the more realistic attempts to estimate preparedness for costs in retirement.
Even if some people systematically under-save, a one-size-fits-all compulsory
saving rate ignores the naturally wide variation in personal circumstances,
work habits, and consumption preference throughout the population.
10.5 The Current Outlook
On departing politics in 1996, former Labor leader Paul Keating was adamant
the SG rate should increase to 15 per cent, and furious that the subsequent
Howard government capped it at 9 per cent. By then the Liberal Party had
developed an ambivalent relationship with superannuation. As a tyro polit-
ician in 1995, Tony Abbott, a later Liberal Prime Minister, famously declared
superannuation to be‘one of the biggest con jobs ever foisted by government
on the Australian people’(Abbott 1995, p. 1574). But the system has become
politically difficult to unwind: Labor has diligently fostered the illusion that
superannuation contributions were a costless‘extra’rather than forgone
wages, making superannuation popular among workers.^25 At the same time,
the traditional donors and supporters of the Liberal Party—thefinancial ser-
vices industry—began benefiting handsomely, extracting billions in fees in an
environment where compulsion severely blunted price competition.
Perhaps uniquely, superannuation has united two of the most powerful,
and traditionally opposed, vested interests in Australia—the trade union
movement and thefinancial services sector—a fact that should ensure its
continued expansion. A growing array of lobby groups has emerged, often
funded indirectly by unions or fund managers, to advocate and stress the
supposed national and personal benefits thatflow from expanding and main-
taining superannuation.^26
It is no surprise, then, that the Rudd Labor government, in 2010, explicitly
ignored the Treasury’s advice not to lift the SG further (because of the added
burden on lower-income earners’take-home pay andfiscal cost), and legis-
lated a gradual increase to 12 per cent by 2019. Equally, the subsequent
conservative Abbott government has only delayed the increase until 2025,
and said little about superannuation fees.
Successive governments have only tinkered at the edges of superannuation
since 1992. Government‘co-contributions’, subsidies for low-income earners,
and tax surcharges have come and gone; contribution limits have shifted
(^25) This became especially blatant in 2010, when the Rudd Labor government consciously linked
the projected revenues from a new mining tax with the legislated increase in the SG. 26
The Association of Superannuation Funds, Industry Funds Network, the Financial Services
Council, the Australian Institute of Superannuation Trustees, and the SMSF Association are among
the more prominent.
Adam Creighton