Super: The nest egg everyone wants to crack

Political parties are a bit like ocean liners. They are magnificent to behold, built to last, and they take roughly three nautical miles to change direction. Communities, on the other hand, can turn more like jet skis. When the two find themselves in the same stretch of water, it is worth watching closely.

One of the recurring features of politics is the tension between long-held party positions and community views that shift over time. Communities change as their demographics, circumstances and bank balances change. Party positions tend to move more slowly because they are tied to history, to identity and to the people who shaped them. Sometimes a party holds firm and the community comes back to it. Sometimes the community keeps moving and the party eventually follows. Either way, the gap between the two is where some of the most interesting political contests take place.

Superannuation is shaping up as exactly that kind of contest.

Labor created the modern super system. It rests on the principle that workers, employers and government should each contribute to saving for retirement. For Labor, this is more than a policy setting; it is part of the party’s identity, sitting in its founding story alongside Medicare.

Others have long taken a different view. One Nation and parts of the conservative side of politics have argued over the years for allowing access to super before retirement. The purpose has shifted over time, from a home deposit to starting a business and, more recently, to helping with rent and the cost of living. Until now, these proposals have generally struggled to gain traction, and they have often been put forward as ideas rather than fully developed policies.

What appears to have changed is the context. With cost-of-living pressures and interest rates weighing on households, the community seems more willing to at least discuss the question. A debate that once sat on the fringes has moved closer to the centre, and the latest polling suggests it has moved further than many expected.

A new DemosAU poll of 1,583 eligible voters found 60 per cent support for allowing people to use their superannuation to help buy a home. The support crossed party lines. The poll found 55 per cent of Labor voters in favour, along with 59 per cent of Coalition voters and around three-quarters of One Nation voters. The poll was released just hours after Liberal senator Andrew Bragg floated letting people use their retirement savings as collateral to secure a home loan.

The picture is more mixed on other forms of access. One Nation’s plan to let workers divert a quarter of their compulsory contributions into take-home pay was backed by only 41 per cent in the same poll, although most of the rest were unsure. A One Nation-commissioned Compass poll released the same day told a different story, with 62 per cent support for putting super into wages, including 60 per cent of Labor voters. Polls commissioned by parties are always best read with a grain of salt, but the direction of the numbers is hard to ignore. The government’s response was swift. Assistant Treasurer Daniel Mulino said the proposal would mean less super at retirement and less economic security for workers.

Labor’s position is clear, and the Treasurer has been making it forcefully. When Pauline Hanson called for rules allowing people to withdraw super in a crisis to help with the cost of living, Jim Chalmers accused One Nation of undermining the very concept of superannuation. He warned that early access on the scale being floated would “absolutely decimate” retirement incomes and ruled out any wind-back of the compulsory Superannuation Guarantee. In question time, he told the House that “Labor built super, we strengthened it and now we will have to defend it”. He also accused his opponents of being against super because they are against workers.

Chalmers has also drawn on Treasury forecasting. He released projections from the Intergenerational Report to support Labor’s argument against One Nation’s proposal to allow homebuyers and renters access to some of their super. The government’s case rests on super’s role in containing future pension costs.

The broader arguments against early access are familiar. Critics point to smaller balances at retirement, a smaller pool of national savings and higher pension costs down the track. They also raise the risk that releasing super for housing simply adds to demand and pushes up prices. The 2020 early-release scheme is often cited as an example of how quickly large sums can leave the system.

Supporters of change put a different case. Some argue that home ownership is itself one of the strongest foundations for a secure retirement, and that helping people buy sooner may serve them better than decades of renting. Others argue that, with the Superannuation Guarantee now at 12 per cent, the balance between saving for the future and managing today’s pressures deserves another look.

It is also worth noting that super policy has not been immune to change under the current government. A year ago, Chalmers revised his tax on large balances, dropping the proposal to tax unrealised gains and indexing the $3 million threshold after a sustained backlash. He rejected suggestions he had been “rolled”, saying he and the Prime Minister had discussed finding another way to satisfy the same objectives. Whatever view one takes of that decision, it shows that super policy responds to public pressure, even for the party most closely associated with the system.

The polling adds an interesting dimension to the tension between party positions and community views. A majority of Labor’s own voters now appear open to using super for housing, even as the party holds firmly to its position. Whether that gap narrows, widens or simply fades once the arguments are tested in a campaign is one of the more intriguing questions of the coming term.

Whichever direction the debate takes, voters would be well served by proposals that are properly costed and clearly explained. The same goes for the case against them, which needs to be argued on its merits. A real choice depends on both sides doing the work.

The battle lines are beginning to form. Labor has signalled it will campaign hard against any change. One Nation is pushing for greater access, including its plan to redirect part of compulsory contributions into wages. The Liberals are treading more carefully. Deputy Opposition Leader Jane Hume says the Coalition has no plan to touch the compulsory super guarantee, but has confirmed it is considering reviving its “super for housing” policy. Senator Bragg’s proposal to use super as collateral for a home loan has now added a further option to the mix.

Every federal election tends to be defined by at least one headline issue that becomes the spine of the campaign. The Treasurer, for one, has already nominated his. He has said the next election will be, in lots of ways, a referendum on the future of superannuation and called it an “existential moment” for Australia’s compulsory superannuation scheme. With the election not due until 2028, it is early days. But if the debate continues at its current pace, super looks likely to be front and centre. The contest will be over who controls it, what it is for and how its purpose is balanced against the pressures households face today.

Whether the ocean liner holds its course or the jet skis set the pace remains to be seen. Either way, it will make for a fascinating campaign.