Cabinet papers 1990-91: hidden battle on new super laws

It was the big-bang policy that created today’s $2 trillion national retirement savings pool.

Then ACTU secretary Martin Ferguson.

It was the big-bang policy that created today’s $2 trillion national retirement savings pool — landmark compulsory superannuation laws for all employers.

But cabinet papers reveal the tense debate over the plan, and how the Labor government hid behind union power to conquer opposition from employers and the powerful public service on the path to the 1992 budget.

Treasurer John Kerin’s submission to cabinet in August 1991 proposed a levy on employers who failed to pay the minimum 3 per cent superannuation agreed under the Accord with the union, and argued for a rise in the guarantee to 10 per cent of weekly earnings by the year 2000. He conceded the measures would be felt “especially” by small business, which lagged the rest of the community on superannuation coverage and compliance, and acknowledged concerns from the Department of Finance, which was adamant employees should contribute from their salary, too — “for example, 1 per cent for 5 per cent from the employer and 2 for 10 per cent”.

The Department of Prime Minister and Cabinet was “strongly opposed … to any commitment to a longer-term target level”, claiming a commitment would weaken the government’s bargaining position with the ACTU in future wages negotiations.

The ACTU, reeling from the Australian Industrial Relations Commission’s rejection of its proposed increase to award super to 6 per cent, was pushing for a 5 per cent standard, or 3 per cent for businesses under $200,000. Crucially, the unions demanded the government announce the measures in the forthcoming budget, and failure to make the public pledge “could … result in the ACTU walking away from the Accord”, Mr Kerin’s submission warned.

Martin Ferguson, then ACTU secretary, last week played down the fierceness of the ACTU’s warnings, telling The Australian there was no real threat.

“We’d had this Accord going since 1983, the first thing was the reintroduction of Medicare, and each year we’d seek to extend it,” Mr Ferguson recalled. “This was Labor in government working with the union movement; I only wish we’d gotten to 15 per cent superannuation.”

Mr Kerin’s submission was a partial success. Cabinet’s revenue committee agreed on August 5 “in principle to a legislative approach to superannuation”. It also resolved that the treasurer and ministers for finance and industrial relations would “negotiate with the ACTU on relevant parameters and the detail of any budget announcement”.

Ultimately, it was a new treasurer, John Dawkins, who would make history in the 1992 budget, unveiling the Superannuation Guarantee Charge Bill.