Motley Fool Australia

Tell the government #HandsOffSuper

A piggy bank is shaded by a sun umbrella on a beach, indicating a call to protect superannuation savings
Image source: Getty images

It’s not popular – or a great strategy to get followers on social media – to be non-partisan.

Still, that’s what we choose to be at The Motley Fool. We’ll give credit where it’s due, but also criticism where it’s warranted.

Frank and fearless.

We did it in 2013 when we campaigned hard against the then-Liberal/National government’s plan to water down investor protections (the so-called Future of Financial Advice rollbacks).

Oh, and the sky didn’t fall in, as was predicted by those who desperately wanted those investor protections removed. They couldn’t have had an ulterior motive, could they?

We did it again, three years ago this month, when we called out Labor’s greatly flawed policy on franking credits, suggesting it was a poorly thought through, unfair and distorting policy. I’m not sure if it was poorly designed, cynical, or both… but it was poor policy, and we said so.

And we’re doing it again, today.

This time, we’re putting the blowtorch back on the Liberal/National Party government, and their equally flawed proposition of encouraging people to torch their retirement to buy a house.

The proposal, being put forward most forcefully by Liberal Party MP, Tim Wilson, is a slogan-heavy “Home First, Super Second”.

It seems to be a fig leaf to stop the planned increase in Super from 9.5% to 12% of wages/salary over the next few years. And a stalking horse to weaken the greatest part of Super – its compulsory nature and its inaccessibility until retirement.

The slogan is, in the way of things these days, something that sounds plausible, even desirable – which, I assume, is exactly what Mr Wilson wants.

Of course, in my opinion, it doesn’t even get to first base as a policy.

Housing, and for many, owning rather than renting, is a deeply human desire, and a worthy goal. On that, Tim Wilson and I agree.

A comfortable retirement, without worrying about food, heating, housing or transport, is – and I presume Tim would agree with me – also a deeply worthy goal.

So, I guess we have to choose, right????

I hope you’re scratching your head, right now.

I mean, should we really have to choose?

I wouldn’t have thought so.

Actually, let me be clearer: In a country like Australia, of course not.

The fiction of a ‘choice’ is political spin. And, as spin goes, it’s good. Tim Wilson has a knack for it.

See, here’s what happens. By seizing the initiative, you get to (try to) frame the question:

“Well, what is it? Do you want Super or Housing?”

I mean, you can’t shelter from the rain under Super, right? It can’t keep the wind out.

And just like that, you’ve fallen for the political spin.

Because here’s my question for Tim Wilson:

“Your question seems to presume that without using Super, housing is out of reach for some/many Australians. And your question seems to assert that such an outcome is a bad thing. So, Tim… given those presumptions, what else is your government doing to help people into housing?”

Because if Tim Wilson and the government are so deeply concerned about access to housing, I’m sure there must be a multi-agency, multi-pronged approach to solving the problem, right?

Task forces. Programs. Industry working groups. Investment in affordable housing. 

There must be some modelling, somewhere, that says Super is the best (only?) way to fix housing affordability.

There must be some modelling, somewhere, that says the significant cost to those people’s retirement is the only way we can make housing accessible.

There must be some modelling, somewhere, that says the previously bipartisan support for utilising Super to fund retirement and reduce the pressure on future budgets was dead wrong.

Right?

I mean, you wouldn’t propose it otherwise, would you?

Would you???

Especially right on the back of having encouraged tens of thousands of us to raid Super for (all too often) jetskis and flat-screen tellies during the COVID recession…

I’m desperately trying not to be cynical.

But I’m seeing a pattern here, and it’s scary.

See, here’s the thing about Super: it’s designed to save us from ourselves. Yes, you read that right.

The Treasurer continues to run the line that opponents “… don’t trust you to make your own financial decisions with your own money…”

So, it’s tough love time: Treasurer, we, as a society, suck at exactly that. And I think you know that.

To my readers; I’m sorry if you’re the exception. I’m sorry if you have an ideological objection.

But. It’s. True.

Compare Australia against any country with a voluntary retirement savings approach.

Or Australia, post-Super, with Australia before the scheme was introduced.

It’s chalk and cheese.

Behavioural psychologists have known for years that we are terrible at making long term decisions.

It’s just not in our evolutionary DNA.

I mean, God, credit cards wouldn’t exist if we were actually good at this stuff!

Nor, other than for emergencies, would personal loans.

And the whole buy now, pay later sector is Australia going to the shops and yelling “YOLO!” as we rush the counters with the apps open on our phones.

And then there’s lotto, pokies… the list goes on. 

So, we need ‘pre-commitment devices’.

Like, oh, I don’t know… Superannuation.

Makes sense, right? 

I’ve been asked, “But why would the government want to gut Super and have us retire poorer?”.

Frankly, I don’t know, for sure. I know some have an ideological obsession with non-profit Industry Funds, often heavily influenced by trade unions. Others are ideologically libertarian and hate Super’s compulsory nature. And yet others are probably being opportunistic, hoping that raiding Super would unleash a short-term bump in economic activity and property price gains… and know they won’t be around in 20 or 30 years when it’s time to pay the piper.)

Frankly, though, I don’t really care why.

And I have no interest in getting caught up in political games, other than to point out the spin that is diverting attention from the real issues.

And here they are, again:

First, Super is one of the greatest parts of our financial system, providing most Australians with a more comfortable retirement than would be provided by the pension.

Second, Super relieves a lot of pressure on the Federal budget, especially in the coming years as the population continues to age and healthcare costs continue to soar.

Third, Super allows a relatively small investment, now, to compound cost-free to provide a lot more, later.

It’s not perfect, but it’s pretty bloody good.

We should want only the prospect of a fundamentally unavoidable disaster to push us off that path to a well-funded, responsible retirement.

And housing ain’t it.

Not because it’s not important. Far from it.

But because it’s too important to let pollies tell us that we have a false choice: between Super and housing.

We should be holding our politicians to account. We should demand more. And demand better.

I agree with Tim Wilson that access to housing is one of the most important issues for young (and not-so-young) people, today.

But if he’s serious, I want to see why Super is the only (and/or the best) solution available.

Don’t hold your breath.

Spoiler: It’s not. Adding Super-fuel to the house price fire is only going to push prices higher. Housing policy is a topic for another day, but it’s important to address the fallacy that putting more demand into the market will make housing more affordable.

It won’t.

Oh, and up to 500,000 of us completely wiped out our Super last year when the ‘Early Access’ scheme was in place. So that’s half a million of us who can’t use it for housing.

Gee, it looks like a policy designed to wreck Super, doesn’t it?

I don’t want to cast aspersions on Mr Wilson or his supporters. I don’t want to assign motives or make allegations.

(And he and I were on the same side on the franking thing, so I certainly have nothing against him, personally.)

Instead, let me go back to the issues.

And let me be very clear:  It is a mistake of monumental proportions for him or his government to further undermine Superannuation, particularly almost 30 years into the scheme where the full benefits are only now beginning to show.

I’m glad he’s worried about housing affordability. My young blokes will absolutely benefit from any improvement on that score

But there is no ‘death or glory’ choice to make, here. It is not a question of “Houses or Super”, any more than it’s “Houses or Healthcare” or “Houses or Law & Order”. 

There are a dozen different things Tim Wilson and the Federal Government can do to improve access to affordable housing. None of them needs to be a mortgage on our retirements.

Please, join me in asking Mr Wilson to find a better way.

#HandsOffSuper

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Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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