Superannuation: a generation betrayed

July 8, 2017
Former ACTU heads Bill Kelty (left) and Simon Crean (right), and former Labor PM Bob Hawke were among the main instigators of the Accord that ushered in compulsory superannuation in the early 1980s.

The historical and current injustices following the establishment of industry superannuation and the subsequent undermining of this important social policy initiative needs to be scrutinised.

In particular, the restrictions on the required increases to the Superannuation Guarantee Charge (SGC) in the decades after 1992 and the widespread — and illegal — non-payment or under-payment of the SGC by countless employers over the same period, need to be redressed with a sustained industrial and political campaign involving the key stakeholders — unions, employers, government and the super funds.

The recent federal government changes to superannuation law placed much attention on to those few who might have more than $1.6 million in their accounts and how unfair a new tax would be.

However the real crime is that these latest restrictions, tax hikes and other proposed impositions are blows to the original national retirement scheme that began in the latter part of the 20th century. This scheme was won through the struggles of working people.

Superannuation began with good intentions, underscored by a progressive public policy framework aimed at giving generations of workers a comfortable standard of living in retirement.

Mary Easson’s Keating’s and Kelty’s super legacy analysed the toxic impact of the constant threat to industry superannuation — a key part of the Hawke-Keating government’s social wage strategy of 1983–1995. It looks specifically at the promises of the Prices and Incomes Accord mark I through to mark VIII, as a vehicle for nominated social improvements. These need to be measured against real outcomes such as workers’ superannuation accumulation accounts.

Prices and Incomes Accord

The Prices and Incomes Accord was an agreement between the ACTU and the Labor government following a national tripartite summit held in Canberra soon after Bob Hawke defeated Malcolm Fraser in the 1983 federal election.

While employer associations did not formally sign on to the Accord they did not complain about the union movement’s agreement to restrict wage demands immediately across the board. Meanwhile, the government introduced, over time, the social wage package trade off.

The social wage ingredients included increases in supplements for low-income families; Medicare; modest increases to pensions; cuts to personal income tax rates; and the introduction of an initial 3% award superannuation.

Out of these, the critical gain for the majority of working people was the ability to convert notional access to universal superannuation into a reality. For decades, this had been restricted to a minority of high income earners, permanent public servants and other white-collar employees.

In return, there was an immediate adjustment downwards of normal wage increases. In September 1983, wages rose by 4.3%; in April 1984 by 4.1%; and over 1985–87 by 2.6%.

The union movement had “superannuation for all” in its industry logs of claim for many years. With this particular claim enshrined in the Accord, union members across many industries and service sectors began substantial campaigns to achieve superannuation accounts for all workers.

The building and construction unions set up Building Unions Superannuation Scheme (BUSS), which later became C+BUS. But union organisers and on-site shop stewards had to convince master builders and sub-contractors to sign deeds of adherence that legally obliged them to regularly pay super contributions for their workers.

This exercise became a major industrial issue through site agreements and building industry award negotiations throughout the 1980s and industrial action often occurred.

Similarly, in the metals and manufacturing sector, the metal unions and the Metal Trades Industry Association, which later became the Australian Industry Group, eventually “cooperated” to bring about widespread superannuation in this key area. The Superannuation Trust of Australia became a major industry super fund for the manufacturing sector. It would later merge with the Australian Retirement Fund to form Australian Super, Australia’s biggest fund.

The industry super fund model was replicated gradually across as much of the industrial and services landscape.

All the main elements of the Accord social wage trade off were rolled out, but it was access to universal superannuation that was always “uncertain” and “painful”.

Compulsory superannuation

The successes of the 1980s union campaign pushed then Prime Minister Paul Keating to legislate in 1992 for formal compulsory superannuation. This time, unions agreed to forgo yet another 3% from a scheduled national wage increase claim, which would be paid into the new SGC for all employees.

The compulsory SGC was to rise to 9% by 2002. Keating’s stated aim was that the SGC should go to 15% to make it work as intended.

Over the initial phase of setting up superannuation as an industrial right — 1983–92 — many workers were still not signed up. But wages were curtailed universally for the whole period. That means that employers who had not been brought into a relevant superannuation scheme enjoyed a decade of centrally imposed wage cuts.

