Australia’s compulsory super 'incredibly beneficial'
Australia’s compulsory superannuation scheme has been ‘an incredibly beneficial policy’, says head of Australia’s Financial Services Council.
John Brogden told TVNZ’s Q+A programme that since the Australian Labor party introduced the compulsory retirement scheme, the country had amassed $1.6 trillion in superannuation and helped the country avert a recession during the Global Financial Crisis.
Mr Brogden told host Susan Wood: “One of the reasons we didn’t have a recession in Australia during the financial crisis is because when listed companies deleveraged, the flow of funds that came into superannuation allowed superannuation funds to buy those shares,” he says.
The then Labor Government brokered a tripartite deal with unions and businesses in 1992. Mr Brogden says the scheme retains 84% public support but that small businesses in Australia hates superannuation, he said.
“They see it as a tax. And it’s really a shared contribution, if you like.
"By law, it’s actually a complete contribution by the employer. So the employer is required to do that. So if you go for a job in Australia, it will be $50,000+ super, or it will be $55,000 including super, roughly speaking. So people understand that, and small businesses tend to see it as a tax on a small business.
"They hate the fact that it’s going up, but there’s never a good time to make this decision, Susan. That’s the critical thing. There’ll never be a good time for NZ or any country in the world to make this decision. Australia had the guts to make it. A Labor Government, to their credit, made that decision 21 years ago, and it has put Australia in an incredible position worldwide. We’ve got the fourth-largest private pension system in the world. That’ll be the third-largest soon enough, and it will provide Australians with an affordable and a comfortable retirement,” Mr Brogden said.
Tomorrow, the NZ Financial Services Council will offer its solutions to increase retirement savings and incomes at a one day conference in Auckland.