Labor’s super threshold plan is bad policy, and sexist

Labor’s plan to phase out the $450-a-month threshold above which employers are required to pay compulsory superannuation for their staff is an extraordinarily bad idea — a sexist subsidy to unions and fund managers dressed up as concern for lower-paid women.

It will enrich the super sector, however, which warmly backed the plan yesterday.

According to Treasury analysis, unless Labor backs former superannuation minister Kelly O’Dwyer’s reforms — to curb super fees and make insurance an opt-in feature — more than 50c in every dollar of the extra super contributed from removing the $450 threshold will be consumed by fees and insurance premiums.

The Productivity Commission found more than half a million more employees were seeing 9.5 per cent of their meagre earnings locked away because the threshold hadn’t been indexed to inflation since 1993. It should now be more than $1000, or about $250 a week.

Under Labor, thousands more will be in the same sorry situation. That is, more earnings of lower-­income workers (mainly women) will flow into the coffers of union-backed funds where they will likely grow into paltry sums that could be spent more effectively during people’s working lives when they probably need the money.

“If a pensioner owns their home and has no other income, they are classified as in income poverty,” said Roger Wilkins, an expert on income and wealth inequality at Melbourne University.

Labor’s claim yesterday that 34 per cent of single women in their 60s were “living in poverty” is not only wrong — that’s true only for such women 65 and older, ­according to the latest HILDA data — it’s highly tendentious.

For a start, 26 per cent of men fit the same definition. Don’t we care about them?

“The majority of single elderly women are widows. If they don’t have enough superannuation, their husband’s superannuation is as much to blame,” said Wilkins.

By the way, the poor and vulnerable, who should be the government’s primary concern, are quite capable of being either sex.

As long as men work more than women, they will end up with higher superannuation balances. That’s how Labor constituted the system in the early 1990s; it’s about earnings, not sex.

Eva Cox, feminist and left-wing activist, criticised Labor’s policy yesterday as a tokenistic gesture.

“Superannuation is still not working effectively for women,” Labor said in its statement.

It’s not working for anyone except high-income earners who can at least salvage a tax advantage. For the bulk of people, superannuation is a disaster, undermining their living standards to enrich the financial services sector.

“The unions wanted to get control of the funds and they’ve done very nicely out of that,” said Ms Cox.