Greg Jericho on One Nation’s superannuation ‘sugar hit’

0:00This is The Guardian. I'm Matilda Bosley, coming to you from We're on Dreamland. And this is The Full Story. If you could pocket 3% of your super contributions to help pay for your rent or your mortgage right now, would you? One nation is pushing a proposal that would allow Australians to do just that. 3% every payday for three years. This is the people's money. This is their money. This is not the government's money. This is their money. Pauline Hansen says it's a necessary lifeline for people being caught out by cost of living pressures. But is draining your future to survive today actually a smart solution or a dangerous oversimplification? I'm not going to know Australians the right to access their money if they feel that they need it. But in the same breath, are they wrong to suggest that something is broken with the Australian Super System?

1:05Today, Guardian Columnist and Chief Economist at the Australian Institute Greg Jericho breaks down the reality behind one nation's super pitch. It's Thursday, 10 September. Thanks for coming here, Groggs. Now, whereas Matilda, great to be here again. Just a start off. I thought, I'd ease us in with something easy. Just could you quickly give us your thoughts on the one nation's superannuation policy in five words or less? It's rubbing Peter to pay Peter. Interesting. Expand. Well, I mean, it's basically trying to solve a solution of people really struggling with cost of living and instead of tackling the issue of trying to get wages to grow faster or to provide government services cheaper. They're basically saying, hey, let's take money from your super that you're going to get later on

2:09and instead of that, we'll give you some money now, which means you'll get less money later. So you're kind of going to be worse off in the long run, but you're going to get maybe 44 bucks a week now. And the problem is the Reserve Bank will probably look at that and go, oh, everyone just got to pay rise. Really? Will raise interest rates, which will wipe it out. And business groups will go, oh, that's good. Everyone's got to pay rise. So we don't need to give you a better wage rise next time. And so, you know, you're basically rubbing yourself. You're giving yourself money that you're taking from your future self and it's going to leave you worse off. Everything you said is so fascinating. I want to get into all of it. Before we start though, would you mind just giving us a really quick rundown of what super actually is? Yeah. I mean, super is essentially you putting money away for your retirement. So you give it to your super-induation fund. They invest it. And when you retire, you get back all that money that has been invested plus the earnings that they have got for you.

3:16And what we're really talking about though here is the super-annuation guarantee, which is something that started back in the early 90s. It was a real sort of thing of Paul Keating. Kind of before this super-annuation was a bit of a purview of the rich. And everyone else was like, sucks to be you, but hey, there's an age pension and don't mind the fact that you'll be living in poverty probably. Whereas Keating was like, hey, everyone should have access to super, but we know there's a big temptation to not invest, buddy. So we're actually going to do it in a sense. We've got to force your head. We've got to force you to do it because not only is it good for you in the future, it's kind of good for the government as well because notionally, and theoretically, it means you're going to be less lying on the age pension. And so you've got more of your own money. So it started off as 3%. We're now, you know, many years later, it's 12% and for a lot of people that's an extra 12% that their employers have to pay into their super on top of their pre-tax wage.

4:17The policy that one nation's describing where it would essentially be taking 3% about a quarter of that super. And rather than it going into this super which is locked off, you can't access it until you retire, it would go straight into your bank account. You'd still receive that concessional tax rate. You pay less tax on it, but you would have access to that money now. It would be available to anyone who rents or has a mortgage and they could do it for 3 years. Now on the face of it, it seems like, okay, well, people need money now and we're giving them access to their own money now. What's wrong with that? Yeah, it's really because super, the way super works is you put money in now and that money is invested over the next 20, 30, 40 hell of a long... many years you've got left before you retire. So, you know, over three years, it's basically about 6,800 in the next three years. And by the time you retire, because of the earnings of all that,

5:17it adds up to about $25,000. And it's really hard for people to work out. Okay, it's a better for me to get 6,800 now or 25,000 in 30 years' time. You've got to be in account to work that out because it's accumulating earnings much faster than inflation. You'd be better off to wait, but people were like, yeah, but I need the money now. I'm struggling now. Speaking of retirement, the other big headline that's been coming out of this is that Barnaby Joyce, who's the Treasury spokesperson for One Nation, revealed that there actually wasn't any economic modeling when this policy was created. I just want to quickly play you a clip of his response when he was asked about that on 730. Here we go, folks. I'll try and answer something which we couldn't eat on an annuity table and also on a sort of linear regression. If I may, if I do it for one, four, you strike down the aisle. Barnaby Joyce, if I may, obviously this is a policy that your party has come up with. So, we would expect you... If you just come up with a question, you haven't given me the details about that. But we would expect you as the Treasury spokesman for that party to be a cross.

