ACTU fires warnings over state of superannuation
The Australian Council of Trade Unions (ACTU) have put the Morrison government and its economic experts on notice over the current state of the nation’s superannuation scheme, with a basic message: leave the system alone.
Stemming from the government’s announcement of the early withdrawal option for superannuation that was brought on by the COVID-19 global pandemic, and arguably made somewhat viable by the nation’s recession which followed, over 2.9 million Australians have taken out an aggregate total of the government’s initial $28 billion estimation on the scheme, thereby causing them to revise its expectations to $42 billion and extending the scheme until the end of the year.
While ACTU officials harbor particular warnings over the impact of a scheme which has gone awry, even government ministers – led by none other than treasurer Josh Frydenberg – are perplexed by the revising of the scheme’s initial plans.
“We know that almost 60 per cent of those accessing their super early have used it or plan to use it to meet essential day-to-day expenses, including paying down debts, with another 36 per cent adding the money to their savings,” Frydenberg said on Thursday, in clarifying the revisions.
“Opponents [of the scheme] are basically saying to 2.6 million Australians that ‘we don’t trust you to make your own financial decisions with your own money’,” Frydenberg added.
But according to the ACTU, that trust is occurring the other way around.
If Frydenberg was referring to the nation’s union movement as opposing continued use of the superannuation early release scheme, the ACTU possesses good reasons to oppose it – or even illustrating workers’ lack of trust in the LNP government with their own money.
The warnings issued by the ACTU have come in the form of many salvos fired in the wake to the extension of the scheme. Not only is the union movement allied with the superannuation industry dead set against the concept of any form or extension of early release of funds, the ACTU has also voiced its opposition to a reported cutting of the superannuation guarantee from its current proposal of 12 per cent.
“This Government can’t be trusted with workers’ retirement savings, tens of billions have been ripped out through its disastrous early access scheme. The size and scale of the early release of superannuation shows that now more than ever, all workers need 12 cents on every dollar earned to ensure a dignified retirement,” said Scott Connolly, the ACTU’s assistant secretary.
“The early access scheme will push huge numbers of workers into poverty when they retire. This will be the legacy of the Morrison Government.
“The Government should immediately rule out cutting the legislated increase of the Superannuation Guarantee to 12 per cent and focus on improving the superannuation balances and retirement incomes of women and Indigenous workers,” added Connolly.
Another red flag raised by the ACTU concerns the consequences of what has already happened as a result of the superannuation early release scheme, and they have revealed some very telling uncomfortable truths in the way of statistics to illustrate this.
- The basic fact: over 2.9 million workers have partaken in the scheme, the vast majority of whom have taken out the maximum allowable of $10,000.00 in either of the two financial year windows.
- Over 500,000 applicants, with some cross-section to the above, have emptied out their superannuation accounts in order to pay their bills.
- As far as leading demographics go, women have been taking out a greater proportion of their superannuation balance than men have been doing 21 per cent to 17 per cent for men, and approximately one in three applicants to the Australian Tax Office are aged 30 or younger.
- The average payment given has been $7,719 since the early release scheme began.
- For the 2019-20 financial year window, the average amount taken out has been $7,407.
- For the current 2020-21 financial year window, the average amount taken out has been $8,619.
- And something about “sloppy seconds”: Of the 2.9 million overall applications received by the Australian Tax Office (ATO), one million of them are repeat applications from one “financial year” window to the next. (On trend, one in three are coming back for more money.)
And all of this leads to an extended level of inequality to one particular group. As the ACTU keeps pointing out that an average of 13 applicants exist nationally for every available job, the impact on the nation’s young people becomes magnified.
According to Michele O’Neil, the ACTU’s president, factoring in a terrible jobs market with low wages growth which has been in poor shape for years, and combining those with statistics pointing towards younger unemployed workers raiding their superannuation accounts, inequality towards that demographic becomes worse and worse.
“We know what’s needed is for the Government to lead and urgently intervene in the jobs market, otherwise young people will suffer the effects of this recession their entire working lives,” said O’Neil.
O’Neil also points towards a jobs-based economic recovery blueprint recently unveiled by the ACTU, and insists that the Morrison government would be wise to consider it, especially to inspire the employment hopes for the nation’s younger workers.
“Australian unions have put forward a jobs-led economic recovery plan to help steer the country through the next stages of this crisis and provide a lasting legacy in the society and economy.
“Young people need support from Government. They need the Government to step up and invest in their future,” she said.
Also by William Olson:
Aged care workers to get paid pandemic leave – will others follow?
Progressives fear welfare cuts may deepen poverty lines
ACTU proactively reveals jobs plan, even if government won’t
ACTU: JobTrainer scheme latest in poor government plans to cut unemployment
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9 comments
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Baby Jewels -
Phil Pryor -
New England Cocky -
Jack sprat -
Matters Not -
Terence Mills
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Matters Not -
Andrew Smith -
wam
Return to home pageMorrison’s comments yesterday that the money belongs to the members belies the fact that it’s money for RETIREMENT. Enabling the early use of people’s retirement money, displays the government’s obvious lack of care about workers in 2020. And who is surprised?
