Source: The Conversation (Au and NZ)
Superannuation has a long and contested history in Australia.
Labor and the Coalition see Australia’s A$4.8 trillion super savings through very different lenses.
Review: Super: The Policy History of Australia’s Retirement Savings Scheme by Emily Millane (MUP)
The Coalition backs plans for workers to access their super early; Treasurer Jim Chalmers claims the Coalition wants to “destroy” the universal super system.
Before the 1970s, superannuation was only available to a privileged few: men who had worked for a substantial period of time in a professional job, or who were employed in the public sector.
This is the starting point for the new book by Emily Millane: Super: The Policy History of Australia’s Retirement Savings Scheme.
So, how did a savings scheme to support workers in retirement become such a political football?
The politics of superannuation
The superannuation schemes before the 1970s were not fair. Only about 30% of workers were covered, and the conditions attached to the schemes favoured employers.
For example, if a worker left an employer before reaching the set retirement age they would forfeit any superannuation benefits. Women were often excluded from superannuation as the terms of their employment did not meet the conditions.
The unions were pushing for a fairer superannuation system that was not controlled by employers. The first industry super fund was set up by the Storemen and Packers Union in 1978 with joint employer and employee control, and members of the union went on strike to force Woolworths to allow them to join the new fund.
In 1979, the ACTU adopted a policy to develop superannuation funds that gave employees a say, and that unions would start these funds themselves.
For these new funds to work, the money invested on behalf of a worker needed to be “vested”, or held in an account for that worker – even though it could not be accessed until retirement.
When the Hawke Labor Government was elected in 1983, it began talks with the unions to deliver a “social wage”. This was the opportunity the unions needed. Wage increases were linked to inflation, which was running at an annual pace over 10%.
To break this link, the unions agreed in 1985 that 3% of the next wage increase under union awards would be paid as superannuation. Employers had to pay the increase, but payment to workers was deferred and invested until retirement.
This embedded the industry funds into the superannuation system, where they competed with banks and wealth management firms
The scheme was expanded by Prime Minister Paul Keating from 1993, when the Super Guarantee made 3% employer contributions compulsory across the workforce.
‘Jobs for the boys’
Employers and the Coalition opposed the development of industry funds. Strikes were part of the industrial landscape in the 1970s and 1980s and the Liberal Party opposed anything that gave more power to the unions. Millane reports that Woolworths called the early funds “socialist”; and employers saw superannuation as an additional cost.
Employers saw the inclusion of union officials on the boards of super funds as “jobs for the boys”.
Coalition governments made several attempts to remove the requirement for equal representation by employers and employees. However, the main ongoing challenge is directors sitting on too many boards.
The Hayne Royal Commission was established in 2017 to examine misconduct in financial services. The Coalition government added superannuation to the inquiry, hoping to uncover evidence of union corruption.
However, that plan backfired. The evidence showed the commercial, for-profit super funds were more likely to be engaged in misconduct than the industry funds.
The purpose of super
The book could have given more attention to how this history has influenced some of the emerging policy debates.
Millane repeats the mantra that superannuation “is your money”. This common description has led to the perception that workers should be able to access their money and use it as they choose. When super is locked up till retirement age, it leads to a sense of grievance.
This is one of the drivers of the increasing trend to self-managed super funds as members try to obtain better returns than traditional super funds. The collapse of the First Guardian and Shield funds with the loss of $1.2 billion in retirement savings shows the risk that investors face.
The “your money” mantra runs counter to the policy purpose of superannuation, legislated in 2024 after a decade of political debate, to “preserve savings to deliver income for a dignified retirement”. This important reform is not included in the book.
The debate on raiding super to fund house deposits does not include the lessons learned from the COVID early release scheme.
While this was an important lifeline for some, others spent the cash on entertainment and shopping.
In total, 3.5 million Australians withdrew $38 billion from super during COVID, reducing their retirement savings. Analysis showed a 30-year-old who withdrew the maximum of $20,000 would retire with about $93,600 less in retirement.
What about the tax breaks?
The tax policy discussions could also be set out better. Before the 1970s, tax avoidance was a feature of many employer-based funds, particularly where employees rarely received benefits.
Tax on superannuation contributions is an unusual feature internationally, so an explanation of the reasons would help readers to understand the debate.
Fast forward to today and tax minimisation is still a feature of superannuation. The Grattan Institute has estimated that tax concessions cost the budget $25 billion a year, and mostly flow to the top 20% of households.
The discussion of subsequent attempts to limit over-investment in superannuation could be more nuanced and draw on current data showing the extent to which high income earners use superannuation as a wealth-creation tool.
So who is this book written for?
Millane opens with a discussion with a neighbour who is interested in the superannuation system.
This book is written for a reader who doesn’t want a technical analysis of the superannuation system but is more interested in why the Australian superannuation system is considered unusual. The historical underpinnings are set out clearly.
In my view, however, Millane has missed the opportunity to explore the current debates, and how the policy design continues to raise challenges for the next generation of taxpayers.
Helen Hodgson has received funding from the Australian Research Council, the Australian Housing and Urban Research Institute and CPA Australia. Helen was a member of Western Australia’s Legislative Council from 1997 to 2001, elected as an Australian Democrat. She is not a current member of any political party. She is a member of CPA Australia and The Tax Institute and sits on the Policy Committee for the National Foundation of Australian Women.
Original source: https://analysis1.mil-osi.com/2026/11/11/australias-4-8-trillion-super-system-has-become-a-political-football-a-new-book-explains-why/