{"id":48085,"date":"2021-02-21T15:03:20","date_gmt":"2021-02-21T15:03:20","guid":{"rendered":"https:\/\/jacobinmag.com\/2021\/02\/australia-superannuation-democratize-funds\/"},"modified":"2021-02-21T15:12:12","modified_gmt":"2021-02-21T15:12:12","slug":"workers-should-take-back-control-of-their-pension-funds","status":"publish","type":"post","link":"https:\/\/radiofree.asia\/2021\/02\/21\/workers-should-take-back-control-of-their-pension-funds\/","title":{"rendered":"Workers Should Take Back Control of Their Pension Funds"},"content":{"rendered":"\n \n\n\n\n

Australia\u2019s pension funds control nearly $3 trillion of workers\u2019 capital, but they\u2019re currently dominated by corporate interests. The labor movement should take back control over them from bankers and use the funds to build a better future.<\/h3>\n\n\n
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\n A man looks at an electronic board displaying stock information at the Australian Securities Exchange, operated by ASX Ltd. on March 16, 2020 in Sydney, Australia. (Brendon Thorne \/ Getty)\n <\/figcaption> \n<\/figure>\n\n\n\n\n \n

Australia\u2019s \u201csuperannuation wars<\/a>\u201d are still raging. The current debate is about whether increasing employer superannuation payments will<\/a> or won\u2019t<\/a> affect wage growth. But this misses the most important point.<\/p>\n

Although they are misleadingly referred to as \u201cemployer contributions,\u201d superannuation payments are neither a gift nor a tax on wages. For workers in formal employment, superannuation payments are part of our wage, paid into collective funds, to be managed in our collective interest.<\/p>\n

Scott Morrison\u2019s Liberal government accepts this principle when it finds it convenient. As soon as the pandemic hit, it allowed workers to withdraw<\/a> up to $20,000 from their superannuation accounts. Given that the alternative would have been to fund a social safety net, you can see why the Liberals chose the first option, which shifted the financial burden onto workers.<\/p>\n

But there\u2019s a more worrying side to this. Morrison\u2019s move was also part of a long-term push to wrest away what little control workers and unions exercise over super funds that are worth almost $3 trillion AUD<\/a>.<\/p>\n\n \n\n \n \n \n

The Origin of Australia\u2019s Superannuation System<\/h2>\n \n

Our superannuation system was not a gift. It was introduced only after persistent struggle by workers and their unions.<\/p>\n

From the 1950s onward, the labor movement demanded \u201cportable\u201d retirement savings schemes \u2014 that is, savings that would move with workers between jobs, rather than being tied up with one employer. Previously this had only been available to senior company staff and some public servants. Unions argued that universal occupational savings schemes would help safeguard a more dignified retirement for workers, in addition to the aged pension.<\/p>\n

Over decades, these campaigns put universal superannuation on the national agenda. In 1973, Gough Whitlam\u2019s Labor government established the National Superannuation Committee of Inquiry (also known as the Hancock Inquiry), which called for the expansion of savings schemes in 1976.<\/p>\n

The conservative Fraser government rejected these recommendations out of hand. Instead, Fraser set about pushing through industrial relations reforms \u2014 including Australia\u2019s infamous secondary boycott laws<\/a> \u2014 that created what experts<\/a>, and the World Economic Forum<\/a>, have described as one of the most anti-union jurisdictions in the developed world.<\/p>\n

Then, in 1983, Labor PM Bob Hawke and his treasurer and eventual successor Paul Keating introduced the Prices and Incomes Accord, a wide-ranging series of industrial relations agreements. Many critics blame these reforms for further diluting union rights and rolling out neoliberalism<\/a> in Australia. They were also crucial to the evolution of Australia\u2019s superannuation system. Superannuation, Hawke and Keating claimed, would work alongside the aged pension as part of a \u201cmulti-pillar retirement system.\u201d<\/p>\n

In line with the Accord, in 1986, the Conciliation and Arbitration Commission stipulated that employers should pay workers a 6 percent increase in compensation for work, comprised of a 2 percent pay raise, tax cuts, and a 3 percent contribution to superannuation. With this ruling, the commission effectively ruled that superannuation entitlements formed part of workers\u2019 wages. In 1992, as prime minister, Paul Keating made employer contributions to superannuation compulsory.<\/p>\n\n \n \n \n

Neoliberalism and Superannuation<\/h2>\n \n

Unions fought hard to win universal superannuation. However, by the time the system took shape, unions found their collective power curtailed. In line with practice in the United States, workers were barred from using their industrial weight to democratically determine how their capital would be managed and invested.<\/p>\n

