Superannuation: The invisible python coiled around the economy

Indeed, the liberal philosophy is optimistic about human agency. That some people save too little or too much is natural in a society of free people. But the ability to observe the consequences of others’ mistakes limits their incidence, encourages responsibility and fosters independence and resilience – hallmarks of any robust and prosperous society.   

As Robert Menzies wrote, “the best people in this community are not those who ‘leave it to the other fellow’, but those who by thrift and self-sacrifice establish homes and bring up families and add to the national pool of savings”.

A meddling state, however well-meaning, curtails the capacity of people to even be ‘the best’.

Yet for all its faults and superfluity, superannuation is popular. Indeed, it is brilliantly designed for expansion: everyone thinks everyone else is paying. Workers don’t feel any direct pain from increasing superannuation. Yet businesses will ultimately rein in the growth of workers’ take-home pay. It is like an invisible python coiled around the real economy.

Meanwhile government can bathe in the glow of mandatory ‘extra savings’, while others pay.

Moreover, superannuation has a powerful cheer squad, from trade unions to fund managers. They are motivated by the power compulsory superannuation bestows and the multi-billion dollar annual flow of fees, which are ultimately paid by ordinary workers who are often none the wiser.

As defender of the forgotten people, the Liberal party should be a bulwark against paternalistic subterfuges and corporatist rent-seeking. Far from endorsing a one third expansion of compulsory superannuation, it is incumbent on liberals to explain how it dupes workers, limits their freedom and corrodes their independence.