Super reform: the ultimate test

In a crowded and competitive field, surely it is Mark Latham’s 2013 essay Not Dead Yet; Labor’s Post Left Future that triumphs as the high point of destructive nostalgia for the Hawke-Keating era. With a tendency to mythologise, cherry-pick and whitewash much of that era, Latham’s exhortation for current and aspiring ALP politicians is not complicated: “There is now just one question for Labor parliamentarians to ask: what would Keating do?”

Lamenting the lost politics of the Hawke-Keating era is entirely understandable. Progressives are desperate for strong moral and political leadership. Where are the articulate advocates of a positive program of change? Politicians who relish participation in debate and eloquently prosecute contested terrain. Why has passionate, determined oratory in the face of a sceptical public become so passé?

Paul Keating was the last great Labor leader this country has had – combining a mastery of political economy with a flair for language. His disdain for focus groups was balanced by his passion for a fine Zegna suit.

KEATING NOSTALGIA

For Mark Latham, the Keating nostalgia runs much deeper. Latham’s oeuvre repeatedly presents us with lovingly preserved policies from 1987, like glittering Christmas gifts – much like a cat proudly presents dead birds to its owner. Latham’s Keating fetish brings to mind some intriguing possibilities. What if Keating was prime minister in 2008 as the global financial crisis cut a swathe through the world economy. How would Keating have reacted? A dollop of light-touch regulation for ladder-climbing aspirationals? Deregulate the banking and financial services industry? Hardly. Ratchet up enterprise bargaining? Definitely not.

No, the overwhelming likelihood is that Keating would have accepted Treasury secretary Ken Henry’s exhortation to “go hard, go early, go families” and unleashed a Keynesian stimulus package all of his own. And as that taxpayer-funded cash injection inoculated the economy from recession and shored up the banks, Keating would have reminded us of his outstanding fiscal supremacy. He would have crowed about the economy’s “beautiful set of numbers”. He would most likely have sidled up to the chief executives of the big banks, when the occasion demanded it, to remind them they owed him. Big time.

Like all good nostalgia, there is invariably a tendency to gloss over the bad stuff or pretend it didn’t happen. Does anyone pine for 17 per cent interest rates and the worst recession in 60 years? These, too, were features of the Hawke-Keating years.

The point is this: the Hawke-Keating era is mourned mainly because it reminds us what’s gone missing for nigh on two decades; charismatic progressive leadership, electoral success and a clear sense of purpose.

Otherwise, the world has moved on and 1980s policy orthodoxies are mostly irrelevant today.

Bill Shorten has declared 2015 to be “the year of Labor ideas”. He has the opportunity to go where no Labor leader has dared go before. A detached, clinical and critical analysis of what worked and what didn’t work during both the Rudd-Gillard and Hawke-Keating years is well overdue. A mature and confident ALP should be able to look back at its previous incarnations with clinical detachment, acknowledge successes and learn from its mistakes.

IS SUPER WORKING?

In the Labor canon, compulsory superannuation is virtually untouchable. When Paul Keating and Bill Kelty famously collaborated to produce this innovation in 1992, it was rightly hailed as a breakthrough for ensuring Australians saved enough to retire on and to reduce reliance on the pension. Some 23 years later, it is timely to question whether the system working? Has it met its objectives?

The system has certainly delivered a staggering $2 trillion into superannuation. At the same time, it is abundantly clear that the architects of the system did not foresee its many shortcomings.

As documented by the recently released Murray report, our retirement savings are being gouged by some of the highest “management” fees in the world. The fees for managing super are exorbitant and can’t be justified on any calculus. Even in the not-for-profit industry superannuation fund sector, which clearly outperforms its rivals, there are problems. Which other not-for-profit pays its senior staff up to $1 million a year?

There is a real question whether superannuation is reducing our reliance on the age pension.

Superannuation has become a boon for redistributing wealth – from the low-paid to the wealthy. It is increasingly fashionable for wealthier Australians to minimise tax by parking as much of their money in super funds as is permitted. It is also commonplace for many of those same Australians to structure their affairs on retirement to ensure that they also receive the pension. The system is being rorted.

The tax concessions on super, largely enjoyed by the top 20 per cent of income-earners, are ripping an increasingly large and unsustainable hole in the country’s tax base – an estimated $45 billion in tax revenue will be lost to the budget by 2017. Moderating those tax concessions would remove any rationale for a GP tax, welfare or pension cuts.

Shorten will need courage to stare down the inevitable pressure (and at least two blistering phone calls) to leave the superannuation system alone. Reforming superannuation is the ultimate test of whether the ALP can unshackle itself from its past.

Image Credit: The Australian Financial Review

This article originally appeared in the Australian Financial Review