Indeed, Australia\u2019s superannuation system was shaped by neoliberal economic reforms that we\u2019re still paying for today. This is important for three reasons.<\/p>\n

First, it imposed on workers a trade-off between wages paid in the present and \u201cdeferred wages\u201d in the form of superannuation. Second, the commission distorted reality by labelling these payments \u201cemployer superannuation contribution.\u201d This misnomer stuck and continues to conceal superannuation\u2019s real significance.<\/p>\n

Thirdly, Keating designed and sold universal superannuation in neoliberal terms, arguing<\/a> that it would ease pressures on government expenditure, restrain wage inflation, and boost private savings to help address Australia\u2019s account deficit. He also argued that forced savings would assist with capital formation<\/a> to fund productive investment.<\/p>\n

Keating\u2019s superannuation scheme did achieve the goal of \u201ctransforming capital markets<\/a>\u201d by enlarging pools of capital available for economic investment. Yet these funds were modelled on capitalist investment funds, leading to the financialization of retirement savings<\/a>. This has meant that fund managers treat workers\u2019 capital like private capital, investing and managing it accordingly.<\/p>\n

The financial services industry took advantage of this to enrich itself, treating superannuation funds like a \u201cfinancial product\u201d to invest in order to maximize returns. A royal commission on banking recently exposed this practice. It found that for-profit superannuation funds have gambled their members\u2019 money on the stock market and whittled their savings away with exorbitant fees<\/a>. Over two decades, Australians have paid at least $362 billion<\/a> in fees to the industry.<\/p>\n\n \n \n \n

Slipping Through the Cracks<\/h2>\n \n

Compulsory and universal superannuation was a huge step forward for millions of workers who were previously excluded from occupational savings schemes. Yet, as an occupational savings system tied to employment, superannuation places a large part of the financial burden of retirement onto individuals. At the same time, as union power and workers\u2019 rights have been eroded, more and more Australians have fallen through the cracks.<\/p>\n

This is threatening universal superannuation. For example, increasing numbers of people in precarious work who work in the gig economy, in informal employment, or on \u201csham contracts\u201d are denied superannuation. So are unemployed workers, disabled people, and those who perform unpaid care work. Women are particularly disadvantaged<\/a>.<\/p>\n

Meanwhile, superannuation tax concessions overwhelmingly go to the rich and are on track to exceed government spending<\/a> on the aged pension. By failing to account for unequal access to superannuation entitlements, and by allowing the rich to use superannuation for further wealth accumulation, the current system works to entrench inequality<\/a>.<\/p>\n

Conservatives often claim falsely<\/a> that superannuation was created to replace the aged pension. But this is part of a broader push to privatize all social services and welfare. Caring for our retired and elderly should remain a responsibility for everyone.<\/p>\n

In addition to ending precarious work and rebuilding a strong, redistributive social safety net<\/a> \u2014 for example, by raising<\/a> the rate of unemployment benefits \u2014 we should expand superannuation payments, such as by extending them to cover parental leave<\/a>. Scrapping superannuation tax concessions for the wealthy would allow us to fund superannuation payments for many more deserving people, like those receiving unemployment payments or the disability pension.<\/p>\n

But fixing superannuation also means taking back control of funds and using these vast economic resources for our collective benefit.<\/p>\n\n \n \n \n

Struggle Over the Future<\/h2>\n \n

The combined $3 trillion<\/a> of Australia\u2019s superannuation funds represents an enormous potential power, nationally and internationally. As major investors in Australian company shares, super funds are on track to dominate 60 percent of shares<\/a> in the Australian Securities Exchange over the next twenty years. Nominally, Australian capitalism will be collectively owned by workers\u2019 money \u2014 but this stake isn\u2019t reflected in the legal framework or manifested in any meaningful control.<\/p>\n

This is why the fight over superannuation isn\u2019t really about retirement. At any rate, more retirees rely on the aged pension<\/a> than on super. Rather, conservatives and employers see superannuation in terms of power and control<\/a>. Whoever controls these funds controls where they are invested, and how much cream can be skimmed off by the financial sector.<\/p>\n

It\u2019s also why conservatives are desperate to attack industry super funds<\/a>, which were first created<\/a> by unions in 1983, and are comanaged by union representatives and mandated to benefit their members. Since then, industry funds have blossomed in scale and reputation, and remain on average the highest performing and fastest growing<\/a> part of the superannuation sector, in stark contrast to their for-profit \u201cretail\u201d counterparts.<\/p>\n