6:19The Treasury spokesman, not Jesus Christ. I mean, what do you have to actually give me the details of these things? I guess what he went on to say at the end of the day, he was saying that how much modeling is needed if this is about people making decisions about their own money and giving people control over their own money. What do you think about the argument of that? Can people be trusted with their own money? It feels like a strange paternalistic question to ask, but I think it's worth asking. The suggestion that people know best is fine if you're also assuming they actually understand everything. But if they don't, then they're going to make decisions that are kind of biased on the present. And we saw from during the COVID period where the Morrison government allowed people to access their super. Yes, somewhere accessing it, a pay down bills, pay off debt. And others were just accessing it because they could. And what we also saw was a lot of people who had very low balances,

7:20essentially, driven down to zero. But again, it's this sense of surely if you're putting forward a policy like this, you could say, well, this is what the impact is for someone on average earnings or media earnings. Or if you're a school teacher or if you're a doctor, it's not hard to work out. And it should be something that we expect someone who's coming up with this policy to be able to answer. We've talked a lot about the risks to individuals and individual finances. But I guess we also saw from the COVID era, Morrison policy of allowing people to dip into their supers that about three million Australians took out about 38 billion in total from their super. And that that will eventually cost taxpayers about 85 billion by the end of the century. So it's not small money we're talking about. What about the cost when it comes to people requiring a pension later on? I know that Australia has a very low pension rate largely because of the superannuation system. Yeah, I mean, this is the other thing. You're quite right.

8:22Australia's retirement policy is essentially based on super and you're owning a home. The two key things. The pension is very low, especially in relation to other advanced countries. We have one of the lowest pension rates. We have some of the highest retiree poverty rates as well. And there's certainly no suggestion here from one nation of what we'll do is we'll counter this by increasing the age pension rates. Or we'll do more to ensure that people in their retirement years aren't living in poverty. No, it's just get take the money now, get a bit of a sugar hit. And long term problems are that's for other people to solve. That's for future. Future Pauline Hansen and Barty be joist to worry about, but they won't be around in 30 years time when this is going to become the issue. We'll be right back.

9:24Pauline Hansen is doing the same thing that authoritarians have done time and place in memorial, which is to give people an origin story for their pain. My name is Sarah Martin and this is the populist, a new podcast from the Guardian about how one nation is winning ground in Australia. These people claim that they're going to give us what we need, so that's who we're backing. We look at its people. She could fill a town hall now with the number of enemies that she's made. It's structure. It's not a democracy, it's an upgraded business model from the EBSWF. To point yourself fresh and for lifeless. What political party does that? And it's money. If you are going to try and say that, you know, I'm being funded by Jane Rohnhard, Hansel is now. We need an orange bulldozer. Let's hear the noise.

10:25We're. Search for the populist now, wherever you listen to podcasts or find it in the full story feed every Monday. So if one nation's super policy was adopted tomorrow, would it actually ease the cost of living pressures and create more homeowners, make it easier to buy a home as one nation claims? No, it would give everyone 44 bucks a week more on average, but prices would go up. So in real terms, that would be reduced. Then interest rates would go up. So that would take even more away from it. If it was to be able to be used for housing, will that just adds more money in bidding for housing, which sends house prices up? The issue with housing at the moment really isn't that we need to get more people in it by doing some weird government thing. The government's already done a good thing by getting rid of the capital gains tax discount and limiting negative guarantee.

11:30We're seeing house prices ease and go down, which is kind of what we want. So doing something like, oh, let's get used to super somehow to be used for housing. It's like, well, again, we've finally got house prices coming down a bit and you want to make them go up again. It's just very counterintuitive, very silly and not going to deliver on any of its aims other than making it look like one nation of God Earth. So that's the kind of situation of God Earth solution to the cost of living crisis and they really haven't. The other thing Paul Enhancin claimed in her press are was that super rates were at 9% 4 years ago and it's now ballooned to 12%. Just quickly, first of all, is that for you correct? No, it was 9% last back in 2013. So just out by about a decade, then it went up to 9.25. It was 9.5% through most of the Abbott, Turnbull and Morrison years.