If…we had good government with no selfish and ignorant careerists, if…we had a completely above board trading, stock exchange and investment system.., if we had a healthy balanced economy, not just foreign corporation mining dominated,…if we had trust in our fellow citizens,…if the world at large was more harmonious, balanced, collectivist, sensible, co-operative… if we had a national scheme for superannuation, “owned” and controlled by treasury, with inputs from the reseve bank, and a national sovereign fund for investing in Australia and its people,…if we had a system of guarantees about wages and conditions, with, say ten percent withheld for superannuation,…if we could believe in this or something similar as socially good and necessary.., if only.
Bring on the Jobs Led recovery that can be created by investing heavily in alternative energy projects after establishing a policy that encourages investment by superannuation funds.
Naturally the COAL lobby will not be happy and may withdraw their financial support for the Liarbral Nazional$ misgovernment …. wouldn’t it be nice?????
Is Jobsled related to Jobson Groath??
Industry super schemes have always been despised by the Tories .Their non profit status and union affiliation have been a complete anathema to their private enterprise and profit driven ideology . What is worst industry super schemes are out performing their private scheme competitors. The idea that these schemes have now accumulated vast capital and become big players in where investment is directed troubles them to no ends . So with the event of the covid crisis it was game on to raid these schemes of their capital by having them sell their shares at the bottom of the market to pay out all those people withdrawing their super early . The big end of town were then able to buy up these shares at rock bottom prices in effect causing a wealth transfer from the poor to the rich .
What Jack sprat wrote (in general). Amusing that this government points out that the dollars involved actually belong to the contributors but fails to mention that the very favorable tax treatment given to those savings (over many years in many instances) came with the condition that such treatment came with a quid pro quo. Namely the funds were there for retirement – thus saving pension payments from future consolidated revenues.
Clearly demonstrates that politicians are in the business of the here and now (the today mentality) with thinking of the future of no immediate concern. No vision. No care. No consideration. And no personal consequences.
The criteria for early draw down on superannuation reads :
>you are unemployedyou are eligible to receive one of the following
JobSeeker Payment
Youth Allowance for job seekers (unless you are undertaking full-time study or are a new apprentice).
Parenting Payment (which includes the single and partnered payments)
Special Benefit
Farm Household Allowance.
>on or after 1 January 2020 either
you were made redundant
your working hours were reduced by 20% or more (including to zero)
you were a sole trader and your business was suspended or there was a reduction in turnover of 20% or more (partners in a partnership are not eligible unless the partner satisfies any other of the eligibility).
So if 2.9million people have participated in the early release of super, are they all unemployed as this seems to be the main category for eligibility ?
Terence Mills re the 2.9 million participating in the early release. As I understand it, the decision maker (broadly defined) was the Tax Department. The very agency which suffered staff cuts over many years and which cannot effectively police the tax affairs of multi-national corporations etc which rort in the extreme. Further (again as I understand it), the Tax Department didn’t even try to investigate the legitimacy of the recent superannuation claims made. Instead they simply waved all claims through.
And let’s face it, there’s little chance they will chase down those who lied mainly because it’s not in their interest to so do.
Would be interesting to know the break down of withdrawals, i.e. the status of the individual.
Meanwhile, much of the (economic/finance) debate round super is short term, ignores the long term demographic trends and many assumptions e.g. any stagnation, reduction, or heaven forbid removal, of the SCG would then automatically be paid by the employer showing their generosity in one’s net or gross income….. at their discretion….?
However, you could be compelled to ditch super, if you are non PR or citizen, i.e. especially on a ‘non substantive’ temporary visa, when intending to depart permanently, logical to cash in super if not contributing in future (but also retaining if more significant, balance for future growth and income cf elsewhere e.g. home country).
In fact Australia has been deemed to have one of the most sustainable retirement income and pension systems in the world, alongside Canada, Denmark, Germany and Switzerland. However, by the negative narratives pushed out about super reflects a fear of both the investments and influence (of non corporate entities e.g. occupational or sector based clout; playing oligarchs etc. at their own game).
Casual observation may be inacurate..
When we got self government, we were given the option to cash in commonwealth super contributions and join the new NT which was touted as an attractive lump sum scheme with possible lumps looming large.
Those who took it built a shed or paid down debt or had a holiday and now struggle in retirement.
Fortunately my darling was suspicious of comsuper public servants and politicians pushing a scheme for her but not accessing it themselves and stayed leaving us retired on nearly the median wage(funny that her male colleagues got a little special treatment and receive twice her pension but the CEO was a woman qed)