The numbers behind One Nation’s super plan

SPEAKER_1 (0:00)

ABC Listen, podcasts, radio, news, music, and more.

Michael Janda (0:08)

There are a lot of perfectly sensible reasons to start a war. Territory, resources, pigs. Wait, what?

SPEAKER_1 (0:14)

You've got to pay for that pig.

David Taylor (0:16)

Yes.

Michael Janda (0:16)

A pig, a pastry shop, a football game, sometimes even birds.

SPEAKER_1 (0:21)

They don't seem to be easy to kill.

Michael Janda (0:23)

History is filled with some stupid wars. On the No One Saw It Coming podcast, we are diving right into them.

David Taylor (0:29)

With me, Mark Finnell.

Michael Janda (0:32)

Search No One Saw It Coming podcast on ABC Listen or wherever you get your podcasts.

One Nation wants to put more of your super into your pocket now, but what would that actually cost you later? What would the fallout be for Australia's economy? Politically, it's already causing plenty of noise and in the media too. Critics say it could fuel inflation as well as leaving people worse off in retirement. Let's strip away the politics and the arguments and look purely at the economics and the numbers. What would it do to household incomes, inflation, interest rates, retirement balances, and potentially even house prices? Most importantly, do the numbers really stack up? Welcome to ABC Business Daily.

I'm Michael Janda, the ABC's Business Editor, again keeping the chair warm for Carrington Clarke.

David Taylor (1:25)

And I'm the ABC's Business Correspondent, David Taylor.

Michael Janda (1:28)

Really good to have you here, DT. And I know you've been crunching through the numbers since this proposal came out. Nothing like a bit of a debate between the intersection of politics and economics to be had.

David Taylor (1:40)

Well, I mean, it's an extraordinary announcement when you think about it, because when else would this type of announcement even fly? You've got a superannuation system. It's been developed by Paul Keating. Admittedly, it was designed, so that once you finished your life's work, and let's face it, in past generations, some people had worked for the same company their whole life, and you got to the end of that, and there's this big pile of money that had been growing in perpetuity, in theory, for decades, but it was reliant on the fact that you owned your own home.

So in that context, why touch it at all? But a lot of things have changed since then.

Michael Janda (2:23)

And the interesting thing, and this is where the politics comes in, like we're hearing this well out from the next election. So it's interesting that we're having this major debate about a decades old policy that introduced by the Keating government. And there is a lot of that political debate to pull apart. So you can listen to our sister podcast, Politics Now, hosted by PK, Patricia Carvelas, who will unpack all of the politics across the next week. And we'll have a link in the show notes so you can find that in case you missed it. But getting back to the economics of all this, One Nation's Treasury spokesperson, Barnaby Joyce, has been out on the interview circuit doing Sarah Ferguson on 7.3 last night, are in breakfast this morning with Sally Sarah.

Can you help us cut through what Barnaby has been saying? What is One Nation actually proposing?

David Taylor (3:14)

Well, I mean, it's pretty straightforward because if you're working and you're contributing to your employer or is contributing to your superannuation, 12% gets taken out in order to contribute to that investment pull that builds in perpetuity. So over time, because this investment is building and building and building on itself.

Michael Janda (3:35)

And then that's gone up in itself because for a long time it was 9% and that was lifted by a previous Labour government and phased in over time, that 9% going up to 12%.

David Taylor (3:47)

The idea with making sure Australians are comfortable in retirement. And that word comfortable is really important because you potentially got 10, 15, 20, 30 years of, let's face it, living off investments. So at the start of that, it might be a combination of the pension and superannuation and as the pension fades, it's just superannuation. And you need income from that and sometimes potentially even drawing down that superannuation. There's a famous ad in the 1990s where the husband gets off the phone with his doctor and that he said, I've got some great news. The GP says, I'll live till I'm 90 And he's beating his chest and his wife says, and he's like, what do you mean?

She said, well, according to our superannuation, you can only live till you're 70 or so. I've never forgotten that ad because it just shows that once the money runs out, it really runs out and that's not a nice place to live. So under the proposal, Australians who pay rent or a mortgage would be given a choice to convert a portion of their superannuation to their take home pay for up to three years. So the full percent compulsory supercontribution would still be paid by employers, but 3% would be paid directly to the person by the superfund if they opt in. So payments would also remain subject to the concessional tax rate of 15%.