Interview: Trading Places
Safety: Snow Job
Politics: In the Vanguard
Unions: Gentle Giant Goes For Gold
Bad Boss: 'Porker' Chases Blue Ribbon
International: Cruising For A Bruising
History: Under the Influence
Economics: Working Capital
Review: Fahrenheit 9/11
Poetry: Bad Intelligence Rap
Satire: Osama Bin Manchu
The Locker Room
Tom Goes Asexual
Road Rage At Work
Democracy In Action
Occupational superannuation is hailed as one of the great achievements of the Accord. Paul Keating gave an interview to the editors of a special issue of the Journal of Australian Political Economy in April and in this he describes the fierce opposition from the life insurance industry. Sections of the union movement were also dubious, especially as the re-writing of the first Accord was premised on a trade off of wage increases for superannuation contributions. Keating notes that even in 1987 "the pygmies" of the life insurance industry did not anticipate the huge benefits for their coffers of compulsory super. The unions also came to see the potential for a national investment fund from the contributions to superannuation schemes and that became a central part of the 1987 document Australia Reconstructed produced by the ACTU and the Dept of Trade.
Keating claims that the decision to implement "universal" superannuation was a political decision driven from the highest levels, in the type of leadership he sees as lacking now.
The major criticisms of what was a terrific achievement are the issues of equality and inclusivity. Self-provision for retirement is the aim, to take the pressure of government pension coffers. The basis of the self-provision is the assumption that workers have an unbroken working life. This is where gender differences in working life impact.
Alison Preston and Therese Jefferson provide an excellent analysis of the contrasting patterns of working life in a discussion paper (Negotiating the Life Course Discussion Paper DP-010, November 2002) on baby boomers and gender differences in the labour market. This paper is cited by Martin O'Brien and John Burgess in their contributions to JAPE and Olsberg covers the same sorts of issues.
Olsberg points out clearly that women are "still 'MS...ing Out' when it comes to adequacy and equity" in superannuation. By 1991 71.8% of women had superannuation as a result of its introduction via the award system. By 2001 his had increased even more with 75% of part-time female employees covered and 93.5% of women in full-time work covered by superannuation. However Treasury modelling estimates funded super entitlements for men of $42,000.00 in 1995, while for women the figure was $17,000.00, with women holding 23% of total assets. By 2019-20 this is estimated to rise to 33%. Thus women will hold $600 billion and men $1200 billion in aggregate entitlements.
Why the disadvantage? As Oslberg says, "the benefits are dependent upon an individual employees paid employment profile and wage level". Women's working patterns make it difficult to accumulate retirement funds, as child bearing, child rearing and other family responsibilities punctuate the work. The paper by Jefferson and Preston presents a great graph that vividly highlights this. Olsberg points out that women comprise 71.3% of the part time workforce.
Increasing numbers of women, as Olsberg notes, are returning to the workforce later in life but have no chance of accumulating savings for a secure independent retirement. Divorce rates and the longer life expectancy make an impact also. Women from non-English speaking backgrounds and Aboriginal women who suffer from under employment and unemployment are particularly affected.
O'Brien and Burgess make similar points. As the say, the introduction of compulsory superannuation was envisaged as a win-win situation. or the reasons outlined by Olsberg this clearly a not the case, and Burgess and O'Brien look at how the changing structure of the workforce and the nature of work and employment means that the compulsory scheme is not adequate for the kinds of "flexibility" employers demand these days.
With the rapid increase in contract and casual employment, and the spread of labour hire, more and more employees are in discontinuous employment arrangements and this makes it difficult to ensure continuous accumulation of superannuation contributions. Permanent part-time employment has a similar impact, according to Burgess and O'Brien.
Older male workers are also in a problematic situation. There has been a decline in labour force participation amongst this group due to the popularity of early retirement. Some see this as a sign of financial security and a reaction to incentives to retire. However O'Brien and Burgess argue that it is equally the case that they are discouraged workers, and their retirement is actually hidden unemployment. This is a much more dismal scenario for these people. Life expectancy is increasing, but discrimination against the employment of older workers, increased part-time and casual work means that this retirement will be a struggle financially.
Burgess and O'Brien conclude with a case for maintaining an adequate state funded retirement income. "Not everyone can secure a well paid job with extensive employer super contributions and sustain it over their life course. Increasingly such a scenario is the exception, not the rule. Even those on average weekly earnings cannot expect a comfortable retirement income." They do say that gradually mitigating factors will improve superannuation as a source of retirement wealth - longer operation of schemes and the pooling of family contributions - but inequalities and differences will remain. At the moment the state funded pension "is relatively parsimonious by OECD standards". Policies at a national level that aim for "full employment, anti age discrimination and the provision of publicly funded pensions should be at the core of an effective ageing policy."
The total lack of interest at the national level in national, socially responsible investment goals mean that there is no effective ageing policy. Boris Frankel has written regularly on this issue. His contribution to JAPE 53 again points out that "Oils Ain't Oils and Super Ain't Super". There is a lack of interest in super that makes it difficult to develop a strong policy debate or the formation of appropriate political economic strategy. As he says, there has been little political struggle over control of the huge superannuation funds. The Swedish example when the labour movement attempted to use funds to gain control of businesses was defeated in 1990. Workers Online has previously looked at this and other problems with superannuation (see A Super Deal?.
Frankel has outlined measures to expand superannuation including government contributions that occur automatically when combined household and individual incomes fall below a certain level. He also suggests a compulsory contribution by super funds to a national investment fund.
Tony Ramsay pursues this idea in his case for linking superannuation to an alternative economic strategy. This builds on the ideas of Australia Reconstructed. The socialisation of investment via superannuation funds is required according to Ramsay. The rules of the funds management make it impossible for the socially responsible investment ideas to be pursued to a large extent. Ethical funds do exist successfully and James Gifford discusses the reporting and rating of social, environmental and ethical (SEE) performance and suggests ways of addressing the problems with the reporting requirements.
The spirit of debate and development of ideas is apparent in this JAPE and the critique by Coates of Ramsay's position helps us all and, in a society where an openness to new ideas that aim at the public good would welcome these discussions about where the money comes from, where it is going and what good it is doing. Is there a possibility for such a debate to impact on national policy making? Greg Combet seems to see a consensus approach between employers and unions as a desirable way forward. His contribution via an interview seems to me lacking in a broader social and economic viewpoint, and is symptomatic of the withdrawal of unions from broader socio-economic debates in Australia. He does mention some of the ways the ACTU has become involved in investments, but is not concerned to broaden the agenda He accepts the public-private partnership schemes as reasonable investment vehicles, rather than seeing them as a way of privatising profit and leaving the risk with government and the public. Why not have a look at the Quebec model of Solidarity Funds, for example, which have the guiding principle of "investing in suitable companies and providing them with services to create, maintain and safeguard jobs, to support training so as to allow workers to increase their influence on the economic development of Quebec, to stimulate the Quebec economy and to foster awareness and encourage workers to save for their retirement and contribute to the development of the economy". The size of superannuation funds, the impact of them on every Australians wage and income make it absolutely necessary for the unions to take up the issues raised in this issue of JAPE. As a way of injecting the "ordinary Australian" into the centre of policy, debate and discussion about superannuation as a way of ensuring that we can be "relaxed and comfortable" in an equitable society would seem to be one way unions can reconnect to workers who have deserted them. Too narrow a focus on organising at the expense of broader social, environmental and political economic issues condemns unions to a marginal role.
Get your copy of the Journal of Australian Political Economy (JAPE) no 53 from
JAPE, PO Box 76, Wentworth Building
University of Sydney 2006
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