No more changes needed to fit-for-purpose super system
A key architect of Australia’s superannuation system has called for a moratorium on further changes to super, saying it has over-delivered on the original system objectives set in the 1990s.
Addressing a Crescent Think Tank lunch in Sydney on Thursday, former ACTU secretary Bill Kelty, whose accord with the Hawke-Keating governments put in place the eventual introduction of super in 1992, said that successive changes to the system were undermining confidence and he supported leaving super as is despite the fact it had changed from the original design.
“Our original system was 15 per cent [tax] when you put money in, 15 per cent taking it out, but if you wanted an annuity you could pay no tax and take the benefit. The Liberal Party changed it, and it costs more than our system because Howard and Costello’s tax cuts transformed it into that, but my view is to stop all the changes to super,” Mr Kelty said.
“That’s more important than me saying change it back to our system — for God’s sake, leave it alone so the next generation can get confidence again in the system.”
He added that the system so far had outperformed the original objectives set in the 1990s around annual returns and self-sufficiency in retirement, putting paid to any suggestions that it needed to be altered any further.
“The earnings now have been bigger than what we anticipated, which was a return in real terms of 3 to 4 per cent a year — it is greater than 4 per cent in real terms over the period,” Mr Kelty said.
“We anticipated by this stage about 40 per cent of people would enter their retirement phase without dependence on the pension and it’s now 50 per cent, so on any measure, we have as a nation surpassed any of those anticipations.”
Mr Kelty was critical of the government’s lack of action on increasing super guarantee contributions above the current 9.5 per cent, saying it amounted to “stealing money off decent working people” and that a rise in compulsory contributions to 12 per cent was the only policy change that needed to be made in the space.
“The only thing I would be interested in in terms of changing the system is going back to get the 12 per cent done,” he said.
“Not one word was said in the last election about moving to 12 per cent, and now the election’s over and we have an inquiry, which surely has only one objective and that is to push [the increase] out.”
He added that his message to the current government would be to “keep your commitments, do what you told people you would do and implement the 12 per cent”.