The compulsory phase, from 1992 onwards, brought more workers under the superannuation umbrella. But still not every eligible worker was looked after. There was always more work to be done, especially by the unions.

Things go sour

When Keating won the “unwinnable” federal election in 1993, industrial relations minister Laurie Brereton introduced a more decentralised industrial relations framework using the earlier revamped Industrial Relations Act of 1988. A particularly nasty aspect of the changes was the creation of so called non-union Enterprise Flexibility Agreements.

A limited “right to strike” law was introduced, but it contained many strict limitations. Industry-wide agreements covering many thousands of workers faded away.

These changes placed great burdens on the union movement, especially in finding new ways to protect basic wages and conditions, and the momentum needed to consolidate and grow to stop industrial super from being lost.

The 1992 legal achievement of compulsory super would be continually buffeted and hindered by the ever-changing industrial relations climate. A radical, game changing initiative such as universal super required a nurturing and benign economic backdrop. This did not happen.

Things get worse

With the advent of the John Howard Coalition government in 1996, successive waves of anti-union legislation pushed superannuation out of unions’ day-to-day priorities. Then Howard formally abandoned the Accord — the delivery vehicle of universal superannuation.

A reactionary drive to pass anti-union laws began immediately. The aim was not only to limit how workers could win gains in wages and conditions but also how to empower employers to reduce hard-won entitlements by making individual enterprises the central point for negotiations.

The 1993 Brereton laws were used as a starting point by Howard and his industrial relations minister Peter Reith. Individual contracts, non-union agreements and single enterprise agreements were given supremacy over collective agreements and awards.

More industrial relations “reforms” were rolled out. The waterfront, building industry, meat industry and the public service were singled out for special attention, aimed at intimidating the whole labour movement.

Howard’s WorkChoices legislation in 2005 turned out to be a step too far. It led to his electoral demise two years later, but it also led to attacks on the collective bargaining rights of workers and the growth of superannuation as a key part of workers’ wages.

Between 1996 and 2007, Howard’s anti-worker policies stifled the growth of universal industrial super. By 2002, the SGC had only risen to 6% and between 2002 and 2007 there was no further movement in the compulsory rate. Howard froze the SGC at 9%.

An opportunity lost

The Rudd-Gillard governments of 2007 to 2013 were a major opportunity to promote universal super to make up the lost ground.

The ACTU pushed for a hike to 12%. Others in the movement pushed for an immediate 15%. Even if the ACTU claim had been met, for the pioneer cohort of workers it would never have been enough. There was an immediate rise in the SGC — by a miniscule 0.25%. This was followed by another rise of 0.25% on July 1, 2014, bringing it to 9.5%.

It was a disgrace and the inevitable happened — the conservatives came to power again in 2013.

Abbott’s 2014 federal budget froze the Rudd-Gillard schedule for increasing the SGC rate at 9.5% until 2021, rather than 12%, with 0.5% to be added after that date annually until 12% was reached by 2026.

The sabotage of the scheme aimed at providing a generation of workers with a comfortable retirement was now virtually complete.

The ACTU had plenty on its plate. The Rudd-Gillard governments’ promise to abolish WorkChoices after the massive union-led industrial campaign of 2005–07 led to laborious negotiations over two long years. The creation of the Fair Work Act 2009, described by many unionists as “WorkChoices Lite”, did not provide a pathway to grow the industry super schemes outside the restrictions of the nobbled SGC. In fact, the rights to industrial action and collective organisation through unions remained severely restricted.

In the lead-up to 2016’s double dissolution federal election, the ACTU launched a marginal seats campaign entitled “Build a Better Future — Fight for our Living Standards”. Among its six key elements was the demand for “a secure retirement” — an acknowledgement that the universal super entitlement was unfinished business.

Despite the millions spent by the unions, Turnbull scraped in and another round of union bashing began.

[This is part 1 of a special expose of superannuation. Part 2 appears here. Brian Boyd is a former Secretary of the Victorian Trades Hall Council.]

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