the economically weakest in the community for a bit more cash for their mates.

  2. re Keating. Is anyone surprised by this?
    eg the that father of free market economics in Australia blatantly contradicts theory re. Determination of the real wage and labour demand / supply curves

  3. I think this is more complex than that though right, it’s not a single factor homogenous problem. Super is a fixed requirement that is a percentage of people’s earnings. In a low wage growth environment where there is plenty or labor an increase in super may come from a foregone wage increase. Or maybe they weren’t going to increase wages anyway? But the idea of treating head count and total labor increases does lump wages and super together. However if we had a constrained labor supply and increasing wages due to business needing to outbid to attract labor then the super increase may not necessarily be taking from wage increases (2002-2007 period). All I am saying is that super increasing impacting wages increases is not black and white as at the end of the day it comes down to labor market conditions. In the current environment I would agree that it takes from wage increases as the labor market is very weak and businesses everywhere are not as profitable as before (taking out JK subsidy) so looking to cut their fixed costs so could even result in headcount cuts.

    • a lot of people above the median wage bracket are on packages…. where the agreement is for $X including benefits and super etc. I have seen packages offered where the total was $165K, but the take home was equivalent of the $110K wage after the benefits and super were calculated.

      You raise the SGC and these people will just get their package adjusted to take home less pay, the company wont fork out extra….. the salary package is designed for this.

      Any business that is struggling to maintain revenue is not going to be able to raise their employment costs another couple of percent… so will look to cut overall wages…. any new hires will be at the same overall employment costs…..

      Any business that looks at the wages of an employee as the amount the employee takes home is destined to screw up big time…though that might explain why so many go to the wall without paying entitlements…

      • Same problem for PAYG contractors: If my super goes up, it comes directly out of my net “take home”, with obvious adjustments for tax difference.

        • Solution set up a pty ltd company and a family trust , as a director and receiving a dividend from the trust “super” is not required to be paid.
          NB. not financial advice do your own research.

          • Which would work, unless the ATO deems the business income as PSI, in which case it doesn’t. TPAR virtually guarantees an audit and unless you’re Kerry Packer, legal battles with the ATO are a losing proposition even when you actually win.

      • Same problem for PAYG contractors: If my super goes up, it comes directly out of my net “take home”, with obvious adjustments for tax difference.

    • I don’t think it is that complex.
      If you model the real wage as being before super, then an increase in the levy shifts the labour demand curve left and shifts the labour supply curve right (quantity of labour is higher at each real wage because employees are receiving more super)
      So the equilibrium real wage falls by the same amount as the increase in super.

  4. I understand the argument. But lets look at my mate that works at the abattoir who works for the minimum wage. He sees it like this. He gets a wage rise of 1 or 2% per year from the minimum wage rise increase. He then gets a super increase to 13% and still gets his 1 or 2% per year from the minimum wage rise increase. He does not think that the minimum wage rise will be lower as its already low and he also has no guarantee he would get a rise anyway. He will take what he can lock in now and sees any one telling him that he should not get the SG increase that they are just on the side of business not the worker. All the workers at the Abattoir think this way.

    • This.
      If we accept the fact that wage rises have gone nowhere last decade and they wont in the next few years… how can they be “lower” if th e super paid by employers is increased?
      As in, if employers are not going to be handing out pay rises anyway… why not increase super?

  5. We’ve just signed new EBA, starting 1/07. 3+3+3. What do you think who is going to pocket that 1-1.5% super if canceled?

  6. Tell me lies
    Tell me sweet little lies
    (Tell me lies, tell me, tell me lies)
    Oh, no, no you can’t disguise
    (You can’t disguise, no you can’t disguise)
    Tell me lies
    Tell me sweet little lies

    Pigs may fly
    Tell me pigs may fly…

  7. The world once had empires, run by emperors …
    Then kingdoms, run by kings …
    Then Australia become a country, and it is run by …

  8. Keating’s comment on the day may have merit. He said “There’s been no wages growth in eight years, so if they don’t get it in super, they won’t get it at all.”. If it is true that there will be no wages growth, and the data tends to support this, then it’s a valid argument.

    • There’s been no wage growth due to stupid levels of net immigration and I suspect this something the arch neoliberal Keating would be strongly in favour of. Like Rudd, he’s a despicable hypocrite.

      • Yes, agreed, my comment is simply if/then a priori reasoning.

        If the only wage rise is via super then it should proceed. The only argument against it (from a wage earners perspective) is if it is substituted by take-home wage rise and that is unlikely.,

  9. Lower take home wages are due to this:

    2 Sep 2020

    software engineers wanting work in Australia will be given exemptions to bypass tough border restrictions as part of a new skilled migration plan

    at a time when the effective unemployment rate is tipped to reach 13 per cent by the end of the year.

    https://www.smh.com.au/politics/federal/nurses-ceos-to-be-given-border-exemptions-under-skilled-workers-plan-20200901-p55r93.html

    Rudd

    brandished a laptop computer, describing it as the “toolbox of the future”.

    “We need to equip our young people with the skills necessary to participate in the digital economy of the 21st century.”

    Digital economy jobs are given to migrants. Thanks Labor.

    • As much as I can’t stand sell outs like Keating and Rudd, the ALP haven’t been in government since 2014. You need to be thanking Scummo and the LNP spivs for the above.

    • blacktwin997MEMBER

      Looks like he’s suffering constipation for a start in that photo. If anyone would know about bullsh!t it would have to be that pudgy albino twerp fvckstick.

      • It’s quite understandable how he became Prime Minister.
        Howard had been around too long and was on the nose.
        At the same time; Rudd and his spin doctors basically fooled enough people (including myself) into buying the illusion/narrative that Rudd was a viable alternative.
        Then the real Rudd came to light.
        Rudd the Dudd.

  10. Paul Keating did make an excellent point when he spoke about ordinary Australians paying one rate for superannuation and parliamentarians benefiting from a higher rate which is paid for by us.

  11. LittleEmperorMEMBER

    Potty mouthed krudd didn’t get to be un secretary-general so has to settle for lobbying for the superannuation industry instead. How pathetic.

    • Potty mouthed? Like the climate talks when he referred to Chinese rat fuking rat fukers? And when recording a speech he described the fuking complexity of Mandarin? What else?