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The Federal Government’s plan to lift the Superannuation Guarantee (SG) from its current 9 per cent to 12 per cent unsurprisingly has widespread industry support. But it might be a surprise for some in the industry that the plan does not have universal and unequivocal community support.
The super debate begins
Legislation giving effect to the increase was introduced into Parliament today.
Opposition to the move predictably comes from the other side of politics. The Shadow Minister for Financial Services and Superannuation, Mathias Cormann, was involved in a Senate Estimates hearing on the day of a roundtable hosted by Investment Magazine and sponsored by Challenger, but the Opposition Leader’s chief of staff issued a statement.
It said: “As you know, the Coalition’s position is clear and we do not support the super increase funded from the mining tax.”
But reservations also have been expressed by those representing low-income-earners and workers with broken employment patterns (particularly women) – and out in the electorate, raising the SG is far from the sure-fire election winner some think it should be.
Eva Cox, the well-known feminist and convenor of the Women’s Equity Think Tank (WETT), is another opponent of the plan, but purely on equity grounds.
“Why don’t I support the increase? Because, I think the system itself is unfair because it puts an enormous amount of money into the pockets of the rich, and much less into the pockets of the less well off,” Cox says.
“I can’t see any reason why public money should be forgone on that sort of basis, and I think putting it up to 12 per cent is actually not going to do anything about the equity issues; it’s just going to make them worse.
“I’m a long-term feminist, and convenor of [the] Women’s Equity Think Tank, but at the moment I’m also attached to the Aboriginal Unit at UTS [University of Technology, Sydney], and I don’t think it’s going to do a damn thing for people in that area, either.”
The general philosophy behind increasing the SG is simple, says the Minister for Financial Services and Superannuation, Bill Shorten.
“There is little benefit in working for a long time and retiring poor,” he says.
Small business might be expected to oppose the plan too, but the chief executive of the Council of Small Business of Australia (COSBOA), Peter Strong, says the council frankly does not care if the SG is 9 per cent or 12 per cent or even 15 per cent; what COSBOA objects to is the administrative burden the SG already places on small business, which will not be alleviated.
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Many Australians are disillusioned with Super. It offers nothing more than index tracking and disappointing market returns linked to a concentrated and risky ASX. Dumb super for dumber people. This is why the SMSF sector is gaining market share. The higher balance, older and more sophisticated members are leaving the cheap, and not so cheerful Super funds hand over fist. 12% is just more good money after bad.