Super is the latest pulpit for the lecturing left

Granting emergency access to super opens up another philosophical rift between Labor's middle-class and blue-collar support.

Tanveer Ahmed 14 July 2020 Australian Financial Review

The term identity crisis, coined by German psychoanalyst Erik Erikson, has been applied to social democratic parties around the world.

The conflict has been related to culture, one where wealthy professionals look down on the views of lower-paid workers and voters, the original electoral bedrock of parties of the left. This is especially true on issues such as race or the environment.

This demographic of wealthy, left-leaning professionals has been termed the Brahmin Left by famed economist Thomas Piketty, denoting those with post-material concerns who express their status through virtuous beliefs. They now form the base for progressive politics.

Separate studies by academics Nick Evershed and Ben Phillips both found the seats most likely to swing towards Labor consisted primarily of educated professionals earning six figure incomes, usually in the inner city.

Meanwhile, working class seats in the outer suburbs swung heavily towards the Coalition.

But in the ALP’s case, a similar conflict has also arisen in the debate over compulsory superannuation.

Much like the debates on culture, there has been an element of class sneering at those who have accessed their superannuation for emergency relief.

A study by economics consultant AlphaBeta Advisory found many of those who accessed their superannuation had not only lost money, but also that a great deal of the funds were spent on frivolity – alcohol and gambling.

This was widely reported in the media, evidence of the folly of the government’s policy to allow early access to superannuation. Former Rudd adviser Andrew Charlton was appalled, describing any food consumed with the spare money as “the most expensive pizza they will ever buy”.

Hectoring the peasants

It was wealthy professionals hectoring the peasants about their ill-informed choices with money.

How dare people spend money on their immediate needs or pleasures at a time of difficulty, and not take time to rejoice at the wonders of compound interest?

A 2019 analysis by the Centre for Independent Studies’ Simon Cowan found the lowest paid workers were the most disadvantaged by compulsory superannuation, their balances whittled away by fees and unnecessary insurance policies. Instead the tax advantages of superannuation benefit the already wealthy.

Once again the ALP, instead of being the party of the workers, is increasingly attractive to the already prosperous.

Perhaps the alleged international envy that superannuation advocates repeatedly make reference to is that of overseas fund managers who can’t access the same fee pool.

In the past decade, a quarter of a trillion dollars has been taken out in fees by Industry Super Funds. Our system has among the highest operational costs of any pension system in the OECD.

Political scientist Elizabeth Humphrys writes in her book How Labour Built Neoliberalism that compulsory super has tied ordinary households to the interests of the financial class.

“The role of superannuation in neoliberal financialisation in Australia delivered one of the most highly exposed pension investment structures to the equity market in the world,” Humphrys writes.

The policy itself, of shifting the responsibility of saving for retirement away from the government to the individual, should sit well with conservatives although the coercive element does not.

Led by Senator Andrew Bragg who has expressed his misgivings in a book titled Bad Egg, a set of Liberal Party backbenchers have lobbied for any increase to the levy to be stalled or even scrapped. This opposition has received further support from the Grattan Institute, which argues that increasing the levy will further drag on already slow wage growth at a time of economic contraction.

Sounding like a fund manager

Former ALP leaders such as Kevin Rudd and the policy’s architect, Paul Keating, have expressed strong opposition to any pause. The head of the umbrella group for Industry Super, former union boss Greg Combet, spoke recently on ABC Radio. Sounding like a fund manager, he said that the increase was necessary to ensure appropriate investment funds for infrastructure and property projects:

“The capacity to invest for the long-term will be seriously affected should there be further policy changes impacting liquidity requirements or contributions that come into the superannuation system,” Combet said.

Given union membership sits below 15 per cent, the fulcrum of power within the trade union movement has shifted to industry super.

The dream of a more socialised investment pool diluting the age-old tension between capital and labour is admirable. Nobody questions that extended lifespans mean there is considerable urgency in helping people become more self-sufficient in their final years.

But instead the policy of compulsory superannuation is exposing another arena of philosophical strain, one where the ALP are conflicted in diagnosing the interests and aspirations of low-paid workers.

Tanveer Ahmed is a practising psychiatrist.

Original article here