Paul Keating has accused the Reserve Bank of Australia governor, Philip Lowe, of failing to comprehend “the key income facts of the last eight years” when he argued that lifting the super guarantee would create lower wages growth.
Keating was responding to comments Lowe made to a parliamentary committee in the middle of August. The governor said if the Morrison government proceeded with lifting the guarantee from 9.5% to 12%: “I would expect wage growth to be even lower than it otherwise would be.”
Lowe said the planned increase would result in “less current income and if there is less income, there may be less spending, and if there is less spending, there may be less jobs”.
In a podcast hosted by the shadow health minister, Chris Bowen, and Sam Crosby, the executive director of the McKell Institute, Keating rounded on Lowe. The former Labor prime minister and architect of compulsory superannuation said the governor advancing that argument indicated he had “no regard for the key income facts of the last eight years”.
Keating said there had been “zero” wages growth since 2012. “The governor talks about wages growth and the need of it, but there is none.
“But there has also been no increase in superannuation since 2013, since the Hockey budget of that time,” he said.
“It is possible to make a case in the very long run, over 30 or 50 years, that the allocation of superannuation may come at a cost of cash wages, but it is impossible to argue that now.”
He said the enterprise bargaining system was now failing workers, because it was not rewarding them for increases in productivity. “It is broken down, and for the Reserve Bank governor not to notice this central fact is like saying ‘I’m breathing but I’m not sure it’s oxygen’, but of course it is oxygen.”
Keating has resumed public commentary in response to frequent hints from the Morrison government that it may not proceed with an increase to the superannuation guarantee despite promising to increase the rate to 12% in the 2019 election.
On the Rekindling Hope podcast, Keating said it was hard to comprehend how the central bank could fail to understand major trends in the compensation of employees.
Keating said during an appearance before a parliamentary committee in Canberra, Lowe had told the politicians asking him questions that he didn’t want to make a political point about superannuation “but went on immediately to make a political point” which failed to distinguish the change in the relationship between productivity and wages.
Keating noted that the minutes produced by the RBA after every board meeting were incredibly nuanced “but the bank can’t notice there’s been no wage increases for eight years and no increases in superannuation – this is pretty remarkable”.
The former Labor prime minister has been on the warpath against Liberal backbenchers critical of the compulsory superannuation system, and has blasted the Morrison government’s decision to allow people to draw down on their superannuation during the coronavirus crisis.
Keating argued that decision will force young people to bear the brunt of bailing out the economy, and it will rob them of their retirement income.
He declared on the podcast the Liberal party “have been opposed to superannuation from the get-go” and he said the current government failed to comprehend that the national savings pool would turn Australia into an exporter of capital.
He said the government needed to discard its “prejudicial” attitudes and understand the super system removed “the great capital yoke” from Australia which had persisted since 1788. He said in five years, Australia would be running a structural account surplus as a consequence of superannuation.