3%, what’s all the fuss about?
August-30-2011Hello fellow super enthusiasts!
Saturday 20 August, 2011 marked a special day in my heart…it was of course, the 20th birthday of our dear friend, the Superannuation Guarantee (SG). It was a dark and stormy night – oh sorry, wrong story… It was a budget speech given on 20 August, 1991 by the then Treasurer John Kerin where he first announced the concept of SG. A year later, it would become law.
When first introduced, the SG started at a measly 3% before gradually increasing to the 9% we know and love today. However, getting it to 9% wasn’t easy and at the time, there was a lot of commentary suggesting that lifting the SG would result in substantial costs to employers with the follow on effects of job losses, a rising unemployment rate and even businesses going broke. Let’s not forget that we were in the middle of “a recession that Australia had to have”.
Interestingly, what the 9% SG in fact did was assist the economy in enduring the global financial crisis, (and we didn’t fair too badly in comparison to our international neighbours) improve dignity in retirement and positively affect economic growth. And cop a load of this, when the rate of SG was increased from 3% to 9%, unemployment rates actually dropped along with real unit labour costs…just a bit of food for thought.
So in my humble opinion and it is very humble, I think it’s time. Time we took the next step down the retirement reform journey and headed for the sign that reads ‘dignity in retirement’ for everyone because that’s what this is all about. Treasury has estimated that lifting SG to 12% means people aged 30 today, on average weekly earnings, will end up with an extra $108,000 in super when they retire. Not exactly small change is it!
With that, I’ve got some questions for the three people reading this:
- What do we need to do as an industry to get SG to 12%?
- Is 12% enough, should we just aim higher and be done with it?
- Lifting the retirement age overseas saw people out with their signs and megaphones, so why aren’t people rioting in the streets to support the SG increase?
With that, it’s cup of tea time.
Yours in Super
Hans
