The elevation of superannuation from obscurity to the forefront of national
reform in the early 1980s was thanks largely to the efforts and collaboration of
Bill Kelty and Paul Keating, secretary of the ACTU and federal Treasurer,
respectively. Kelty and Keating, visionary, intelligent, persuasive men, wanted
to leave their mark on Australia’s industrial framework:‘Keating dominated
the cabinet and Kelty dominated the unions; their alliance reinforced their
individual power...they formed an enduring partnership which shaped
Australia’s economic path’(Kelly 2008, p. 281).
Superannuation was still controversial.‘We’re back in power and thefirst
thing we do is start taking money off workers for some bastard offspring of the
institutions of capitalism’, said one union sceptic (Love 2008, p. 91). Mean-
while the Liberal Opposition, while supportive of the freer trade andfinancial
deregulatory agenda of the Hawke government, opposed introduction of
universal superannuation. It opposed what it saw as a paternalist encroach-
ment on people’s earnings that handed significant power to union-dominated
industry funds.
That two conservative governments had tried and failed to introduce a
European-style publicly funded retirement income, while the Labor Party
succeeded in instituting a privately managed one based on individual
accounts is a great irony of Australian history. How could a party that once
spurned contributory insurance have so heartily endorsed a new privatized
version? Former Labor leaders, nursing an atavistic disdain forfinance, would
have loathed the implicit reduction in workers’take-home pay and implicit
subsidy to thefinancial services sector. But the Labor Party of the 1980s had
changed. Under new leadership it had dropped its socialist ideals, and, like its
New Zealand counterpart, absorbed the teaching of free-market economics—a
particularly urgent lesson given the exigencies of the 1980s. Labor was more
comfortable with investors and appreciated the benefits that wouldflow to
Australians from freer global trade and investment.
Superannuation was also a way to bolster the waning power of trade unions,
the primaryfinancial and organizational supporters of the Labor Party. The
diminution of manufacturing in the economy, among other reasons, had seen
trade union membership steadily dwindle from around 60 per cent in the
1950s. Thirty years later only 45 per cent of workers were members, and only
17 per cent (12 per cent in the private sector) in 2013. Industry superannu-
ation funds, with half of their directors union-appointed and half chosen by
employer associations, offered union officials opportunities for lucrative post-
ings and platforms to influence the investment of hundreds of billions of
dollars. The ten largest industry funds managed $233 billion in 2014. The
potential for conflicts of interest of directors, given competing loyalties to
unions, employers, and members, has underpinned calls for greater transpar-
ency (Staley 2010). Industry funds invest twice as much (16 per cent) of their
Adam Creighton