12:31And from the time the other easy government has got in, they've been successively raising it to 10% to 10.5% to 11% to 11.5% to 12% where we are now. So no, she was just a bit out, but who needs, who needs details? Her facts and figures are wrong, but does she have a point that super has potentially crept too high? I'll look, there are some certainly who argue that we don't need it at 12%. I sort of disagree. I've always been a bit of a little bit in line with Paul Keating on this. And I'm surprised Paul Keating hasn't come out yet and really slapped him down because he always views super attuations as his baby. Look, I think 12% is fine. I don't think it needs to go any higher, but I think it is a good level. I think 9% was a touch low and 12%, I think, is about where we should be. But that's not really the issue with super. That's certainly not the problem of super.

13:37Okay, that's not the problem with super, but you are hinting that there is an issue there. Yeah, I mean, the real problem with super and it really goes to a discussion. I'm pretty sure we had last year when remember all the talk about super was about limiting the tax concessions for funds that were had more than three million dollars in them, which should count them for about 0.1% of every well with super. And if you remember back then it was, oh gosh, this is a death tax. You're taking away my inheritance, you're ruining aspiration back then suddenly super was super important and couldn't be touched. Now suddenly we've got a policy suggestion that really is only going to affect low and middle income earners with something that's like, oh, yeah, it's just super. Who cares? Just rate it. The problem with super is that all those tax concessions that we do have in place, unfortunately, they're kind of being brought by the very wealthy.

14:40And it is massively distorting wealth inequality in Australia. So just to put some figures on it, about 23 billion dollars a year in tax concessions from super goes just to the richest 10% of Australians that's people and more than 162,000 dollars a year to notionally encourage you to have money and super so that you won't have to be reliant on the age pension. Despite the fact that you would never have been eligible for the age pension because you're so damn wealthy, you know, you wouldn't wouldn't make the cut off. But you know, 23 billion dollars a year, think of what could be done with that. But let's actually reduce the costs of things like say dental, let's make dental in Medicare or let's make childcare free or let's make you know, union table free or let's just do something that alleviates the costs of things.

15:41You really fired up about this Greg. The thing that kind of grants my gears a bit about this debate is when ever we're talking about super annuation that's really only going to affect lower middle income and it's because most wealthy people aren't going to bother doing this because they're not suffering as much from the cost of living and they know, you know, the good deal that you get with super annuation. So it's not going to affect them. It will affect lower middle income earners who super is already lower who are going to be much more relied on the pension. It affects them and all the coverage is, oh, maybe this is a sensible common sense way of doing it. And yet as soon as there is any suggestion of touching the super annuation of the very wealthy of reducing their tax breaks, suddenly our super sacrosac, you can't do that. You're killing aspiration. And it's, I think it goes to not just sort of the wealth inequality in the system, but also the just the inequality and how we even debate these things.

16:47That's why I sort of really think it's important that we do slap down this kind of policy, not in a condescending way of, oh, we know what's good for you and you will waste that money. But to point out this is actually a bit of a conjo. You're being conned here. Demand better services, demand more from your government. And the government do something about the tax courts for the rich or for high profit companies like gas companies or so on. It's really sort of standing up for that because I think this is a con job really when you get down to it. Thank you so, so much for coming and explaining this all Greg. I really, really appreciate you breaking it all down. No problems Matilda, always great to chat. That was Guardian columnist and chief economist at the Australian Institute Greg Jericho. You can read more of Greg's coverage breaking down all of the economic debates in Australian politics at the guardian.com.

17:54This episode was produced by Taylor Strano and Shane Anderson, sound design and mixing by Daniel Seymour, and the executive producer of Full Story is Hannah Parks. Don't forget to follow or subscribe to Full Story wherever you may get your podcasts and feel free to leave us a review while you're there as well. Until the Bosley, see you next time. A.I. is transforming sales, support, and every customer interaction in between. But too often, you're sold a different A.I. agent for every job. That changes with Finn. Finn is a single customer agent that works across the entire customer journey. From qualifying sales leads to resolving support issues, Finn works across teams, carrying context from one conversation to the next. Meet the agent making perfect customer experiences possible at Finn.ai.