One Nation’s super raid: inflationary today, impoverishing tomorrow

It’s unclear what is worse about One Nation’s plan to allow millions of Australians to dip into their superannuation – depriving people of future retirement income, or adding to the nation’s inflationary pressures right now.

No matter how Pauline Hanson and Barnaby Joyce describe their policy as some sort of costless way to help people deal with their living expenses, there will be a measurable cost in the near and long term.

As Reserve Bank governor Michele Bullock has been at pains to explain for months, interest rates are being pushed up to curb the ability of Australians to spend.

Yes, it’s painful. People have to make tough spending decisions. But the alternative – high inflation that erodes wages and the nation’s economic competitiveness – is infinitely worse.

So One Nation’s idea to give potentially millions of people access to billions of dollars flies in the face of what the RBA is trying to achieve.

“Interest rates keep rising,” Hanson noted while announcing her idea. If this policy ever found its way into operation, you can guarantee the Reserve Bank would have to push rates up even higher.

The purported income boost of $44 a week to a median full-time worker is worth about a half percentage point increase in interest rates on a $600,000 mortgage.

Hanson, who honestly worries about the people living in tents or cars, couldn’t fathom these poor people – likely to be without a job and without super – would not only be unable to use her scheme, but the higher inflation would make their lives even harder.

Barnaby Joyce said the inflationary impact would be “undetectable”. He simply doesn’t want to look.

Joyce also argues that people are “smart” when it comes to super. That flies in the face of the real-world experiment this country went through during the depths of the pandemic when the Morrison government allowed people to take up to $20,000 out of their superannuation accounts.

The government thought 1.5 million people would take out $27 billion to help deal with the economic troubles caused by the pandemic.

Instead, at least 2.6 million withdrew at least $40 billion. It became the second-largest stimulus measure during the COVID-lockdown years, contributing to the inflationary pulse that has plagued the country ever since.

People literally lied so they could get their hands on their super and go on a pandemic-era spending spree.

Independent research, something that goes beyond the “vibes” that amounts to policy development within One Nation, revealed where the program’s money went.

At a time when cash usage crash, there was a surge in withdrawals from ATMs. The money went under a mattress or into the black economy.

Some of it was used to pay down debt. The third-largest increase during this period was on gambling.

People also lifted their spending on takeaway meals, furniture, buy-now-pay-later products and online retail.

It’s also no coincidence that the cash was made available as the country started going through the biggest increase in house prices in a generation.

One of the authors of the research noted: “This evidence is just so powerful that a large subset of the population has difficulty making sound decisions for their long-term future – it’s one of those cases where constraining people can make them better off. A sobering thought for an economist.”

That economist was Steven Hamilton, a former Treasury official who is now a senior policy official within the office of Angus Taylor. He could have been talking about the One Nation brains trust that thought up its super policy.

All of this came at a cost of an estimated $120,000 in future retirement income. Which brings you to the long-term costs of the policy.

“You’re existing super won’t be touched. Not one dollar,” declared Hanson.

Rubbish. If you don’t put in as much super, even for three years, the long-term value of that super is eroded.

Under One Nation’s own numbers, a person who takes $8000 to $9000 over the next three years will end up with at least $25,000 less in super when they come to retirement.

Superannuation was created in part because people are terrible at making long-term financial decisions. It was also put in place to take pressure off the federal budget and to ensure older Australians had dignity in retirement.

But One Nation’s policy confirms that superannuation is fast becoming the magic pudding of Australian politics, that it can do anything and everything.

The parts of Sam Sawnoff and Bill Barnacle, the pudding owners imagined in the children’s book by Norman Lindsay, are being played by Pauline Hanson and Barnaby Joyce.

Also desiring a bite are many Coalition MPs, who still want to allow people to access their super to buy a home in a policy that would bid up the price of housing while delivering an international wealth transfer from the young to the old.

Not that the Labor Party doesn’t want a slice. It has been talking for years about encouraging super funds to invest in some of its pet concerns, from renewable energy to the housing sector.

The economic problems of this country are deep and broad. There aren’t easy solutions. They require tough choices.

And, like populists throughout time, One Nation has come up with a policy that would just make things worse – now and well into the future.

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