Treasurer Josh Frydenberg used an appearance at the National Press Club on Friday to suggest that that he might actually act to halt the SG increase, saying the government “must rightfully and carefully consider the implications” before going ahead. That’s despite recent comments from minister for superannuation Jane Hume that the government was unlikely to break an election promise by making changes to something that had already been legislated.
And that means – absent a captain’s call from ScoMo himself – that it’s impossible to tell whether they’ll actually go through with it.
At this point, the verdict is in on the legislated increase. Few disagree that it will hurt wages while leaving workers only slightly better off in retirement. In Mr Frydenberg’s own words, “it’s not rocket science”. There is an extremely solid economic case for a freeze or cut should Mr Frydenberg pursue those options.
But of course, this isn’t economics – it’s politics. And Mr Frydenberg must weigh the viability of taking a policy that will likely be branded anti-worker to an election that is now looking shakier than it did just a few weeks ago. So the government flips. And the government flops. And the government hopes that eventually there will be a poll that confirms that people really don’t mind what happens with their superannuation so long as more money winds up in their pocket.
Fat chance. Few people outside of politics and the financial services understand or care what the Retirement Income Review found and are unlikely to wade through its 600 pages to find out. People in general are disconnected from their superannuation. Any move to cut or freeze the increase will be seen as an attack on personal finances and portrayed as such by an increasingly desperate Labor Party.
It’s clear that Mr Frydenberg needs a circuit-breaker. A controversial plan floated several months ago that would see workers choose to either have more take-home pay or more superannuation could provide just that. The key word here is, of course, “choose”. Nobody wants to be seen as telling people what to do with their own money. But by pushing that decision on to workers, Mr Frydenberg will get to have his cake and eat it too.
Of course, the superannuation sector will be baying for blood – they usually do. But the political logic of putting choice back in the hands of workers is unassailable. And it might be the only way out of the jam Mr Frydenberg is in. The hemming and hawing over superannuation has gone on for too long. Even Mike Callaghan, one of the architects of the RIR, says the government needs to act. It’s decision time.
