Super shambolic
the government is set to legislate an objective for superannuation that will disempower australians from controlling their own savings. BY Tim wilson and jason falinski.
The government’s vision for superannuation looks more like a concentration of economic power in the hands of industry super funds than control by Australians of their own retirement savings.
Federal Treasurer Jim Chalmers has released the long-awaited consultation paper on legislating an objective for superannuation.
Sir Humphrey would be proud to recount that “the objective of superannuation is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.
Most Australians would think it’s easier to define super as their money for their retirement. Alas, not.
Instead, the government is treating super as an off-budget balance sheet and a vehicle to empower trusts with which they collude to achieve their political objectives.
As the treasurer confirmed when launching the paper, super can be used to deliver the government’s climate policy; it can be invested in energy generation, toll roads, ports and just about anything industry funds can buy that you can’t.
They can do so by financing the capital expenditure with your savings, and then send you the bill for operational expenditure throughout your working life and retirement.
And if the current assistant treasurer had his way, funds would be able to send your money to their favoured unions, too – but in a rare moment of sanity, the Senate recently disallowed it.
The consultation paper has already attracted criticism for the opaqueness of terms like “dignified” which “denotes the importance of financial security and wellbeing in retirement but recognises that this does not necessarily equate to the same level of income in retirement for all Australians”.
The 2020 Retirement Income Review could be used as a codex. It mentioned “home ownership” 133 times because it is “the most important component of voluntary savings and is an important factor influencing retirement outcomes and how people feel about retirement”.
Yet, achieving higher home ownership rates was not mentioned once in the legislated purpose of super, and housing was mentioned on the periphery in the context of something government funds, not families own.
Such is the hostility from the current government that the consultation paper repeated the Retirement Income Review’s three-pillars mantra for the system of “a means-tested Age Pension, compulsory superannuation [and] voluntary savings”, but deliberately cleansed the last three words: “including home ownership”.
It was once a given that governments supported home ownership because it is the primary vehicle to democratise the wealth of the nation, minimise wealth inequality and empower families in their working life and retirement. No more.
In the current government’s world view, your super should be used for housing that funds own, just so long as you can’t.
It’s consistent with the treasurer’s recent essay in The Monthly that extolled “values-based capitalism”, which is code for supplanting the expression of your values through your economic decisions and imposing monopoly government values instead.
The government has already flagged it will introduce schemes that socialise the risk of investments to mobilise capital towards political objectives and privatise the gains.
Rather than “values-based capitalism” it has a shorter title: “cronyism”.
It isn’t just aspirational home owners being sold out by slamming the door shut on using their savings for their own benefit, it is also those who took control of their retirement incomes – with tax increases that will disproportionately hit self-managed super funds.
It’s likely the government will repeat the capital flight from SMSFs to industry super that took place in the lead-up to the 2019 election with its threat of scrapping refundable franking credits, which applied to both types of funds, but only reduced the income of one.
So, the result of this legislated purpose is that fewer Australians will own their own home and have less in super, while mega-trusts own more housing and control more of the wealth of the nation.
It’s the very definition of fundie feudalism, and that is the future the nation is now sleepwalking towards.
Many might think that when the government talks of overturning Australia’s governance structures, it means having a referendum on a republic. But in super, it is doing it without a vote by increasing the economic power of unelected trustees to control the commanding heights of the country.
The government uses the rhetoric of “super wars” to confect a fake conflict between those who support super and critics who supposedly don’t. It’s actually a debate about whom the money should empower. And the government is about to legislate that it’s their money, not yours.
Tim Wilson and Jason Falinski are both former Liberal MPs. This piece was first published in the Australian Financial Review.