Queensland LNP Senator Gerard Rennick has labelled Australia’s superannuation system as detrimental to the country’s economy.
“Superannuation was the worst thing to ever happen to the economy in this country,” Senator Rennick told ADH TV on Sept. 5.
“Where our corporations have gone wrong over the last 30 years is that they’ve been taken over by these fund managers.”
Senator Rennick said because Australians make frequent contributions to their superannuation accounts they should have more of a stake and say in the management of super funds themselves.
“When was the last time you actually voted, if you were in a retail fund or an industry fund, for the people who run those boards? Of course, no one gets to vote for those people. They’re selected, not elected,” he said.
Senator Rennick also said Western corporations—that super funds held stakes in—were more focused on politics than achieving optimal returns for shareholders.
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“We’ve seen a takeover of our corporate boardrooms. Today, our companies are driven by ideology and not productivity,” he said.
Labor’s Super Objectives
The senator’s comments align with recent moves by the Albanese Labor government to redirect the superannuation industry towards supporting “nation-building” projects.In August 2022, at a superannuation lending roundtable, Treasurer Jim Chalmers outlined his government’s agenda to steer the investments of super funds away from inflated equity markets and foreign assets and instead, focus domestically.
Mr. Chalmers was joined by former Prime Minister Paul Keating, who said superannuation funds must help achieve societal objectives.
“If super funds just think they can go buy tech stocks in America and highways in Italy, they’re going to run into trouble. Without being heavy-handed, there is a requirement of funds to look at social opportunities,” he said.
Treasurer Chalmers hinted that his government was in need of financial assistance considering the large deficit it inherited from the Morrison Coalition government post-COVID-19.
“We see government budgets heaving with debt, and there are obvious needs for investment, particularly in areas like housing and energy,” Mr. Chalmers said.
The Albanese Labor government is also moving the country towards net zero and is financing the construction of major renewable energy projects.
In February this year, Mr. Chalmers released an essay “Capitalism after the crises,” calling for investors to divert their funds towards sustainable avenues like green energy projects.
“We will create a new sustainable finance architecture, including a new taxonomy to label the climate impact of different investments,” Treasurer Chalmers wrote.
“There’s a genuine appetite among so many forward-looking businesspeople and investors for something more aligned with their values, and our national goals.”
Origins of Superannuation
The treasurer’s approach does appear to deviate from the traditional capitalistic framework.Businesses and corporations typically maximise returns by focusing on profitability rathern than fulfilling social outcomes.
The superannuation scheme as a concept was initially initiated in Parliament by the Hawke Labor government before it was officially enshrined in legislation by the Keating government in 1991 when the Superannuation Guarantee was introduced.
The justification for the scheme was to alleviate pressure on the underfunded public health system and reduce reliance on government pensions.
Yet there have been concerns that removing the responsibility of saving for retirement has spurred Australians into being more relaxed with their spending habits.
