Industry super spits dummy over biased modelling

The lobby group for 15 Australian industry superannuation funds, Industry Super Australia (ISA), has taken aim at the federal government’s Retirement Income Review, which it claims was inherently biased in cautioning against lifting the superannuation guarantee (SG) above 9.5%:

“The troubling conclusion is that the review was rigged to get the outcome some government MPs wanted,” [ISA deputy chief executive Matthew Linden] said.

However, the Retirement Income Review’s chairman, Mike Callaghan, has hit back hard, claiming ISA are the ones pushing a biased agenda:

“While the review did not work to any pre-determined outcome, ISA’s misleading claims are clearly directed at it trying to pursue a particular outcome”.

Mike Callaghan makes a very good point. The Henry Tax Review and the Grattan Institute came to similar conclusions to the Retirement Income Review, namely:

  1. The SG should not be lifted, given it would lower wage growth and harm lower income workers; and
  2. Lifting the SG would cost the federal budget more than it saves in Aged Pension costs.

Therefore, are we to conclude that the Henry Tax Review and the Grattan Institute were also biased in coming to these findings? Obviously not.

All one needs to do is follow the money. The group that stands to gain most from lifting the SG to 12% is the superannuation industry itself. Doing so would increase fund inflows and funds under management, enabling the industry to earn bigger management fees and award itself bigger bonuses.

If there is anyone pushing an agenda here, it is ISA. It has a vested interest in ensuring the SG is lifted, which is why it is spending members’ money on a propaganda campaign to pressure the government to follow through.

Unconventional Economist
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  1. One of the co-authors, Deb Ralston, had an article in the Conversation today which made the point that since the system is biased in favour of high income earning men, raising the SGC will only increase the inequality in the system, particularly against lower income women and women who take career breaks.

    The RIR suggested a few ways to deal with this which, if they had a half a brain and if they GAF about their members, the ISA and its member funds would be embracing.

  2. Moments like these you need a Minsky

    Whocouldanode. Models are biased? As Financial Capitalism’s thimble trick goes, the returns are always to Capital and its Rentiers!

    Next you’ll be telling me a Sovereign Currency Issuing Government can afford any level of pension it desires for its retiring citizenry and could do away with the finance and union sectors clip of a working wage that is ideologically based in Super ‘Markets’.

    Steel toe boot meet a former Labor Prime Minister’s British Regency and French Empire antique collection.

    • I think you are missing a key point that is the foundation stone of our system, if a corp can borrow at 0% to outbid a family to own a home and push prices up, like this guy ( see from 12mins)

      it is because corps ar inherently more efficient than people and their special activity with that home will spur us to even greater economic growth. It has nothing at all to do with the fact that corps are the primary vehicles that those with free capital can invest in nor that corps (and their owners and managment) are very close to those who control the money supply.

      • Moments like these you need a Minsky

        You may well be right in regards to my missing key points, Toby. Knowledge is a path that one walks toward a truth, never reaching it. Yet, Some think they’ve arrived, then hold onto their false flag with the greatest conviction.

        I take my understanding and epistemology of our “system” not from some mythical binary notion of market “efficiency” vs inefficient “other” pretensed upon “foundation stones” that have come down from on high.

        To quote the Anthropologist David Graeber on the socio-psychological order:

        “All throughout the 20th century we’ve seen this kind of contest between states and markets, that is all politics, about choosing sides……….. What do you believe in the market or government to best solve social problems?

        We are used to thinking of these as opposed principles but actually if you look back historically places that don’t have states generally don’t have markets. Markets first seem to arise as a side affect of bureaucracy and for much of human history the (markets) are a side affect of military operations. So the opposition (Markets V Govt) really isn’t there.”

        The assumption that market solutions should have preeminence over a larger government role in the economy is central to the finance ideology and at the heart of the neoliberal economics paradigm. However, this simplified binary framing – either markets solve all problems best, or markets always require government intervention including a direct government role in certain circumstances to achieve fair and optimal outcomes – is a false choice.

        That the Enlightenment’s faith in reason and science as benign forces that would liberate mankind from superstition, myth, and subservience to the brute forces of nature was not unlike religious faith in how it turned into ‘false consciousness’, i.e. subliminal obedience to an oppressive social order.

        The reason a Corp can borrow at 0% is because law (force of Govt) says so. Please refer to the suggested outcome of finance Capital’s thimble trick above.

        • We are in violent agreement. I should have used the /sarc tag sorry but since you brought it up yes market vs state is a massive false binary. Nature abhors a vacuum. By not choosing state, yes, you aren’t getting market. You are getting unelected oligarchy or some variant. A blend is best but requires informed voters. Bring on our AI overlords. It is the only way. I’m not joking now.

        • Jumping jack flash

          Markets are touted as being the best solution to everything because everyone assumes they are fair. Through volumes the market will determine fairness.

          However the market becomes an equation or a machine to achieve the desired result regardless of whether it is “fair” or not, and the inputs are simply manipulated to achieve it.

          Take any market in the New Economy as an example, but you needn’t look any further than houses, the most obvious.

          • Moments like these you need a Minsky

            Assuming agency is in part the problem.

            Globalisation, deregulation, financialisation, privatisation, etc. are just “regulations” that bring a regime of power to life.

            The Frankfurt school (Horkheimer, Ardorno and Marcuse) in the 1930’s took a turn from the stages theory of Marx towards socio-psychology (Jungian) in my understanding, because of their concerns with the ideology and reification of modern industrial Capitalism.

            They were concerned with how reason, science and the Enlightenment had become subservient to the technical apparatus of Fascism, Totalitarianism and modern Industrial Capitalism.

            The false consciousness of it. Marcuse’s “One Dimensional Man” comes to mind. Growth in a finite planet.