Is super a bigger political bomb than Medicare? We're about to find out

analysis Jim Chalmers says the next election is a 'referendum' on super. Is the outcome clear? Barnaby Joyce had just said "lie" for the 17th time when the line went dead. A few moments later, dialled back into his Radio National interview, he joked listeners had missed him in "full flight" about Jim Chalmers's claim One Nation and the Coalition were "against universal super". It was, he said, a lie to rival the infamous "Mediscare". It's a telling comparison. Joyce fought the 2016 election when Bill Shorten's Labor ran the brutally effective scare campaign that the Coalition planned to privatise Medicare. And Chalmers, invigorated by comments about super from Pauline Hanson and Liberal Andrew Bragg, has wasted no time in framing the next election as a super "referendum", spamming social media with claims his opponents want to "destroy" the system. That's a bit much. Hanson only said super should be "lightened up a bit", perhaps by letting people access more of their funds pre-retirement. Bragg was more colourful, calling compulsory super "a loss of liberty", but his colleagues ran a mile from him. Still, the line isn't totally fanciful either. One Nation has flagged more policies to come, and there is genuine hostility to super among Coalition MPs, several of whom told the ABC this week they did want to carve out a point of difference with Labor on the subject. Some within Labor are salivating at that prospect. Asked whether super was as much of a vote-winner as Medicare, a senior Labor figure jubilantly declared: "It's bigger." But on the right, some believe that voters weighed down by economic gloom will be tempted by the thought that super is their money and they should access it now, not later. So would a super referendum deliver the resounding Yes vote Labor expects? Supercharged retirement Since it began in 1992, compulsory super has substantially boosted the wealth with which Australians retire. That's even before the system is "fully mature" — that is, when retirees have had super for their whole working lives, a milestone still years away. Super's logic is neat: require people to save some money for their own retirement, give everybody access to the power of compound returns on long-term investments, and reduce the need for pension payments. Labor hails it as "the envy of the world". But the fact remains that putting money away for tomorrow means less money today. In a legal sense, the amount employers must pay into their workers' super — currently 12 per cent of their wages — is on top of their wages, not instead of them. But for businesses, the dollar is still a dollar, and a 2020 Grattan Institute report based on a study of enterprise agreements found super increases had come at the expense of wage increases most of the time. This is contentious terrain, and that finding landed in the middle of a political debate about whether the compulsory amount should increase from 9.5 per cent to 12 per cent. The Coalition resisted, but Labor delivered it in government. Labor politicians strenuously resist the idea that workers must choose between more super and more wages. But a hint at what they really think is that they have no plans to move to a 15 per cent guarantee, Paul Keating's original vision. Comparing the pair At the same time, Treasury and Grattan have warned in recent years that super may be over-preparing people for retirement, such that retirees spend very little of their super before they die or even increase their wealth, passing on large inheritances. A Treasury retirement income review in 2021 studied the accounts managed by one large super fund and found that members died with 90 per cent of the super they had retired with on average. Ironically, Labor itself has used this argument when it has proposed less generous tax treatment for those with very high super balances — and the Coalition has usually been on the opposite side of that debate. But when it comes to the super guarantee, the roles are reversed, and the Treasury finding of 2021 informed a view among many on the conservative side that the guarantee was too high. Some would even like to wind back the clock, lowering the guarantee to perhaps 10 per cent. Several Liberal politicians told the ABC this had been discussed internally but was viewed as a risky proposition and had slim prospects of becoming opposition policy. That would truly make the election a referendum on super. The idea could have political appeal if it was presented to voters as a wage rise. But there would be no guarantee that businesses would pass the savings on and, if they did, it would be an inflation risk. Instead, the Coalition has gone to the last two elections campaigning to erode super a different way; by letting first homebuyers tap their super for a home deposit, an idea spearheaded by Bragg and now-shadow treasurer Tim Wilson. It's not clear this has been a major factor in either election, for good or ill, but it is hated by economists who say it will push up house prices and will not solve the crisis. That may even be a design feature. Liberals claim those who drain their super would be no worse off because their money would make a similar return once invested in their home. But that's only true if house prices keep growing above inflation forever. When do we want it? Now The Coalition's plans for that policy are ambiguous. But Hanson is now swimming in the same waters. Her policy, which does not exist yet beyond some vague statements, is to allow people to draw down on their super as a cost-of-living measure. Here, unlike the super housing policy, the money withdrawn would likely be spent, not invested. An academic study of the Morrison government's pandemic policy to let some people access $20,000 of their super found gambling was a major spending category. The line of "gambling with your future" almost writes itself, and One Nation would open itself to a fierce campaign from Labor and a well-endowed super industry which has spent decades building public support for super as the bedrock of financial security. A war of slogans would follow: "It's your money" up against "It's your future". LoadingIndicators of future performance For either One Nation or the Coalition to win that campaign, it would likely need to find some way to discredit those high reserves of public affinity for super. Bragg has been trying this in his own way for years with his claims of "corruption", with little success. But a sleeper issue on the government's agenda could change this: an overhaul of the "performance test", the rules governing how super funds can invest members' money, a dry and technical process led by assistant treasurer Daniel Mulino. The industry says the current benchmarks are too restrictive, forcing them into safe bets and inhibiting them from investing in startups or innovation. Funds are so constrained that they have effectively run out of Australian investments and are hunting abroad. Labor has signalled it will broaden the criteria without compromising the requirement for funds to make responsible investments and solid returns. But it is also planning to set "national priorities", such as investment in housing and renewables. That is a red rag to a bull for conservative super sceptics, and the Coalition has been watching warily for some time. But this week, it was Hanson who blew it up. "Jim Chalmers cannot stop spending, and now he has his eyes on Australians' superannuation to fund more of Labor's bad ideas," she said in a social media post this week. "Your super is not Labor's piggy bank … Jim Chalmers should keep his hands off." There is no more truth in the idea that the super performance test changes are a Labor raid on superannuants than there is to Chalmers's claims about his opponents "destroying" super — fighting liar with liar, to use Joyce's word. But it's a reminder that a super war could damage both sides. Former treasurer Wayne Swan, who now heads a large super fund, acknowledged the risks but said it was a fight Labor was right to pick and should be confident of winning. "The thing is, it's a cheap trick, a mirage," he told the ABC. "You're telling people you're giving them something when you're just taking it away."