Why are the conservative parties suddenly obsessed with super?

0:00Obviously, this is a policy that your party has come up with. So we would expect you... But you just come up with a question you haven't given to Anita. But we would expect you as the Treasury spokesman for that party to be a crof. The Treasury spokesman, not Jesus Christ. I mean... One nation is coughing heat for a proposal that would let Australians take some of the money going into this super as extra pay instead. A 50-year-old... They would be 27,000 worse off. Well, folks, how on earth... How does... I mean, this is ridiculous. For up to three years, renters and mortgage holders could choose to take home a quarter of the money that would normally be put into their retirement, worth about $44 a week for someone on the average full-time wage. At the same time, the coalition has been looking at its own ways to give people greater access to their super now. And some of its MPs want to go further. So why is superannuation suddenly being pitched as an answer to Australia's cost of living and housing problems? And is it a good idea?

1:00I'm Ruby Jones, and you're listening to 7am. Today, economists Greg Jericho, on the growing political fight over what our super should actually be for. It's Wednesday, September 9th. Greg, the case that Pauline Hansen is making here around super is simple, right? She's saying people are struggling with their rent and their mortgage. So why not let them take home a little bit more of their money now? What's wrong with that idea? Look, what it is is it's a very, I think, clever pitch actually by Pauline Hansen and one nation, because you're right, it's all about dealing with the real issues that households and people are having right now, which is the fact that they're suffering a massive cost of living crisis. Their basic pitch is if you're paying rent or mortgage, they're basically everyone who really isn't retired,

2:02essentially, that's going to cover most people. You can redirect 3% of your 12% superannuation guarantee contribution to yourself. So you can basically say, look, we want to take 3% now. Maximum of three years, apparently you can do it, although, you know, with the thing like this, they say a maximum of three years, but it probably continue on and on. It's a type of policy that once you're set in place, you don't stop. So it's all about essentially giving Australians that money now. And we're talking perhaps around $44 a week or so for sort of an average income earner. So essentially, what you're saying is, okay, we'll give you some money now, because now is when you need it, don't worry about retirement, all be good by then. And the real problem with that is that it essentially is robbing yourself from later to pay yourself now. And it doesn't end up in a good situation that has problems both now and in the future.

3:06Okay, and there's been a lot of talk about this being potentially inflationary. One nation's argument is that not everyone will take this up. So realistically, I mean, how much difference would this make or could this make to inflation? Yeah, look, it definitely would be inflationary because we know from what happened during the COVID years when the Marissa government did allow people to take out some of their super if they needed to, that a lot of people did add they took out as much as they could. So the likely audience that this will be a fairly popular scheme and that many people would do it. That is introducing a lot more money into the economy. And it comes at a time when the Reserve Bank rightly or wrongly is saying that we're spending too much money at the moment. That means that we'll see interest rates go up. And so probably what we'd see from this is any of the benefits of it. You kind of be wiped away by an interest rate rise. That also we know flows into rental prices increase.

4:09So it's kind of a bit of an alluser area gained in that sense of, oh, we've got more money. Great, we can all go and spend it. And then the Reserve Bank says, yeah, we're going to actually take away all that money out of the economy through a rate rise. So if we were to take this picture at face value, that's three years of reduced super contributions. What would the impact of that be on the average person's super in retirement? Yeah, so we're talking for a sort of average income around $25,000 less when you retire. And given the average super balance of someone as they sort of get close to retirement is just to touch over 200,000, we're talking basically about 10% less. So it's a sizable whack. And again, it might be this thing about 25,000 that doesn't seem like much and it's a long way away. But that just shows that sort of sense of what $45 a week adds up to over the many years.

5:10And again, that's if it's just limited. But history sort of shows that when you offer these types of policies, they'll be limited at first. And then they just keep on going because again, what would you do if you're one nation? And put this policy saying, oh, you should have your money now, not later, and then what in three years time, you're going to see one nation suddenly argue, actually, no, now you should have your money later. No, no, the three years is a nice makes it sound reasonable. But I think what we'd likely see is it just go on and on. And there's no guardrails proposed is there were around people actually spending it on their mortgage or rent. Because I mean, we saw with COVID when people had access to super, you know, they spent it on all sorts of things. Yeah, and that's the thing. At the moment, you can actually access super if you are able to demonstrate, you know, essentially a dire need you to medical emergencies or financial hardship.

6:10You know, if you are able to demonstrate that, then yes, you can. But with this, it's just, yeah, if you, you know, if you want it, you can, you can have it. And some will use it to pay down bills, some will use it to pay off their home line. And some will just use it because I can use it. And what we certainly saw during the COVID years was people who didn't have a lot of super essentially running it right down. And we also know that because women generally have less super than do men, this will do more damage to women's long term retirement. And we also know that women also struggle the most when it comes to poverty and retirement. So quick fix, not a good long term outcome. But you know, it's hard to tell people who are suffering through a massive cost of living crisis to say, please believe my accountancy and acumen and you shouldn't have your money now because once it accumulates, you know, that that kind of argument is really tough to say to people who are struggling.

