Your Retirement Should Not Be Politicised: Economist

By Daniel Y. Teng
Daniel Y. Teng
Daniel Y. Teng
Writer
Daniel Y. Teng is based in Sydney. He focuses on national affairs including federal politics, COVID-19 response, and Australia-China relations. Got a tip? Contact him at daniel.teng@epochtimes.com.au.
May 25, 2022 Updated: May 31, 2022

Political tribalism is holding Australians back from taking control of their retirement nest eggs, according to economist Cameron Murray, who says superannuation has no noticeable benefit for retirees.

Murray, a research fellow at the Henry Halloran Trust at the University of Sydney, is calling for the government to take a close look at the necessity of compulsory superannuation (retirement) funds in the country, which he says is being propped up by the Labor Party because it is an integral part of its legacy.

“Having studied superannuation and housing for a decade, it seemed obvious that the super system was failing, and taking super out for other purposes might be good,” he told The Epoch Times. “Who’s to tell someone whether buying a house is better than sending their kids to daycare, or fixing their car, or paying rent?”

“The system is predicated on this idea that somehow the age pension is unsustainable or unreliable, yet you are giving your money to the world’s most expensive fund managers to gamble on Tesla shares and cryptocurrency.”

Epoch Times Photo
Shoppers are seen wearing face masks in the district of Fairfield in Sydney, Australia, on July 30, 2022. (Lisa Maree Williams/Getty Images)

When established by former Prime Minister Paul Keating in 1992, the system was designed to give Australians a source of income upon their retirement and to move people off dependency on the government age pension.

At the same time, the initiative spawned a vast superannuation industry that now controls $3 trillion in funds (the fourth largest pension fund in the world) and boosts the earnings of major fund managers and unions to the tune of $30 billion (US$21 billion) a year in fees. Bodies like Industry Super Australia receive $23 million per annum from the fees, which is overseen by former Labor ministers Wayne Swann and Greg Combet.

Currently, in Australia, eligible employees must pay 10 percent of their earnings into a super account, with tax breaks available to workers who wish to invest more.

The contribution is due to increase to 12 percent by 2025, with former prime minister Keating arguing that it should be closer to 15 percent.

Yet Murray says compulsory superannuation has failed to benefit workers and that they were not better off at the end of their careers.

“The first and fundamental problem is that the system provides no insurance element. What I mean by that is if you don’t earn income during your life, you don’t get any super when you retire,” he said. “If you get injured, sick, must care for your partner, whatever the case may be.”

Instead, he said Australia would be better off investing in the age pension system, which supports more individuals than the super system does.

Epoch Times Photo
Profile photo of Cameron Murray, economist and research fellow at the Henry Halloran Trust at the University of Sydney. (Courtesy of Cameron Murray)

“The super system is predicated on this idea that somehow the age pension is unsustainable, bad, or unreliable,” he said, noting that the combined value of superannuation’s yearly fees ($30 billion) and tax breaks ($40 billion) “swamped” the cost of the age pension.

Further, the percentage of retirees in the pension scheme has barely changed in the 30 years since the scheme was established. Yet despite all these issues, “tribalism” and a reluctance to dismantle the system due to political sensitivities, have kept superannuation going.

“I don’t think there is much more to [super] than the fact Keating had a bargain with the Prices and Incomes Accord in the 1980s, and he didn’t want wages to go up to stimulate inflation,” Murray said. “So, the political bargain was, ‘You can get these wage rises in the future, as a special delayed pay rise, and we are going to call it superannuation.’”

“What happened is things just spiralled from there,” he added. “That’s how tribal politics operates over time, you get entrenched in your position, and you spiral into this vortex of storytelling to support your view.”

Murray said that if it were the Liberal Party that created super, the same tribalism would have developed.

More recently, New South Wales Liberal Senator Andrew Bragg has been vocal in calling for an overhaul of the system, including continuing to push for Australians to be allowed to access their super to fund the purchase of their first home.

The recently defeated Coalition government had proposed to allow first home buyers to withdraw up to $50,000, or 40 percent of their total super, to fund the deposit for their first home purchase—spurring a wave of criticism from finance groups, trade unions, and the Labor Party.

The move followed an earlier initiative by the government during the pandemic to allow Australians to withdraw up to $10,000 from their super funds to weather the locking down of the economy. Over three million individuals took up the offer, taking $36 billion out of their accounts.

Daniel Y. Teng
Daniel Y. Teng is based in Sydney. He focuses on national affairs including federal politics, COVID-19 response, and Australia-China relations. Got a tip? Contact him at daniel.teng@epochtimes.com.au.