Labor loves an idea everyone can cheer, especially one that costs the party nothing. This time, it’s business owners picking up the tab.
Labor has come up with another two good ideas, but the big question is who’s going to pay for one of them? And while the party’s members at the triennial ALP national conference in Adelaide cheered the ideas, no one seemed to care that this would be another impost on business owners.
The first good idea is to reduce the retirement age from age 67 to 65 for those who have worked in manual labour jobs for a long period of time. This was acknowledging that these workers might find their day-to-day tasks harder as they get into their 60s.
The next good idea is to allow the super industry to share data with Centrelink and other government agencies to effectively make pensions easier to get and to make the pension adjustments as income changes because of super, easier to adjust.
The AFR’s Phillip Coorey and Lucas Baird pointed to former PM Paul Keating’s view on the subject.
“You’ve got to fill in 45 pages to get a pension (45 pages) and then you have to work out what to do with it all,” said Keating, who argued that Australians would benefit from a simplified system managed largely by the super funds. “What we could do is have the super funds build it all.”
The information from super funds to Centrelink might also give pension recipients a clearer picture of how their super will affect their pension and it might stop some pensioners living on the minimum pension because they fear that their super might run out. Others fear how good super returns can reduce the pension because annual income from elsewhere directly affects the pension received each year.
The third ‘good’ idea is that all workers, regardless of their age or how long they work, will get the 12% super which is compulsorily paid to workers aged 18 years or older. Right now, younger workers receive paid super only if they work more than 30 hours a week.
But given the Albanese Government’s spectacular win at last year’s federal election and how much of this Labor team’s policy ideas are driven by what existing and potential voters would like about any new idea they dream up, this super-for-all has vote for me all over it.
So, what do I think about this ‘good’ idea? Well, I’d point to the single inverted commas around the word ‘good’.
You see, I’m a fan of super as a social policy that will deliver economic benefits for workers for when they retire and our super industry is best of breed, globally.
However, it is effectively a pay rise paid by employers and so this is a carrot dangled in front of young potential voters/workers, which small and medium businesses will bankroll. Big businesses will too but this Government doesn’t have a healthy respect for what businesses do for the economy and the material benefits they deliver for their employees.
By the way, unsurprisingly, the Greens have been backing this measure, which means it looks like a done deal that will be well in place for the 2028 election.
That is a rather tame ‘kick in the pants’ for the government that has brought about a superannuation system that even you couldn’t deny as being the “is best of breed, globally.”
You opened up with a statement that promised so much, i.e. “Labor’s “good idea” on super has one big catch: someone else pays” and it turns out that the “someone else” that pay are the employers.
As an acclaimed economist I expected you to elaborate that subject a bit further, for example: why do employers employ staff and how do they cover their cost of running a profitable business?
Now days, AI seems to know everything, so let’s ask it. It turns out that “Employers hire staff to scale production, leverage specialized skills, and free up time so the business can generate more revenue than it spends. To remain profitable, a business must ensure that the economic value an employee creates significantly exceeds the total cost of keeping them on the payroll” WOW, what a surprise! Employers don’t actually pay this super out of their goodwill, and since it’s imposed on every employer, then, in order to remain profitable, all employers have to do is “create significant economic value from its employees” that exceeds the cost of keeping employees on the payroll and make a profit for the owners of the business.
So, who is the “someone else” that should pay if not the business that employs staff? An effectively run superannuation system aims at reducing overtime the dependency of an aging population on collected taxes. Probably you are not familiar with the problems that has been gripping countries like Italy whereby the combination of an aging population and a disproportionate and decreasing ratio of pensioners compared to the workforce is one of the most critical structural and fiscal threats facing Italy.
Italy’s public pension system relies on a pay-as-you-go model, meaning the contributions collected from current active workers directly fund the pensions of current retirees. When the ratio of workers to retirees shrinks due to low fertility rates and rising life expectancies, the contribution base narrows while the payout obligations balloon.
Clearly, prevention of such calamity is what makes our superannuation the “best globally”. And since business has the ability to adjust and manage the value of its products and services, it’s the sector most able to ensure our economy works for EVERYONE as, buy purchasing business products and services, we ALL CONTRIBUTE.
This government has no understanding of small business and the increasing costs that is forcing the high ratio of bankruptcies. Small business now is unable to continue to absorb Labor’s union’s wish lists spending that has taking the country down the path of no return. Not to mention the high cost of energy with their Green maddest that has become everyone’s nightmare. When Albo retirees he needs to write a book on how to create division in society, how to turn a resource rich country into one of the lowest productivities countries per capital in the Western world, how to lower the living standards of all its citizens while telling them to believe in the dream of how grateful we need to be to him for destroying once was a beautiful thriving country and society. Sounds like looks like communism with a dictator
I don’t know about the “apistle” in the first comment and the writer appears to be over reactive.
Thankyou to Anne Diane’s comment. Titslly agree Anne and we are in a very sad state in this country under the Labor government
Thankyou also to Pete for a well informed paper – as usual.
Cheers