Super and The Pandemic

By Andrew Bragg, Liberal Senator for NSW on August 7, 2020 in Other

A man for all seasons. Photo: John Mangos

No doubt as you read this you are somehow reflecting on the effects of the COVID-19 virus, whether it’s a health impact on you or someone near to you, an employment impact, or in the case of most people, a financial impact.
With restrictions easing, life will slowly begin to return to a new normal. It concerns me that during this transition many ‘armchair experts’ will be trying to advise you on the best ways to navigate your life and financial future.
Most of them will be from the unions and big business, vested interests which espouse the virtues of an outdated superannuation system that was the brainchild of Labor cronies and the union movement.
It’s now 2020 and we are still stuck with the 1992 Superannuation Guarantee Act from Paul Keating, which is outdated, inefficient, and beholden to vested interests. The system is seriously underperforming and not delivering as it was intended for Australian workers.
Many people have argued against early access to super, which we legislated during the pandemic. Super is your money. Emotional rhetoric may make for salacious reading but I prefer to deal in good policy and the facts.
I have recently published a book called Bad Egg: How To Fix Super. My research for the book uncovered startling failures. The industry wants you to keep your savings in a fund because clearly your money is working for them. I want you to be able to use your money to buy a house should you choose to get into the market.
Super has damaged homeownership. In 1996, 11 per cent of 25-34 year-olds owned their own household outright. By 2016 this number had dropped to just 1.5 per cent. My research revealed a whopping 63 per cent totally agreed with allowing access to super for a first home.
Next, the super system costs more than it saves. Treasury figures put savings to the economy in the reduced age pension at $9 billion. The cost of the scheme in foregone revenue is $36 billion. Try running your household budget on that ratio and see how long you last before you go broke!
Thirdly, super is not significantly reducing pension reliance. With average balances around $196,400 for men and $129,100 for women, super will only last for a few years of retirement. And it explains why 68 per cent of retirees will still take some form of pension – either part or full – until 2050.
Pension reliance will not change between now and 2050 under any proposed superannuation policy, which shows the system is not working.
Fourth, self-interest reigns supreme. Anyone who has looked at the super system will appreciate the intricate alliance between industry super funds, the union movement, and the Labor Party. Super funds provide the money, the union movement provides the people and the ALP provides parliamentary representation. They are all fellow travellers.
The super system has done exactly what venerated Hawke era Finance Minister Peter Walsh feared. He said, “Consistent with its policy of putting the interests of those with jobs ahead of those without jobs, the ACTU was in favour of compulsory superannuation … (for lower-income workers) it will be a cost-ineffective investment …but are a pot of gold for those, including unions, who can get into super fund management.” Gotcha.
So when you’re looking at super, look at who is talking and how they might stand to benefit. It is, after all, the people’s money, and that means your money.