Finance

Superannuation rule change could better manage economy: ‘Fairer and more effective’

Published

2 months ago

May 4, 2026

Superannuation rule change could better manage economy: ‘Fairer and more effective’

Is there a better way than just the RBA? · Getty

It doesn’t seem to make a lot of sense, does it? Someone decides to go to war, the oil stops flowing, prices go up and our economy starts shutting down.

The best response we can come up with is to raise interest rates, to dampen demand a little more. As if doubling the price of petrol won’t do that enough.

Problem is, raising interest rates only hurts people with mortgages and renters, typically not high on the wealth ladder. People with no debt get more money, and will spend it. And the rising interest rates hurt the businesses that have already been hit. Just when we want to raise supply.

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Besides interest rates, standard macroeconomic thinking is there’s only one other lever. We could reduce net government spending, which is hard to do when you’ve just cut taxes on diesel and petrol, which will fuel demand just when you don’t want that to happen.

But there may be a third way. To our collective credit, Australia has set up what many regard as the world’s best superannuation system. As at December 2025, we had close to $4.5 trillion set aside for our futures. And, every hour of every day, 12% of our income is added to the pile.

It’s been suggested that the super guarantee levy might be used as the third ‘lever’ to modulate the economy, in addition to fiscal and monetary policy.

This was actually one of the arguments used when the levy was introduced back in 1992. Instead of giving workers a wage rise, which might trigger wage-inflation, Bill Kelty and Paul Keating negotiated a compulsory savings scheme. Workers would benefit, but not immediately.

Perhaps it’s worth revisiting that negotiation. Say you want to set the levy at 12% over the long term. When times are tough you might put the 12% rate down a little to stimulate the economy. Instead of a $100 wage and $12 in super, people get $102 for now and $10 for later. We get through.

Or, when inflation is running you might nudge the 12% up a little to constrain demand. The extra isn’t paid by business. Instead of the $100 wage and $12 in super, people get $98 for now and $14 for later. Given the cost of living crisis, maybe the lever only cuts in above a certain income.

This would arguably be fairer, easier and more effective than the interest rate sledgehammer. It would inject or remove the same amount of money from the economy. But the pain is spread, people keep their own money rather than paying it to the banks, and businesses aren’t hit by higher interest rates just when you want them to invest in their capacity.

It’s not a complete replacement for interest rate changes, but the three levers can be used in combination to manage the economy more effectively and more fairly.

This is just one of the ways that we might think a little deeper about Australia’s strategic stockpile of cash, without jeopardising its fundamental superannuation purpose.

Dr Ian Woods and Josh Dowse say we should go back to the conception of the superannuation system to think about better ways to fight inflation. · supplied

For example, super funds are designed to provide for the future, but are assessed on quarter-year returns. Yet private wealth may be oversold if our natural, social and human capital are being shredded in the meantime.

Perhaps our super can help address some of our most intractable problems. Take housing. In Europe, pension funds invest heaving in high-quality, long-term rental housing near city centres. Their returns are set-and-forget at a level compatible with their low long-term risk.

This doesn’t happen in Australia, but it might. About 30% of our super already sits in low-return, low-risk bonds, so a slice of that could create just the housing that Australia needs, with no downside to anyone in the picture.

It’s currently hard for a super fund to do this, as they compete on those quarterly returns. But to keep competition on an even playing field, what if all super funds were required to invest say 15% of its pool in the public housing and other infrastructure that our society needs.

Many would say that our super fund is just that – for super – and should not be meddled with. We would say the pool is now so large that it is already having unintended implications for our economy. And, that we need to draw on these funds directly because governments are no longer prepared to borrow or tax more for essential purposes.

And then there are those who say ‘That’s our money and you can’t say what it’s for’. To which we reply that we wouldn’t have it if our government hadn’t set up the scheme, and that we wouldn’t have so much without the tax breaks it offers.

So let’s give a little more thought to how we can best use this national wealth for national benefit. We have precious few other choices.

Josh Dowse and Ian Woods are the authors of ESG Unlocked: How successful companies and investors build our natural, social, human and financial capital.

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Finance

Consumer confidence plunges among younger adults

Published

10 hours ago

June 18, 2026

Press Room

Consumer confidence plunges among younger adults

Consumer confidence has plunged among traditionally optimistic younger adults amid fears for their personal finances and the wider economy, figures show.

GfK’s long-running Consumer Confidence Index remained unchanged at an overall score of minus 23 in June.

However, the analyst said this was was “misleading as, beneath the surface, there are new signs that confidence is weakening”.

Source: GfK

Neil Bellamy, consumer insights director at GfK, said: “The biggest fall this month is among those aged 16 to 29, traditionally one of the most optimistic groups.

“Here confidence has dropped 11 points over the past month to minus two, the lowest level seen for two years, driven by large falls in views on both their own personal finances and the wider economy.

“More broadly, there are now no demographic groups with a positive confidence score, including higher-income households earning £50,000 or more, who have slipped back into negative territory as of June.

“Confidence remains subdued and vulnerable to further economic or political uncertainty.”

Overall, confidence in personal finances over the coming year remained flat at minus two, four points lower than this time last year.

The measures of both personal finances and the economy over the previous 12 months were both slightly down, by two points and three points respectively, “reflecting the sense that things have been extremely tough over the last year for so many”, GfK said.

The only measure to increase was expectations for the wider economy over the next 12 months, up two points to minus 36 but still eight points below this time last year.

The major purchase index, an indicator of confidence in buying big ticket items, remained at minus 20, four points lower than June last year.

Finance

How US-Iran peace deal will affect our cost of living

Published

20 hours ago

June 18, 2026

Press Room

How US-Iran peace deal will affect our cost of living

“Ships of the World, start your engines. Let the oil flow!” said Donald Trump on social media after he announced the signing of an interim peace deal with Iran on Sunday. Under the agreement – which Iran acknowledged included a 60-day negotiating period for a final deal – the president said that following retrieval of mines, there would be a “toll free opening” of the Strait of Hormuz.

But many of the finer details remain “unclear”, said The Guardian. There are questions over the “exact timing of the reopening of the maritime route, who will oversee safe passage and whether any conditions will be applied”.

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Finance

Hong Kong graduates prefer careers in finance, survey finds

Published

1 day ago

June 17, 2026

Press Room

Hong Kong graduates prefer careers in finance, survey finds

Hong Kong graduates believe the city’s finance industry is its most attractive and stable sector, making them more optimistic about career opportunities than their global peers, according to a study by the CFA Institute, which trains investment managers.

The US-based institute’s “2026 Graduate Outlook Survey”, released on Wednesday, found that 71 per cent of Hong Kong graduates rated their career prospects between eight and 10 out of 10. The global average for that level of optimism was 59 per cent.

The graduates’ view of careers in finance reflected “both the sector’s resilience and Hong Kong’s continued strength as an international financial centre, which ranks third worldwide and first in Asia-Pacific”, the institute said in a statement.

The findings also indicated that young people were confident about Hong Kong’s role as an international financial centre, resilient amid global uncertainties, and strategically focused on improving skills, it said.

That confidence was “deeply grounded”, it said, with nearly 90 per cent believing they had the skills to succeed and clearly understood what employers were looking for, notwithstanding the wider adoption of artificial intelligence in the city.

“Rather than viewing AI as a threat, 38 per cent of Hong Kong graduates believe it has no negative impact on their job hunting, and 37 per cent believe it makes securing a job easier,” the institute said. “Three quarters are already actively using AI tools in their job applications, demonstrating a proactive, tool-first mindset.”