What a Super idea!

A short musing about the black-hearted superannuation release by the Morrison government, and the ensuing, totally predictable “if only we had realised” news cycle from the MSM.

It’s really a very simple problem.

Workers’ superannuation is deliberately and explicitly locked away from early access because it’s meant for a very specific purpose – retirement income.

It requires Year 10 mathematical skills to understand that $10,000 today, under compound interest, will represent a great deal more in even ten years’ time, and much, much more in thirty or forty.

Equally, taking that $10,000 dollars out of a superannuation account today will yield exactly that – $10,000 – but it will really rob its owner of far more down the track.

That’s the simple and obvious problem with what Morrison and the Coalition did. Instead of addressing the problems that were going to force the suddenly unemployed to seek frantically for cash-flow, they generously offered a “solution” by dangling money in front of them that should never have been visible.

But it’s actually far more evil than that.

For a start, allowing the desperate Covid unemployed access to their superannuation nest-egg immediately reduced the pressure on the government to provide systemic solutions to the problems that caused and continue to cause this cash-flow crisis: rent, mortgage, even just food on the table.

By allowing the panicked unemployed to momentarily solve their problems by sabotaging their retirement, the government cynically gained a little breathing space for its own response.

For example, they could have offered zero interest loans, instead of tempting Australians to damage or destroy their retirements. But they didn’t, even though it was obvious that the people who could least afford to lose $10,000 from their Super were exactly the people most likely to need it. For people for whom $10,000 was neither here nor there, either they didn’t need it, or it was a convenience, not a necessity. But they didn’t offer loans, they allowed people to raid their protected savings.

But even that isn’t the most black-hearted aspect of this apparent largesse.

Just ask yourself three questions – what is this going to do to superannuation funds? What is it going to do to the stock market? And who is positioned to benefit?

Again, the answers don’t require a PhD in economics. Industry super funds in particular are going to be placed under a lot of pressure by all of the sudden and completely unexpected withdrawals. They don’t carry billions of dollars in ready cash, so they’ll have to hastily liquidate assets in order to satisfy members’ withdrawals. That suits the ideologues who want industry funds out of the market (where they regularly outperform retail funds) and allow greater profits for banks.

Next, the necessary sale of assets, most often shares and bonds, is going to depress the market and will also create a large pool of available shares – at reduced prices – for buyers who still have liquidity to purchase them.

Feeding frenzy.

The average wage-earner gets $10,000 in hand to stave off ruin. The industry fund has its long-term plans and profitability torpedoed, and its asset base raided. The rich, with funds to spare, reap a windfall bounty of depressed stocks which, in time, will recover to again pay dividends, but this time to the 10% who now own them, not the 90% who used to, and whose retirement nest egg has been smashed.

Win-win-win for the pigs in the trough. Lose-lose-lose, again, for the average Australian.

And all of this was easily predictable the day the scheme was announced. It required no knowledge of future events beyond the blindingly and obviously predictable.

Blindingly obvious, that is, except to the mainstream media.

For some reason they had trouble seeing more than a few weeks into the future, and in the laughingly titled “analysis” pieces about the announcement they spent a lot of time talking about how this would ease pressure on household budgets, but absolutely no time printing huge headlines saying Don’t Mortgage Your Future and Government Dodges Responsibility.

As usual, their moment of revelation has been reserved for that time that’s generally known as “too late”.

Only now, after the event, we’re seeing lots of tut-tutting and head-wagging from pundits who are finally pointing out all of these things, now that it’s too late and the carnage has taken place.

This “if only we had realised” cycle from the mainstream media is a disgrace, and it’s perpetrated over and over again. The most obvious case is in the lead-up to elections, when large amounts of embarrassing and relevant details about candidates are mysteriously forgotten. Then, when it’s too late and they’ve been elected, exposé pieces suddenly appear, showing pictures and headlines from the past; pictures and headlines as often as not from the same publication, which inexplicably mislaid them during the election campaign and has only now unearthed them.

If only we had known…

You knew. You saw what they were doing. You chose not to say anything. And now you’re insulting our intelligence by offering up outrage and scandal by telling us what you could have told us when it mattered.

It’s hard to say, really, who’s more culpable, but for the Coalition politicians and the mainstream media, it’s been a super idea, and no doubt will be again.