Home' Policy Magazine : Policy Vol 32 - No 3 Contents 36 POLICY • Vol. 32 No. 3 • Spring 2016
DON’T INCREASE THE SUPER GUARANTEE
47 Productivity Commission, An Ageing Australia (see note
26). Kirchner presents other views in Compulsory Super At
20 (see note 2), pp. 12-14
48 See for example Kirchner, pp. 12-13; and Taylor and
Cowan, The Age Old Problem of Old Age: Fixing the Pension
(see note 35).
49 Ellis Connolly, The Effect of the Australian Superannuation
Guarantee on Household Saving Behaviour, Reserve Bank of
Australia Research Discussion Paper RDP 2007-08 (2007).
50 Ellis Connolly and Marion Kohler, The Impact of
Superannuation on Household Savings, Reserve Bank of
Australia Research Discussion Paper 2004-01 (2004)
estimate 38%; other estimates are summarised in Table 2
and range from 17% to 75%. However, the more recent
estimates are generally more relevant.
51 Edey and Gower, ‘National Saving: Trends and Policy’ (see
note 28), p. 297.
52 Connolly and Kohler, The Impact of Superannuation on
Household Savings (see note 50).
53 Kirchner, Compulsory Super At 20 (see note 2), pp. 13-14.
54 This argument was put at the time of the original
introduction of the SG, see Edey and Gower, ‘National
Saving: Trends and Policy’ (see note 28), p. 288.
55 Michael Drew and Jon Stanford, ‘Why is Superannuation
Compulsory?’, Australian Economic Review 37:2 (February
2004), p. 186.
56 Andrew Leigh, ‘Returns to Education in Australia’,
Economic Papers: A Journal of Applied Economics
and Policy 27:3, pp. 233–249 (September 2008),
57 For example Allen Consulting Group, Enhancing Financial
Stability and Economic Growth: The Contribution of Super
(Melbourne: August 2011).
58 Gruen and Soding, ‘Compulsory Superannuation and
National Saving’ (see note 42).
59 Simon Kelly, Twenty Years of the Super Guarantee: The
Verdict, Report for CPA Australia (August 2013).
60 Kirchner, Compulsory Super At 20 (see note 2), pp. 5-12.
61 For example Allen Consulting Group, Enhancing Financial
Stability and Economic Growth (see note 57).
62 Rafal Chomik and John Piggott, ‘Pensions, Ageing and
Retirement in Australia: Long-Term Projections and
Policies’, Australian Economic Review 45:3 (2012), pp.
350-361; and Australian Financial Markets Association,
Submission to the Consultation on Financial System Inquiry
Final Report (31 March 2015). Some super account holders
will manage their super and non-super assets to offset this
risk, but many account holders would not.
63 Allen Consulting Group, Enhancing Financial Stability and
Economic Growth (see note 57).
64 Two effects that weaken the link from savings to investment
are (a) some of the increased super savings is invested
offshore; and (b) the increased super savings lowers the
Australian cost of capital which causes a reduction in foreign
65 Saten Kumar, Scott Fargher and Don Webber, Testing
the Validity of the Feldstein-Horioka Puzzle for Australia
(2009). The random effects model in: Saten Kumar
and B. Bhaskara Rao, ‘A Time Series Approach to the
Feldstein-Horioka Puzzle with Panel Data from the OECD
Countries’, Munich Personal RePEc Archive Paper No. 18464
(November 2009). And the models with more controls in:
Julien Fouquau, Christophe Hurlin and Isabelle Rabaud,
‘The Feldstein-Horioka Puzzle: a Panel Smooth Transition
Regression Approach’, Orleans Economic Laboratory
Research Document No. 2006-23 (2006).
66 Jerry Coakley, Ana-Maria Fuertes and Fabio Spagnolo, ‘Is
the Feldstein-Harioka Puzzle History?’, The Manchester
School 72:5 (September 2004), pp. 569-90.
67 See also Alison Preston and Siobhan Austen, ‘Women,
Superannuation and the SGC’, Australian Bulletin of Labour
27:4 (December 2001), pp. 272-95.
68 See Australian Bureau of Statistics, Household Income
and Wealth, Australia, 2013-14, Cat No 6523 (2016),
‘Feature Article: Superannuation in Australia, 2003–04 to
69 Ken Henry et al, Australia’s Future Tax System: Final Report,
Detailed Analysis: Part 2 (2009), Chapter A.
70 George Kudrna and Alan Woodland, ‘Macroeconomic
and Welfare Effects of the 2010 Changes to Mandatory
Superannuation’, Economic Record 89: 287 (December
2013), pp. 445–468.
71 As above, Table 5.
72 As above, Table 4.
73 As above, Table 3.
74 As above, p. 460.
75 In other words, the overall benefit in this option could
be obtained by a cut in income tax or taxes on super,
offset by an increase in the GST, with no change in the
76 Kudrna and Woodland, Table 4 and page 462 for wages;
Michael Kouparitsas, Dinar Prihardini and Alexander
Beames, Analysis of the Long Term Effects of a Company Tax
Cut, Treasury Working Paper 2016-02 (The Australian
Government the Treasury, 2016).
77 Ross Guest and Ian McDonald, ‘Superannuation,
Population Ageing and Living Standards in Australia’,
Economic Analysis and Policy 32:1 (March 2002), pp. 19-34.
78 As above, p. 32.
79 Ross Guest, ‘Superannuation, Owner-Occupied Housing
Demand and Private Savings in Australia’, Australian
Economic Review 37:2 (June 2004), pp. 198-204.
Results are in Table 1, but are for an increase in the SG
from 12% to 15%. Note that this study assumes that
households aren’t myopic and therefore understates the
benefit of the SG.
80 Peter Dixon, James Giesecke and Maureen Rimmer,
Superannuation Within a Financial CGE Model of the
Australian Economy, Centre of Policy Studies Working
Paper G-253 (Melbourne: Victoria University, June 2015).
81 As above, Figure 29.
82 Allen Consulting Group, Enhancing Financial Stability and
Economic Growth (see note 57).
83 As above, p. 44.
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