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:
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