The debate about whether to increase the rate of money Australians pay into their compulsory retirement savings received vigorous debate in the Senate on Aug. 27.
While speaking in support of a separate bill to amend the superannuation retirement scheme, Gerard Rennick, a Liberal Nationals senator, told the Australian Parliament the issue highlighted the core difference in philosophy between the left and right sides of politics.
Rennick said those on the right, or conservative, side of politics believed in free choice and individual responsibility; and were fighting forces pushing Marxist and communist policies on the left, progressive, side by contrast.
“So many of those forces sit opposite us today, all with their little red books, bobbing their heads to every command issued by their Big Brother: industry super funds run by unions,” he told the Parliament.
Attributing the $3 trillion superannuation industry to the secretive plotting of communist controllers, Rennick noted that Australia’s retirement scheme had never been mandated by the people. He then pointed out that in New Zealand when the government wanted to introduce a compulsory retirement savings scheme in 1996, 92 percent of the people voted against it.
Rennick also criticised the $40 billion in superannuation management fees and a similar amount the industry receives in tax concessions.
“Most of these fees go to white-collar blowhards in Sydney and Melbourne. Every week rivers of gold flow out of regional communities,” Rennick said.
He also criticised Labor for not standing up for low-income earners, who he says pay a higher rate of income tax than the wealthy pay on their superannuation income.
“Where is the Labor Party in this? I thought the Labor Party and the unions were the champions of the poor and oppressed. No—not when it jeopardises the rivers of gold that flow into the superannuation funds that then flow into the Labor Party’s coffers,” he said.
Bemused by Rennick’s speech, Labor Senator Timothy Ayres rebuffed the remarks, saying he wasn’t clear what the senator opposed in terms of industry superannuation funds.
“The super system was built by Australians working together,” he continued, saying the compulsory scheme that takes a percentage of income from employees—accessible once they turn 60—was built by employers and unions.
“Millions of Australians who otherwise would have been impoverished in their retirement are living a decent, secure retirement that their parents could only have dreamt of.”
Ayres likened Rennick’s speech to a “stream of consciousness world salad” that had him feeling like he was having an out-of-body experience.
Ayres then claimed that the Liberal government forced Australians to access their super funds early, instead of providing a means to support workers amid the pandemic.
“Those individuals knew they couldn’t rely on Scott Morrison,” said Ayres. “They had to go to their own low-balance accounts and strip them out because they—casual workers, low-income workers, and women—knew they couldn’t rely on this government.”
Australian Capital Territory Labor Senator Katy Gallagher said Prime Minister Scott Morrison made an election promise to continue with the currently legislated increase for the super guarantee from 9 to 12 percent.
“If he breaks his promise, this will be an attack on workers and their standard of living,” said Gallagher.
However, the standard of living for workers pre-retirement would be lowered if the legislated increase goes ahead, according to a review by Treasury of Australia’s tax system.
“The superannuation guarantee rate should remain at 9 percent,” the report’s panel recommended.
The panel also recommended that together with the Age Pension, the 9 percent superannuation guarantee can be expected to provide the opportunity for low to average wage workers with a working life of 35 years a substantial replacement of their income in their retirement.
The report notes that increasing the compulsory saving rate to 12 percent would increase potential retirement income, but: “It would also reduce an employee’s pre-retirement income.”
This would lower the standard of living for Australians during their working years, says Leith van Onselen, an economist formerly with the Australian Treasury, Victorian Treasury, and Goldman Sachs.
Treasury’s Tax Review supports this claim, and goes on to say employees would bear the cost of these contributions through lower wage growth.
“The retirement income report recommended that the superannuation guarantee rate remain at 9 percent. In coming to this recommendation, the Review took into account the effect that the superannuation guarantee has on the pre-retirement income of low-income earners,” the report stated.