Australia has an ageing population – that’s well known. Over time it is likely to lead to higher outlays (medicare, pension etc) and fewer taxes and hence pressure on the budget balance.
Along comes Ian Silk of Australian Super who argues that the superannuation guarantee should be increased to 12 per cent to address the ‘economic time bomb’.
In an appearance before the House Economics Committee, Silk said
We don’t have members turn up to (Australian Super’s) briefings and say they don’t want any more super; the reverse is the case. They are very hot to trot on the issue. They’re telling me in loud and clear terms they want 12 per cent.
For a start, if people want to invest more in super they don’t need an increase in the super guarantee – just put more in.
But as Grattan and others have shown, an increase in the superannuation guarantee worsens the budget bottom line due to the lower tax receipts. Along with the excessive fees (outrageously high pretty much across the board), a higher superannuation guarantee leads to a worse budget position, a sacrifice in present income, poor net of fee returns and a windfall for the superannuation sector. Effectively the taxpayer and the worker are subsidising the financial sector.
What is the end result? The worker has to live a poorer life when young and middle age, and then when retired has a pot to spend on a nice overseas holiday while reverting to the age pension. It is well established that superannuation has not reduced the call on the age pension (it may have if it were in the form of a lifetime annuity rather than a lump sum).
So Silk is sprouting sophistry.
But no more so than various lobby groups including the Australia Institute and Mercer who want to pretend that an increase in the superannuation guarantee has no impact on wages. As if an employer is indifferent to the employer contribution to superannuation. What nonsense. They look at the total cost of employing a person including superannuation and other on costs. If it were a ‘free good’ such as the lobbyists assure everyone, why stop at 12 per cent? Why not 5000 per cent?