You give people a chance, they’llvote for 9 per cent in their pay packetevery day, and no tax regime ever inventedwas a big enough incentive to getmoney into super, none.We had zero growth in superannuationpre-’83, when 5 per cent of the finallump sum was taxable. People have aninfinite preference for a dollar in theirhand – in fact, there’s even a preferencefor a dollar in their hand plus everythingthey can borrow off a bank, at an18 per cent interest rate.
Fiona Reynolds: And superannuationas a policy is already coming underfire this year. There’s discussion aboutwhat we should be doing about it longterm. That is going to get worse, it’s go-ing to get worse this year, when peoplesee their returns. And probably the yearafter when people see their returns. AndI just think this policy at this time isreally, really dangerous to the long termviability of superannuation.The finance sector also employs ahuge number of people in
Australia, sowhat happens about that? You knowwe’re taking people from – instead ofpaying 15 per cent contributions tax topossibly paying 40 per cent marginaltax on the amount that we’re savinganyway.
Then you’ve got people at theretirement end who are having theircontributions reduced. So that’s likelyto mean them getting more of an agepension, so the government’s payingover there. It just seems like a viciouscycle to me.Nicholas Gruen: I’m struck, andI take Garry’s point that there is a politicaloverlay to this and it’s wise not to benaïve about it. So that’s fair enough.But I am still struck by the fact thatthis is a proposal to lower compulsorycontributions temporarily, to thenincrease them by 3 per cent or a thirdfrom where they are now. And everyoneis so focussed on their short termconcerns that we haven’t even talkedabout that.
I actually think that increasing compulsorysaving in
Australia is a missingpart of the recovery, of negotiating ourway through this terrible period with anasty looking foreign debt.I signed the letter and argued foran increase – a long term increase, notas a sort of rhetorical flourish and notas something which might help me sellwhat I really want to do, which is getmy Keynesian rocks off in the shortterm. But because I think that’s reallyimportant.And I think that the super industry,if you’ll pardon me saying, reminds meof my old friends in the automotiveindustry who just can’t see why peopleshouldn’t be forced to buy cars.
‘Thereare all those jobs in the industry, whycan’t the government make life easier forus?’ Well, that’s not the government’s joband all sorts of things are going on inthe economy.And we’re in a crisis and the crisiscan morph in all sorts of nasty ways intoa, for instance, a currency or a borrowingconfidence crisis. And I think theindustry is looking a gift horse in themouth. If the industry can get the SGinto a space in which it’s in policy makers’minds like the interest rate is, thenit’s really come of age, it’s really becomea very deeply legitimate part of the economiclandscape in