What's so super about super?
By Chow Wei-Cheng Superannuation assets in Australia are estimated to be $230 billion, or about 53% of GDP. They are expected to grow to between $450 billion and $600 billion by the year 2000. Coverage of employees has risen from 42% six years ago to around 90%. There has also been a significant growth in the coverage of employee groups that have had limited access in the past: by August 1994, 61% of part-time employees and 84% of female employees had super cover. In 1983, super covered only 24% of women. The ALP government's drive to increase super dates back to 1983, when it began by offering tax incentives. Following the national wage case in 1986, super was introduced as part of industrial awards. Compulsory super began in 1992 with the Superannuation Guarantee Contribution. Under this scheme, employers had to contribute 3% of wages towards super for employees. Today the contribution is 5-6%.
Fitzgerald Report
The next significant development in the government's super policy was the Fitzgerald Report in June 1993. The report pinpointed the government's lack of savings as the main cause of Australia's low savings pool. Accordingly, it called for a return to federal budget surpluses, achieved with increased taxation and reduced government spending. The report suggested that 18% of wages should be contributed toward superannuation. To achieve this, employees should also be compelled to contribute. Additionally, to maintain the savings pool, the report suggested extending the age of eligibility for super pay-outs to 60 and 65 for women. Recently the government announced its intention to phase in an age increase from 55 to 60. In the 1995 federal budget, the government announced plans to increase Super Guarantee Contributions to 9% of wages by the year 2002. The equivalent of up to 15% of employee earnings will be directed to super savings. This is to be achieved by contributions from employees and matching contributions from the government — paid for by cancellation of tax cuts promised in Keating's One Nation package. Workers had been promised the tax cuts in place of pay increases already earned from productivity trade-offs under the Accord. Now the tax cuts will be paid as super. In short, part of workers' wages are being delayed for years, and then paid by the government instead of by employers. Super is also seen as an opportunity to find a new role for unions in the era of enterprise bargaining. Unions will be the keeper of super funds for those employed under awards or in the public service. This has been completely endorsed by the ACTU bureaucrats, who have been moving towards "service" organisations rather than unions that fight to defend workers' rights.
Trickle down
At the launch of the Superannuation Guarantee, then Treasurer John Dawkins stated "the government's superannuation policies are of fundamental importance to the future well-being of all Australians ... they will boost national savings, reduce our need to borrow overseas, thereby increasing potential economic and employment growth". The government argues that higher domestic savings will increase investment, which will in turn increase economic growth and employment. This is a variant of the "trickle down" theory. Firstly, if companies have more capital available to invest (from a larger savings pool), who is to say it will be invested at all? This depends on whether investments will be profitable, and that depends on factors such as the state of the boom-bust cycle, how bullish companies feel about the future, the state of the global economy etc. Secondly, if invested, what will it be invested in? The funds will be invested in the area of highest return, which could mean speculation, takeovers which actually reduce jobs or in building plants to exploit the cheap labour of workers overseas. Thirdly, even if there is higher investment and more growth and jobs created, who is to say whether working people will benefit? Will people be employed on stable, livable wages, or in unstable subcontracted jobs, under individually negotiated contracts? Another myth relates to the current account deficit, which the government claims will be reduced by higher savings. The deficit essentially means that Australia is importing more goods and services than it exports. Thus Australian capitalists are losing market share to their overseas counterparts who are trading in the Australian market. Again, the government argues that workers and bosses both have an interest in returning the current account to surplus. The logic of the argument is then for workers to help business as much as possible. However, if Australian capitalists make more profits than overseas capitalists, do workers benefit? Or does it just mean BHP makes more profits than Anglo American? Even if BHP does do better, will this mean more jobs?
Asian miracle
A third myth concerns the Asian "growth miracle", which is alleged to be due to a higher level of savings. In fact, the growth is due to many factors. A key one is the exploitation and political repression of workers in these countries. For example Korea, whose history is marked by several dictatorial military regimes, has one of the longest working weeks in the world (reported at 54 hours in 1987). This super-exploitation has fuelled business profits in these countries and financed industrialisation. The high growth rates are a function of the early phases of industrialisation, a period which Australia has already passed. The question is whether the high level of savings in Asia is caused by high economic growth, or whether a higher pool of savings increased economic growth in the first instance. The World Bank conducted econometric tests on savings and growth data for these countries. The results were published in the report
The East Asian Miracle. It found that there was evidence that high growth rates led to higher savings, but not the other way around. Therefore, if the Australian government is intent on increasing savings, it should increase incomes. A common misconception is that, if unions control super funds, they have control over businesses and can use this against the bosses in negotiations about wages and conditions. This is not so, because as trustees to the super fund, their legal responsibility is to keep the savings stable and earn a return; they can't switch investments from a profitable "bad" capitalist to a less profitable "good" capitalist. In any event, the trustee does not make decisions about investments. These are undertaken by professional fund managers such as Banker's Trust, Macquarie Bank and Lend Lease, which have no interest in union affairs.
Who benefits?
It is the big firms and the capitalists who own them that really benefit from super. The wages that go into super are invested in corporate equities, corporate debt, loans, property and overseas assets and so provide more capital for business. Super accounts for about 30% of the Australian stock market's capitalisation. Super is a means by which the government can privatise pensions — that is, reduce retirement and old age welfare and replace it with workers' wages. It reduces workers' overall living standards in two ways: firstly through reduced government welfare, and secondly by deferring wages and tax cuts into the future. In addition, the drive to increase national savings has given further justification to government austerity measures. Turning the government into a net lender rather than borrower requires further privatisations, tax increases and spending cuts. Ultimately, the need to save is a result of uncertainty about the future. A society that removes economic uncertainty needs to be created. A government-guaranteed old age pension, paid for by taxes on business and the rich, would be a good start. To solve the longer term problems of job creation and economic growth, a pool of funds could be made available for investment, from a redistribution of wealth from the rich and big business to a democratic government. Decisions regarding investment and job creation too should be placed under social control by nationalising these big companies under the control of workers and consumers.