Paul Keating has hailed the increase in superannuation to 10 per cent of wages, beginning on July 1, as a milestone achievement in Australian public policy which will give all citizens greater security in retirement.
Speaking exclusively to The Australian, the former prime minister and treasurer compared superannuation with Medicare, setting a new standard that ensured Australia was a caring and united society.
“The movement of superannuation to 10 per cent of wages and salaries from July 1 is a historic moment,” Mr Keating said.
“It reflects the maturity of the Australian workforce in agreeing to set aside 10 per cent of their wages and salaries for a later and better retirement.
“The universality of superannuation, like the universality of Medicare, speaks volumes about the notions of inclusiveness in the Australian family – national superannuation is now a community standard.”
The Morrison government was under pressure from several backbenchers, some ministers, business and welfare lobby groups, and think tanks not to proceed with the legislated increase in the superannuation guarantee to 10 per cent, ahead of further phased increases to 12 per cent by 2025.
Mr Keating campaigned strongly for the increase to proceed, having already been delayed from the increase to 12 per cent initiated by former Labor treasurer Wayne Swan. The Abbott government froze the super guarantee at 9.5 per cent in 2014.
The Retirement Income Review, chaired by Mike Callaghan, a former Treasury deputy secretary and chief of staff to former treasurer Peter Costello, which reported last year, found that “the Australian retirement income system is effective, sound and its costs are broadly sustainable”.
But the review argued most increases in the guarantee were funded by lower growth in wages, giving support to the argument there is a trade-off between superannuation and wages.
The review also argued that the 9.5 per cent super guarantee level was adequate provided retirees also better managed their assets, including accessing equity in the family home.
The report was trashed by Labor, unions and industry superannuation funds, who accused the panel of making false assumptions and using flawed modelling to help support the case for the guarantee not rising to 10 per cent this year.
Mr Keating, as treasurer, was the principal architect of Australia’s $3 trillion superannuation system and as prime minister presided over its introduction in 1992.
A year earlier, while on the backbench, he outlined a plan to lift contributions from 3 per cent to 12 per cent by 2000. His government proposed introducing contributions to 15 per cent in its last budget, in 1995. He said he regarded getting agreement from both Labor and the Coalition, eventually, to increase the super guarantee to 12 per cent as his most important policy contribution since leaving parliament in 1996.
“Australians know the inclusiveness of superannuation with Medicare means they are never left in a corner and alone, and that the national family embraces them as it does all others,” he said.