There’s a particular trap in Australian progressive politics which involves dismissing a political issue simply because Tim Wilson has become involved.
It’s fair to say the Liberal MP represents the antithesis of what anyone with a skerrick of blood in their veins feels life is all about: the rent-a-blazer with a nine-dollar smile, last seen in the 2019 election hanging around old folks homes like a has-been crooner doing morning melodies, or a fake relative with a newly drafted will.
But that would be to underestimate him, as the course of the franking credits issue showed. Wilson’s relentless campaigning on it was a savvy pick up on the widespread anxiety Chris Bowen’s (remember him?) very modest proposal induced — even in people with no share portfolio.
Labor, cosplaying class war, never noticed how the issue was eating away at it in the Melbourne “middle band” seats it assumed it would win and didn’t, thereby losing the election.
Well, it’s happening again with compulsory superannuation.
Freedom Boy has become the grinning face of the anti-super campaign, leading many to assume that the issue hasn’t got chino’d legs.
The barrage of propaganda, to the effect that industry super fund managers pretty much light up their cigars with ‘umble people’s modest contributions, is a farrago of misinformation. But to not see its power would be another mistake.
Compulsory super, as an issue, is going to eat away at Labor’s support in key social strata, and Labor will need to come up with a more flexible policy on it to win them back.
The problem for Labor is the contradictory nature of compulsory superannuation itself. It combines two things that look similar but are quite different.
The compulsory employer contribution is made up of two things: firstly, a charge to employers over and above what would be paid in wages, an actual transfer from profits to wages, actual class politics.
The other part is what would have gone into present wages, but is now sequestered into superannuation. That is a compulsory sequestration of employee wages. The strict value of that may be impossible to calculate, but it’s real and people increasingly notice it as a wage gap, and as a fix with a touch of paternalism and governance to it.
Labor is failing to notice this, in part because its leaders — both MPs and tame intellectuals, think-tank big fish and the like — spend so much time congratulating themselves on what a triumph compulsory super has been that they fail to notice the increasing disquiet about it among those it is meant to serve. (And of course there’s a third part, a purely voluntary employee contribution).
The deeper paradox of this is that compulsory super has been the agent by which distrust of the thing itself has become generalised. When Labor introduced it in the early 1990s, we were still a recognisable class society, with a degree of class discipline that Labor could rely on to implement coercive social policy.
But compulsory super immediately began to undermine that, turning collective class life into individualised life-course management.
It was part of a suite of measures — negative gearing, workplace agreements, mixed public-private health system — that turned sections of the working class into life entrepreneurs, managing the individual fate of their families.
As the fortunes of different sections of the working class and Labor-oriented middle class have divided substantially, that atomisation has become significant. It’s Labor’s missing primary vote: not the regular 10% Green progressive vote, but a 5%-8% bump who are classically working-middle class, would never vote Green, but are so life-entrepreneurialised (not by choice) that the Liberals appears to better represent their interests at the federal level.
That includes construction workers, fly-in fly-out workers, sales reps and numerous others whose working life has also been atomised — by short-term contracts, agency employment etc. For many, compulsory super — designed for full-time, stable employment — is a mismatch which costs them the opportunity to deploy their money to maximum advantage.
Labor leaders’ rah-rah for compulsory super is blinkered and unreflexive — self-serving working-class branding, a degree of Keatingolatry, and a refusal to acknowledge that it was Labor that created the conditions whereby any collectivist policy becomes ever more difficult to sell.
Keating got what he wanted: from the party’s Catholic right, an attack on its left collectivist traditions. But his understanding of social change was so poor that he never anticipated how much this would undermine Labor. Three decades of near-total failure later, here we are.
The solution is relatively easy: separate the employer contribution and fight for it, and extend it, under the “make corporations pay” line; make part of the employee contribution voluntary, and own that freedom as a Labor thing (with campaigns around why it’s a good idea for many to put into super, the $500 cup of coffee blah blah); wrap a defence of industry super funds in that freedom; propose to raise the pension, funded by a Medicare-style levy that draws on the minimal collectivism that sustains the latter’s political viability, and reduces the burden on super for non-penurious retirement.
If Labor is unwilling to be flexible and creative in that fashion, it should be prepared to answer a campaign in which the Coalition asks the electorate why Labor doesn’t trust workers with their own money.
Surely that’s incentive enough for actual policy development: having to face six months of Freedom Boy’s beluga-coprophagic grin.
Note: This article has been updated to clear up confusion between the implicit employee contribution and the voluntary employee contribution.
Forget all the far right fueled crap about what wrong with the Super system we have – there is only one problem – its created a big bundle of money over which Scomo, along with his pet dog Wilson and their masters have no control over. Money is Power!!!