7:19It's really sort of in a way, conning people in saying here, we're going to give you some easy money. Don't worry. Instead of looking at what is the real problem, the fact that real wages are fallen, the fact that the costs of services have risen, the fact that perhaps people are struggling with the rally that go into the GP or go into the dentist or things like that are costing more. And we're not going to put any pressure on businesses to raise their wages. We'll fix it all with a bit of super. Still to come, the coalition's controversial plans for our super. Greg, there is this kind of strange twist here. It turns out that the coalition under Susan Lee had already developed almost this exact policy. And in one respect, I think there's went even further. So tell me about what they were considering.

8:20Yeah, apparently it's come out that they were costing this before season Lee got rolled so back in 2025. Essentially much the same with that three percentage points of your super. They were going to exclude renters for some reason. I think it was their suggestion was this is about people paying off their mortgage. Suggest that renters, if you're going to do something like this, need just as much help, they were not going to have that three year limit. And they were going to have it being paid as ordinary income, which would mean it would get tax like income tax, whereas the one nation policy is saying, I will give you this extra income, but we're going to treat it still as super annualization for taxation purposes. And as you know, super annualization attracts less tax and we give super annualization less tax because you can't touch that money. So in a sense, one day should say, not only we're going to give it the money, we're going to basically give you a tax cut as well, which adds to the entire cost of the thing is as well from a budget three point of view.

9:20But the liberal parties proposal slightly less generous because of that taxation aspect, but would go on forever. And again, as part of I think a suite of policies that the liberal party have for a long time being sort of mulling over because they've never had a real love for super annualization. People like Senator Andrew Bragg really hates compulsory super annualization, essentially calls it communism. And so they like using the idea of super annualization is this quick fix. Yeah, well, we heard Andrew Bragg, the opposition's shadow housing minister calling one nation's plan just a start. So he's been talking about going further using super as a mortgage offset, maybe even collateral for a home loan. So the mortgage offset's collateral arrangements cash out measures. There are pluses of minds on all of these models, but I think it's a good debate to have because we want to be giving Australians the best chance that we can to live in a house that they own.

10:23Where does the coalition want this to end up? If you, I think if you really sort of held their feet the far would say let's get rid of compulsory super annuation completely. And I doubt would see much of a suggestion of all let's fix up the age pension on the other on the other ed. The problem with the liberal parties policies against super annuation and again using it as this fix is especially when it comes to housing is all of their policies regarding using super annuation, whether as an off set or using his collateral, whatever for housing is all designed to actually increase house prices. That's what it will always do because you're in a sense saying, oh, we've got this money. Let's use it now to to bid up house prices. And it's kind of bizarre that we've got that policy occurring at the same time where we're finally seeing, you know, the changes to the capital gains tax and negative gearing having a literal impact on prices causing house prices to fall in a way we haven't seen for many years.

11:25That's actually helping housing affordability and yet we've still got the liberal party saying, oh, the best way to solve housing affordability is to let people use their super and it's like, you know, it's this case of they're ignoring the actual signs in the housing market at the moment and still just going on this attack on super annuation. I mean, the irony is, of course, there's lots of problems with super annuation and yet whenever there are attacks on super annuation, it only really gets criticized if it's an attack on the tax breaks that go to the richest, you know, we saw last year, the government trying to do something on super annuation balances of more than $3 million that was attacked as a death tax is hitting people's inheritance, even though it affects the state of the state. And even though it affected maybe 0.1% of people were super, whereas these policies that are essentially going to ruin or at least worse than the retirement for people on lower middle incomes, they're regarded, oh, this is a common sense kind of plan.

12:32Yeah, that's interesting because there was, I guess, a sense until recently that there was bipartisan support for super that, you know, super had to be protected for a time and so. Why do you think the idea of using that money now, you know, for cost of living for housing, why do you think that is gaining political ground. Well, because look at who's proposing it, we're talking essentially the conservative political parties, whether or not you want to call one nation, it's served. One nation doing purely because it's a populist policy that looks like they're helping people, whereas they're not actually putting any pressure on businesses to do anything. And the liberal party are doing it because they know it's not going to affect anyone that they really care about. They say, yeah, do whatever you want with super, it also will help house prices, well, that's great. That that's certainly what they're all about is trying to increase house prices and increase wealth of the wealthiest.

13:35And they're saying, let's do that, but let's make sure we don't touch those, those tax breaks that are going to the richest and it's just a. I think really highlights the inequality that is driven throughout our polity, whereas you know, when we're talking about changes to superannuation that will affect the very, very richest, most one percent, the wealthiest one percent, that's painted as being a horror show of destruction, death tax and terrible stuff, whereas when we suddenly get a policy that is going to actually reduce the retirement income of people who are certainly not thinking about inheritance or their second or third investment property, that's given this cavalier approach of, oh, why shouldn't we be touching it? Greg, thank you so much for your time. Pleasure.

14:41Also in the news, Australians will be allowed to opt out of our social media algorithms under new laws announced by the Prime Minister. Social media companies will be forced to give users the choice to turn off algorithm driven content and instead see only posts from people they follow. The laws will also require services, including online games, apps and AI chatbots to protect children from harms like pornography and misogynistic content. And a friend of Alan Jones who denied witnessing an alleged assault in a Sydney restaurant has admitted in court descending a text to Jones saying if you need me to refute any lies, I of course will. The man says he doesn't recall the lunch where another witness claimed to have seen complainant see looking to strought or sitting next to Jones who had his hand under the table. Alan Jones has denied all 22 counts of indecent assault and two counts of sexual touching against him. I'm Ruby Jones, this is 7am, thanks for listening.