Across the developed world, pension systems face funding crises. This makes Australia’s aim to raise the superannuation guarantee to 12 per cent stand out as fine public policy and should not be derailed by the mining industry’s campaign against the tax on super profits of resources companies. GERARD NOONAN, president of the Australian Institute of Superannuation trustees and a former editor of The Australian Financial Review, lays out the argument.
Recently, the International Herald Tribune singled out two countries – the Netherlands and Australia – as shining examples of good public policymaking in a world of seriously underfunded pensions. In Europe, you can use one hand to count the number of countries which can seriously claim to be able to pay for their ageing workforces in retirement. You need both hands and all toes to count the number of countries in Europe and across the Atlantic in North America (yes, including the USA) who haven’t a hope in hell of looking after their ageing populations as they retire over the next two or three decades with even a modicum of dignity. Mention was made of Australia’s compulsory 9 per cent of wages which all employees pay into their super funds each week.
The story noted that the government had announced it was planning to lift the rate to 12 per cent. It didn’t say this was going to be a gradual increase from 9 per cent over the next decade, but the overall tone was rather complimentary. You got the impression that the International Herald Tribune was a bit surprised that at least someone had got it right, given all the talk of how the debt problems of the PIIGS countries (Portugal, Ireland, Italy, Greece and Spain) were potentially contagious and could cause a second bout of world economic pneumonia. So it was something of a shock to return to Australia several weeks ago to find that all anyone could talk about was executives of very rich mining companies bleating about a tax which they themselves had asked the Henry Tax Review to impose.
The miners had argued to Henry that they would prefer something like the new tax rather than its crude predecessor, which each state imposes on the amount of minerals the companies dig up and sell. My main thought at the time was: ‘Be careful for what you wish for’. These are, of course, minerals which are part of the common wealth – that is, they belong to us all. We’re happy for miners to dig the stuff up and sell it for a substantial profit. But there’s a limit to how much profit any company is entitled to make out of common resources, and they should pay an appropriate amount back to the source country.