I can understand Brian Boyd’s frustration concerning the Superannuation Guarantee Scheme (SGS) in “Superannuation: A Generation Betrayed” (Green Left Weekly #1144 and #1145). The original promise was short on delivery.
He is right to point out the inequity that existed in providing superannuation for workers prior to 1992.
Before the inception of the SGS, when starting my career as a teacher, I was advised by a savvy union official to never regard my investment in the NSW State Superannuation Fund (SSF) — provided to all public sector employees at that time — as a “gift” from a generous Department of Education. Rather, I was told to look at it as deferred income: “It’s your money, partly funded by you and partly funded by the employer, but it is all money you have earned.”
Now, as a retiree, that fund pays me a benefit that is regularly increased in line with the Consumer Price Index. That benefit no longer exists for new public sector employees. The NSW Wran Labor government abolished it 40 years ago. Apparently it wasn’t affordable.
Curiously, it is still provided to members of the NSW Parliament — but that’s only fair isn’t it?
Knowing your history is important. The NSW State Superannuation Scheme that politicians still enjoy was established after World War I and was an excellent and affordable scheme. Labor lied to us, downgraded our super scheme and betrayed us.
Boyd refers to the SGS as a “revolutionary national retirement scheme that began in the latter part of the 20th century won by the struggles of Australian working people”. This is an exaggerated claim.
There were struggles by workers to win superannuation in some industries, such as the building industry’s Construction and Building Unions Superannuation (Cbus), as a condition of employment under their award. But for most working people, superannuation was legislatively imposed on them with very little consultation.
Many workers objected to foregoing a national wage increase to fund a new retirement scheme. Prime Minister Paul Keating and ACTU secretary Bill Kelty were the driving forces initiating the SGS.
As a trainer working for the Australian Trade Union Training Authority, I encountered many workers at job sites and training sessions who resented losing a 3% wage increase to fund the first instalment of their newly minted superannuation account.
Perhaps “exceptional”, in the pejorative, would best describe the scheme. It was built on the principles of neoliberalism: a maximisation of return on members’ accounts; no licence for socially beneficial investments offering a lower return; no requirement for ethically or environmentally-based investments; and no election of fund directors by members.
The poison of corruption was sown with jobs for the boys: ACTU executive members and their acolytes held lucrative positions on the boards of industry super funds.
The ACTU is a fiefdom of Labor and this partly explains why it has degenerated as a political force over the past 20 years.
The demise of the Communist Party of Australia, and with it the loss of a socialist party with its history and cadre within the trade union movement, was a disaster for the working class.
Compared to national superannuation schemes operating internationally, ours began with very few “guarantees”. You could lose all your money year on year and some workers are lucky to break even. Some funds were and are better run than others, but in the early days it was a dog’s breakfast.
Workers are considered “fair game” for the finance industry. There is no government guarantee that the funds you are required to have placed in a super fund will at least match the rate of inflation, or even match your deposits. There doesn’t seem to be a problem for the government to guarantee the liquidity of the major banks, but if you are a worker your super account has not even minimal protection.
Commissions and administrative charges have been a thieves’ picnic, and vary greatly from fund to fund. The for-profit retail funds (banks and insurance companies) have a poor reputation in this regard.
We are also expected to be informed enough to manage our own individual super accounts. This leads to the inevitable exploitation of vulnerable fund members. Technical language and inconsistent terminology all play a part in mystifying superannuation to the detriment of all of us.
Boyd detailed the various attacks that successive Coalition governments have engaged in to change the nature of the scheme or reduce its financial viability as a pension. They have a visceral hatred of the union-based, not-for-profit industry funds.
Anything that suggests social solidarity is subverted where possible and replaced with the market model — giving you “freedom of choice” if you have the ability to exercise it.
Over time, corporate funds, public sector funds and industry funds have been joined by the retail funds, produced by the finance and insurance industries and the self-managed superannuation funds or SMSF. The latter are, more often than not, a vehicle for tax avoidance supposedly administered by the Australian Tax Office (ATO).
It is an endemic scandal that many employers fail to pay their employees’ super into a nominated account, and this blatant theft of workers’ wages continues unchecked by the ATO.
The finance industry is gaming the superannuation system, using it for the rich to shelter money at concessionally low tax rates. The government has facilitated this plundering of the public purse.
This proliferation of superannuation has produced $2.4 trillion in funds held by the industry this year. It is estimated to reach $3 trillion in three years. This is a “honey pot” for Australian capital, providing a constant flow of funds from employees. It came to the rescue in 2008 during the Global Financial Crisis.
Reform or replacement?
Boyd bemoans the fact that the Rudd-Gillard Labor governments failed to raise the superannuation guarantee contribution to the 15% claimed necessary to provide an adequate retirement pension. This is hardly surprising given Labor’s history of working class betrayals, as he acknowledged in relation to the 2009 Fair Work Act.
This was a monumental bit of bastardry by Labor, again failing to show any gratitude for the union-led anti-Work Choices campaign that was instrumental in booting out the Howard government in 2007.
Given the SGS shortcomings, it would be foolish to place a lot of store in it being reformed. Rather than reform a seriously flawed and corrupted scheme such as this, socialists should focus on replacing it with an adequate national retirement pension, commensurate with individual needs and social responsibilities. The current aged pension is an inadequate safety net at best.
Boyd still clings to the belief that a universal super entitlement was “unfinished business” and the current Super Guarantee Scheme is redeemable.
I believe the Labor Party is ideologically incapable of even imagining a national retirement pension scheme, given its commitment to neoliberalism. Labor is wedded to casino capitalism, the engine that drives our national superannuation scheme.
We should take the opportunity to think beyond capitalism to a better world that socialism promises. We are faced with a capitalism that will continue to seek to replace human labour with robotics for the benefit of the greedy class. Already, the growing trend is to increase casual employment, and a unionised labour force is a decreasing percentage of the employed.
Does Boyd see a future for super in a world of diminishing work opportunities? Is it doomed to be the preserve of a privileged employed minority in a capitalist world?
In Europe, a discussion around providing a basic income for all citizens is beginning. Would this and other initiatives render the current superannuation scheme redundant?
Socialist Alliance’s position is for an adequate national retirement pension for all. Superannuation is a fraud and doesn’t serve the public good.
[Dave Bell is a former officer with the NSW Teachers Federation, a delegate to NSW Trades and Labour Council and ACTU congresses and a former state secretary of The Greens NSW. He is member of the Socialist Alliance.]