There are plenty of problems with it but getting rid of it would probably be the wrong thing to do. Let’s not forget that super has really only been in operation for most of us for about 25 years, if you started work in 95 you are the first people to have super the entire career, it also means you’re 45 and 20 years (22 now) away from retiring, we don’t know if super is working as intended until then. Can we adjust it to work better, of course we can/. There are plenty of good, rational arguments from smart people (not pollies) that can make a case for it or against it. let’s look at those and give the right answer, not let freedom boy, bragg, Hume, etc ruin it for everyone
Absoluetly agree, but often difficult to have anyone focus upon their future versus cash or gratification now. Using deep seated psychology in PR which conditions peope to have antipathy towards super then impare the system so fewer constraints and responsibilities on employers…..
Impair not impare…
Franky, I’m 71 but I had super pretty much as per the system we have now (in one form or another) since 1971 (my entire career). It’s true that it wasn’t compulsory for much of that time, but the public service and much of corporate Australia had their own systems in place. True, I had to corral it over the years, as I retired before choice of a super fund became a thing (I think).
But it served me really well until the GFC, when everyone’s super got a flogging, but that’s not the fault of the design of the scheme. That was the fault of incompetence of the fund managers, and that goes for ALL the funds. And even then it still worked as long as you were contributing not drawing a pension off it. Unfortunately I had retired by then.
To my mind, compulsory super with mandated employer contributions is a brilliant system which has proven its efficacy for at least 50 years.
You nailed it, Fred.
But the issue is that Australian Workers don’t experiance that big pile of money as class power. Just as future income.
There will be no increase in wages no matter whether super is compulsory or not. I did not have a salaried job until I was 47 years old because my professional life was stipended in a religious order. However for the next 13 years I worked for a salary in a community organisation.
, so not hugely paid, then in my own consultancy tapering off from 2007 to 2013. I paid extra into super as a self employed person. I always paid extra into super in my salaried position. Because of compounding interest and good markets and an industry fund that did not cream off profits I was able to become a self funded retiree for the past 7 years with my partner who undertook a similar journey. Living in our own home, thankfully bought when housing was more reasonably priced. I do not trust the Federal Government to look after people be they waged or self employed. Education in good financial management and low cost good independent and not commissioned financial advice should be available to all. This should be about benefits to all because if this Government continues the increase in poverty in our population will only grow. It’s not just about culture of waged and self employed, casualised labour it’s about justice and fairness.
There is the compulsory payment an employer makes and a voluntary additional amount that an employee may make which is preferentially treated tax wise. The latter payment may be via salary sacrifice. This article seems to assume there are two compulsory payments, one by the employer and one by the employee, or am I missing something.
No, I thought that too.
It really is that plain & clear, all the rest is persiflage.
Usually from people payed by the word or commission.
And Im not sure the update clarified it wither?
Thanks also Emoticon, glad another saw the clear problem with the article.
The article and some comments use the term “employee contribution”. Super Guarantee is a compulsory employer contribution only, although most employer super plans require an employee contribution this is not required by Super Guarantee. It can be argued that Super Guarantee reduces wages. And once in the super fund the employer’s contribution belongs to the employee and the anti-super crowd want more flexibility in withdrawing from it.
There’s a lot wrong with what you say Robert. An employer might physically pay the contribution but that doesn’t mean the ‘incidence’ of the impost falls only on the employer. Just as a retailer may physical pay the ATO the GST on goods you purchase doesn’t mean the incidence of the GST falls on the retailer. I’m not saying all the impost of the employer contribution falls on the worker, or that if it were removed, workers would get great benefit. But with any type of ‘tax’ or benefit it’s generally the less powerful who are the losers. I also don’t really understand what you mean by saying the contribution ‘belongs to the employee’. If this is so it’s a strange form of property ownership. — you don’t have control over it, you can’t use it, & the super fund can completely lose it. And exactly what is the ‘guarantee’? I know of one case where a person who worked for a large Christian charity found out that for a few years their ‘Christian’ employer did not pay the employer super contribution though they lied about in the pay slips. The net result, the employee missed out…no guarantee, no ownership. It’s just one big scam that costs our country dearly.
I said that to the extent the employee may get smaller wage increases it is paid by the employee. The employee can determine how his super account is invested, transfer it to another fund and choose how to withdraw it. The employee must just wait a long while to withdraw it in return for the tax concessions it attracts. I would say the employee owns it.
Mark, in this and your previous comment you have completely misunderstood how super works. Robert’s comment is exactly correct. There is no compulsory employee super, and yes, the employer contribution is in lieu of wage increases, that was the design of it.
The bulk of your argument is conceptual, which is fine, but also wrong, which is less so.
If you mean by “conceptual” that a microeconomic point is being made then agreed. On its own terms the point made by Mark is valid.
Yet, the mode of analysis has its critics with regard to terms such as elasticities, utility and whatnot. The economic arguments can become religious.
I was always glad that 5% was taken out of my pay each fortnight, which I later voluntarily increased to 10%. I didn’t amass a fortune as my length of service was a bit short for that but it contributes towards a comfortable retirement.
Yep. I resented it at the time, like mum insisting that we cleaned our teeth, but the pay-off has been the differrence between penury & (almost) plenty.
Also, my own teeth.