Sarcasm may be the lowest form of wit, but it helps cut through political farce – as demonstrated when shadow treasurer Chris Bowen slammed the looming bank royal commission in Parliament this week.
At issue was the government’s determination to investigate not-for-profit industry super funds, a group of which own The New Daily.
The ‘scandal’ surrounding industry super, he thundered, was that they “are the best-performing superannuation funds in Australia when it comes to returns for their members”.
“[The government] has to get to the bottom of these outrageous returns that the industry funds dare to produce for their members, some of whom are rumoured to be members of a trade union … ‘There are members of unions who are having a dignified retirement. We must get to the bottom of this at once!’ the Prime Minister has ordered.”
Okay, it’s not great comedy, but it highlights the ludicrous suggestion by Immigration Minister Peter Dutton that “people lose a lot of their super through fees and through donations and all sorts of support for unions”.
Oh yes? People lose a lot more money – around $140 billion over 10 years – through the underperforming for-profit superannuation system, but Mr Dutton doesn’t seem to notice that.
As reported previously, the not-for-profit industry funds have outperformed the predominantly bank-owned ‘retail’ funds by 1.4 percentage points over one year, 1.1 percentage points over five years, 0.7 percentage points over 10 years and 0.8 percentage points over 15 years, according to research firm Chant West.
If those numbers are hard to visualise, the cumulative result of being in an underperforming fund is not.
If your fund was 0.8 per cent behind the pack for 15 years, your super balance would be 13 per cent smaller than those in funds that kept up.
Over a 40-year working life, with the same underperformance, you’d find you had missed out on an additional 38 per cent in your fund at retirement.
To a certain kind of political thinker, there’s nothing wrong with that – if a wage earner wants to exercise ‘choice’, but it turns out to be a bad choice, that’s just the market functioning, is it not?
Well no, for one fundamental reason. When a retiree finishes their working life with too small a pot of super to live on – and 80 per cent of Australians do at present – the taxpayer is on the hook to top up their retirement income through the pension system.
As the Abbott government’s Commission of Audit showed, that is becoming increasingly difficult to cover through the tax system – its report estimated that full pensions would fall from 60 per cent of retirees in 2007 to 30 per cent in 2050.
The faster that can happen, the better off taxpayers will be.
But the converse is also true. If the ‘scandal’ of royal commission investigations helps push retirement savers out of the not-for-profit sector and into the perennially underperforming retail funds, taxpayers will be worse off.
At the same time, bank shareholders will be better off as the size of the banks’ funds under management grow.
So putting aside the hapless super saver for a minute, the government’s one-eyed determination to investigate a group of funds that are close to world’s best practice will have a three-way negative effect.
It will slow the growth of Australia’s pool of super savings, cost taxpayers more in pensions, and transfer both private savings and public tax revenue into the pockets of bank shareholders.
As I say, to a certain type of political thinker, that’s a good outcome.
Little wonder that Mr Bowen is relying on sarcasm to get his message across – the Coalition’s war on ‘dignified retirement’ deserves nothing less.