Although far from perfect, industry super funds have been invested to create jobs<\/a>, to push for divestment from fossil fuels<\/a>, and to hold to account major corporations such as Rio Tinto<\/a> and AMP<\/a>. This hints at their global power. Pension fund divestment<\/a> was a critical part of ending apartheid in South Africa.<\/p>\n

This power is another reason why the Liberal Party and employers are intent on attacking industry super<\/a> \u2014 for example, by removing<\/a> the mandated 50 percent union representation on the boards of these funds.<\/p>\n\n \n \n \n

Defending Super Means Democratizing Super<\/h2>\n \n

Any reforms should go in the opposite direction. The mandated 50 percent representation on industry super boards reserved for employers is what should be scrapped, with full control given to workers\u2019 representatives. After all, there\u2019s no equivalent requirement that worker\u2019s representatives make up 50 percent of for-profit super boards, or corporate or bank boards for that matter.<\/p>\n

Superannuation funds are legally mandated to benefit their members, and this, too, is a site of struggle. The Liberals have proposed changes<\/a> to superannuation governance that would restrict the definition of \u201cbenefit\u201d to purely financial criteria.<\/p>\n

This came shortly after a recent groundbreaking court case<\/a> between a $57 billion superannuation fund that was linked with the notoriously conservative Shop, Distributive and Allied Employees Association (SDA) and a twenty-five-year-old fund member, Mark McVeigh. McVeigh accused the fund of failing to act in his interests by not properly considering the risks of ecological crisis in making investment decisions. The settlement required the fund to ensure its actions were consistent with a net-zero carbon footprint by 2050.<\/p>\n

This speaks to a broader point. Although superannuation funds are collective, they are treated like private capital; they define members\u2019 benefits on an individual basis rather than on a social, collective level. Even when invested as part of public-private partnerships<\/a>, superannuation has entrenched the private provision of public goods.<\/p>\n

If the labor movement doesn\u2019t claim full ownership over super, we risk losing it. In 2020, Scott Morrison suggested that industry super funds should be used to bail out<\/a> struggling air carrier Virgin, while at the same time letting individual members drain their superannuation accounts to pay their rent. Worse still, we run the risk that our super will be invested in projects that accelerate our demise \u2014 for example, to fund Scott Morrison\u2019s \u201cgas-led recovery<\/a>\u201d or the expansion of military industries<\/a>.<\/p>\n\n \n \n \n

Fighting To Reclaim Our Future<\/h2>\n \n

Defending super in its current form or calling on funds to divest from destructive sectors won\u2019t be enough. Our capital should instead be invested to build a better future.<\/p>\n

When the system first took shape, many in the union movement called for superannuation to be used to construct workers\u2019 housing, in line with the idea of a \u201csocial wage.\u201d Today, after decades of declining public investment in housing \u2014 not to mention other social services \u2014 there is a more pressing need to return to this proposal and others like it.<\/p>\n

In view of the climate emergency and the economic collapse triggered by COVID-19, the almost $3 trillion of workers\u2019 capital could be used to kickstart a Green Recovery. We could create well-paying jobs in community- and worker-run enterprises<\/a>, raising living standards and reforming industry to mitigate environmental damage and inequality. This would mean reclaiming and broadening the term \u201cmember benefit,\u201d and pushing it beyond narrow, individual financial criteria.<\/p>\n

Establishing democratic control over super is one of the most urgent industrial issues confronting the Australian labor movement. We can\u2019t trust corporate interests to invest our social capital. It\u2019s time to mobilize our industry funds behind our members\u2019 needs. We own the wealth \u2014 isn\u2019t it about time we owned the future, too?<\/p>\n\n \n \n \n\n \n \n \n\n\n

This post was originally published on Jacobin<\/a>. <\/p>","protected":false},"excerpt":{"rendered":"

Australia\u2019s \u201csuperannuation wars\u201d are still raging. The current debate is about whether increasing employer superannuation payments will or won\u2019t affect wage growth. But this misses the most important point. Although they are misleadingly referred to as \u201cemployer contributions,\u201d superannuation payments are neither a gift nor a tax on wages. For workers in formal employment, superannuation [\u2026]<\/p>\n","protected":false},"author":2433,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"_links":{"self":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/48085"}],"collection":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/users\/2433"}],"replies":[{"embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/comments?post=48085"}],"version-history":[{"count":1,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/48085\/revisions"}],"predecessor-version":[{"id":48086,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/48085\/revisions\/48086"}],"wp:attachment":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/media?parent=48085"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/categories?post=48085"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/tags?post=48085"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}