Superannuation change proposed for Australia
- Economist argues super is 'gravy train'
- Says beefed up pension would work better
- READ MORE: The outrageous loophole at the heart of Albo's super plans
A leading independent economist argues that superannuation should be abolished, and the funds in accounts given directly back to Australians to manage themselves.
Fresh Economic Thinking Chief Economist Cameron Murray said compulsory superannuation costs around $30billion to $40billion a year in administrative costs and fees.
'It's become quite a gravy train and there are $30billion or $40billion reasons a year to keep the show on the road.'
He said there was little scrutiny of how super funds were spending members' money.
'There's plenty of middle management positions, with titles such as "director of modernisation" or whatever the current trend is,' Mr Murray said.
Mr Murray expressed disdain for fund managers.
'I call them spreadsheet monkeys,' he said.
'You get a little team and you sit there and bore your mates get some nice Powerpoints to reassure everyone the fund is being nice. It's ridiculous.'
Economist Cameron Murray said compulsory superannuation costs around $30billion to $40billion a year in administrative costs and fees
'They think they are hot stuff, buying and selling the same shares off each other, back and forth.
'We are spending $30billion or $40 billion on those guys. It is pretty wild.'
Compulsory superannuation, a system requiring employers to contribute 11.5 per cent of an employee's wages into a retirement savings and investment fund, was introduced in 1992 by the Keating Labor government.
Mr Murray pointed out the contradiction in the left party's stance, which advocates for privatising retirement by encouraging people to entrust their money to private fund managers.
'It's a really ugly mark on the Labor party, they have a two-faced view here,' Mr Murray said.
'When it suits them for the base, they go, "we're winning for you, we're getting extra out of the nasty employers, super is something extra".
'Whereas to the treasury and policy nerds, they say this is just diverting wages from bank account A to bank account B where a fund manager gets to do what they want with it until the contributor are 60 or whatever the age it is.'
Mr Murray said people 'have been brainwashed for decades' by the Labor party into believing super was something extra rather than something taken out of a pay packet.
Compulsory superannuation was introduced in 1992 under the Labor government of Paul Keating (pictured right with wife Annita Keating)
'When super started, one of the big motivations Paul Keating had was to defer spending,' Mr Murray said.
'So the bargain with unions was "you can get your pay rise", but you are not allowed to spend it in the economy because that would be inflationary.
'So, it's a payrise you get in your bank account that you can't spend.
'We have this idea that super stimulates investment. It is to suppress spending and suppress economic growth because we had inflation fears.'
Mr Murray pointed out that people were allowed access to their super to stimulate the economy during the pandemic period.
He contended that if the money tied up in super was put back into general circulation, it would grow the economy and allow it to afford a much better and more widely accessible retirement pension.
According to Mr Murray, abolishing super would not mean a nation of impoverished retirees even without the pension being beefed up.
'People can voluntarily save; they will still have their money' he said.
'Something like 75 or 85 per cent of money saved was already saved outside of super.'
Mr Murray approved of the Coalition's proposal to allow people to withdraw up to $50,000 from their superannuation (up to a maximum of 40 per cent of their balance) to purchase their first home.
'A house is the best asset to own in retirement,' Mr Murray said.
'In Singapore, with their compulsory savings system, their first objective is to own a house outright.
'In Australia, you are not allowed to use super to buy a property for yourself when you are young and need a house, but you can buy property for someone else with a self-managed fund.'
Mr Murray said a particular inequity was the different ages that people could access super and the age pension.
'I think it is ridiculous you can get your super at 60 and the pension at 67,' he said.
'You've got rich people having seven years to spend their tax-advantaged savings before they can claim the government pension.
'It's a total boomer middle-class scam. You should have the same ages at a minimum.'
Mr Murray suggested that super could be abolished by simply letting people access their funds.
However, he thought this should be a phased withdrawal.
'You can't just let everyone spend all the money at once,' he said.
'There would be this huge spending spree because everyone under 30 would spend $50,000 extra this year.
'You need to have an annual spending limit to empty the accounts over a four to five-year period for people who want to empty them.'
He also said there could be random spot checks to ensure companies paid salaries with the super added in.
