Increases in compulsory super remind us those Coalition politicians still really hate industry super funds
- Details
- Published: Monday, 26 March 2012 14:02
Last week the Federal Parliament endorsed progressive increases to compulsory superannuation that will see an eventual increase from the current 9% to 12% in 2019. SGC will go to 9.25% in July next year. Compulsory superannuation is a piece of social policy admired across the globe. Originating in a relationship between the ACTU and the Hawke Labor Government, ACTU Secretary Bill Kelty and Treasurer and then Prime Minister Paul Keating created something so obvious and compelling that you wonder why compulsory superannuation didn't exist earlier.
Well, you don't wonder for long. Compulsory national superannuation was initially proposed as part of the 1972 Whitlam initiatives but up until the 1980s superannuation was solely the privilege of predominantly male professions, clustered in the public sector or available after a long qualifying period in the private sector. It was a system that meant there was no proper strategy to improve and protect retirement income levels and this disadvantaged wage earners in the private sector and particularly, women workers. It was pension or nothing.
And superannuation funds were only run by the big banks and insurers and were usually available through company funds with impenetrable governance, questionable decisions about investment and anonymous trustees.
So how can anyone be opposed to a system that introduced compulsory superannuation for everyone, managed through funds with equal representation of employers and employees and with no profits being skimmed off to the big banks?
In 1985 the then Leader of the Opposition was John Howard. Howard said this:
"That superannuation deal, which represents all that is rotten with industrial relations in Australia, shows the government and the trade union movement in Australia not only playing the employers of Australia for mugs but it is also playing the Arbitration Commission for mugs".
Howard was commenting on the deal between the government and the ACTU which saw the trade union movement forfeit a claim to 3% productivity improvement as wages to instead be paid in compulsory superannuation - endorsed by the Arbitration Commission and managed by superannuation funds with equal representation of the unions in the industry and the employers.
Howard went on to describe it as a "Chicago racket", referring to the corruption and gangster years of Chicago in the 1930s. But Howard's view was not a lonely one in the Coalition - which has steadfastly opposed every increase in compulsory superannuation since that time, whether it be from 3% to 6%, or the 6% to the current 9%. Antagonistic, moi?
How dare the employees in an industry and the employers run a superannuation fund for people on a not-for-profit basis when the Coalition's mates in banks and finance could have been skimming off the cream investing the money themselves without the employees having any idea where it was being invested, by whom or who were the Trustees managing it on their behalf?
Now there is around $1.4 billion managed in the compulsory superannuation pool in Australia - a figure expected to increase to $3 billion in the next decade.
But the Conservatives who opposed equal access to superannuation still do so. In an article in The Australian on 14 March in anticipation of the increase in compulsory superannuation, Tony Abbott attacked industry super funds creating a "gravy train" for union officials to sit on the boards.
The current Opposition Leader foreshadowed that the Coalition doesn't easily forget their mates losing access to money being made in this area and that they will pursue this at some stage in government.
But the problem for the Coalition is that industry/government funds that exist only to fund retirement incomes for the members rather than create profits for corporations have, in the past eight years to June 2011, delivered 49 of the 50 strongest performances. Corporate funds are regularly at the bottom of the barrel on returns, the fees are invariably higher, the directors and trustees are the real faceless men, and existing solely to provide a profit to the companies that run them.
Any attack on the not-for-profit sector will be driven solely by hatred and envy and puts at risk the retirement incomes of members of those funds. Beware.