Using super to fix wages growth is as disingenuous as using it to fix the housing market

Greg Jericho
·4-min read
<span>Photograph: Joel Carrett/AAP</span>
Photograph: Joel Carrett/AAP

So many of our policy debates are mired in bad faith that are never actually about solving the problem at hand.

Dealing with climate change, for example, means we need to reduce emissions, but instead the debate is always about power prices and economic growth. To wit:

Government: “How can we reduce emissions?”

Everyone: “Put a price on carbon and subsidise renewables.”

Related: In the debate about super, the actual point of a retirement income policy is lost | Greg Jericho

Government: “If only there were an answer ... oh well, guess we need more gas.”

I wish it were a joke, but this week the prime minister, Scott Morrison, told a UK Policy Exchange forum that “effective action in this area [climate change] is no longer about if or when, but importantly how.”

This week retirement policy via the retirement incomes review got this treatment.

The government doesn’t really care about retirement policy – it cares about retirement politics. Any moves to make the system fairer, such as dealing with the inequitable taxation exemptions and benefits of superannuation and dividend imputation, are attacked as tantamount to a death tax.

And its focus on superannuation is dominated by its campaign against industry super funds – a campaign rather ruined by their annoying habit of outperforming retail funds and retail funds’ habit of committing acts that justified a royal commission.

Any real reform of the superannuation industry would focus on retail funds, because as every review confirms, most dud funds are retail funds and most retail funds are duds.

Instead the government would rather weaken the superannuation industry under the guise of helping people’s retirement (yes, really).

One of the main problems of our retirement system is that it benefits those who own a home. That’s a problem because the housing market itself is also distorted by taxation breaks.

So what to do?

Government: “How do we solve housing?”

Everyone: “Reduce negative gearing and the capital gains tax benefits.”

Government: “If only there were an answer ... oh well, better let people access their superannuation.”

I wish it were a joke, but no.

Graph not appearing? View here

Government backbencher Tim Wilson argues that the key to improving retirement is to have people access their super to help pay for a deposit.

Given the median balance for those in their early 30s is around $30,000, those most in need of help would likely have to drain their superannuation just to get a small toehold in the housing market.

Wilson this week praised former RBA governor Bernie Fraser for suggesting the idea was not all that bad. And yet his doing so unintentionally highlighted his policy’s failure.

The article he linked to had Fraser arguing that the policy wouldn’t put much pressure on house prices, but crucially that “it wouldn’t be anything like those kinds of pressures [such as capital gains tax benefits and negative gearing] on house prices which are there now and are very real and are part of the reason why it’s so difficult for people on more modest means to even contemplate the prospect of owning a house these days.”

And remember home ownership only makes your retirement more secure because our retirement system is structured that way.

We have a system that penalises renters.

If you actually cared about retirees who rent, the obvious thing is to make retirement easier for people who rent, not attempt to get them into a broken system at the expense of their retirement income.

And then there is the issue of wages growth.

There is much debate about just how much (if at all) wages growth is affected by the superannuation guarantee.

Government senator Jane Hume recently said that if “wages don’t go up over the next five years and they are scratching their head and wondering why, you can say: ‘Well actually your super guarantee has gone up’.”

That argument is rather beyond the pale, given we have just endured six years of declining wages growth since the government froze the superannuation guarantee.

I mean, come on.

If this government truly wanted to increase wages it would not institute a policy to reduce public servants wages growth. It also would not seek to reduce the bargaining power of workers as it has continually sought to do.

Using superannuation to fix wages growth is almost as disingenuous as using it to fix the housing market.

Enough with the bad faith.

If you want to fix wages growth, fix wages growth.

If you want to fix housing affordability, fix housing affordability.

And if you want to improve retirement incomes, don’t instead seek to destroy superannuation because you hate industry funds.