Bill Kelty, the Australian trade unionist who helped paved the way for the introduction of the superannuation guarantee in 1992, has pleaded with policymakers to stop making changes to the compulsory payment system beyond the scheduled increases.

Speaking at the inaugural Crescent Think Tank in Sydney recently, the former head of the Australian Council of Trade Unions said the government needed to “stop all the changes to super, stop all this nonsense and stop threatening it all the time.” Ex Liberal Party leader John Hewson said on the same panel that changes to the schedule did not automatically lead to wage increases.

“Leave it as it is,”  Kelty said. “For God’s sake, leave it alone so that the generation can get confidence again in the system.”

Kelty played a key role in getting the unions and the Labor government to agree on the Prices and Income Accord in 1982 which set the country up for guaranteed superannuation 10 years later. His comments follows current Treasurer Josh Frydenberg’s long-awaited review of Australia’s retirement income system that the Productivity Commission called for ahead of an increase in the superannuation guarantee to 12 per cent by 2025.

The former director of the Reserve Bank of Australia from 1987 to 1996 said while the super system he helped to create wasn’t perfect, the scale of funds at almost $3 trillion warranted getting it right. “But people are making generational decisions and they’re tired of governments coming in and changing it,” he said.

Finance Minister Mathias Cormann previously said that the retirement income review would “not lead to any change”, because voters were tired of the government “tinkering” with the system. The Labor party’s shock defeat in the federal election earlier this year was largely because of a plan to abolish excess franking credits that large swathes of the mature-age electorate railed against.

Kelty’s comments ran along the lines of voters looking for consistency in the system that largely houses their life savings. He said the only real change should be the existing scheduled increases to the superannuation guarantee rate from 9.5 per cent to 12 per cent between 2021 and 2025.

“Leave it alone so people can say it’s my money for my generation,” he said. “Not one employer has said they will increase wages if the superannuation guarantee increase is pulled back… not one,” he said, before labelling the debate “nonsensical”.

John Hewson agreed with Kelty. “Bill’s right, any employer will tell you its never a good time to increase super,” he said. “The wage system has to be looked at separately.”

Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning.
Leave a comment