With low wage growth expected to continue for the foreseeable future and employers saying they could not afford wage rises during the pandemic, it simply defied logic to think employers would automatically boost salaries if the SG increase was dumped.
Nevertheless, the government was under immense pressure from a ginger group of backbenchers, some ministers and business lobby groups to scuttle the SG increase. The campaign within the government, and supported from outside, was intense.
The decision by the government to stick to the SG increase, at least to 10 per cent, means every worker will see a lift in their retirement savings. Although already legislated, it was under threat, so this is a significant victory.
But the victory was only made possible because of Paul Keating. The truth is that nobody – including Labor leader Anthony Albanese and ACTU secretary Sally McManus – had the cut through on this issue.
Every time Keating gave a speech or was interviewed by journalists, people listened. Any intervention in the debate when viral on social media. Nobody can marshal the facts and figures, and use such a colourful turn of phrase, to articulate why the SG should continue to increase.
It is a sign, also, that the greatest advocate for working people remains a man who led the Labor Party 25 years ago. The principal architect of compulsory superannuation remains its principal advocate and its guardian.
The reality is that the government feared a campaign spearheaded by Keating, aided by the Labor Party and trade unions, and the superannuation industry, if they moved to cancel the SG increase to 10 per cent and beyond.
The Morrison government has enough challenges without adding this. It would be a broken election promise. It would require the government winning House and Senate approval to change what has already been legislated. And it would have given Labor and the unions a galvanising issue to campaign on ahead of the next election.
Scott Morrison and Josh Frydenberg are political pragmatists rather than policy ideologues. They knew they could not win this argument. There may be a theoretical trade-off between superannuation and wages but the real-world experience is very different. This was not understood by Mike Callaghan’s retirement income review.
To tell workers that an SG increase could be swapped for a take-home pay increase is absurd. This argument treats voters like they are fools. Was everybody’s income going to automatically increase by 0.5 per cent if the SG increase did not proceed on 1 July? Of course not.
There is, however, a need for further reform to the superannuation system. I have noted in previous columns the high fees and overly generous tax concessions, the wasteful spending, and the union-heavy industry fund boards and cozy relationships with unions.
For now, though, maintaining the SG increase is a great outcome for working people who will see their retirement funds increase. It is, effectively, a pay rise they would never have got otherwise. And it would not have been possible without Keating’s advocacy.
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