Ideas@TheCentre – The Centre for Independent Studies


Ideas@TheCentre brings you ammunition for conversations around the table.  3 short articles from CIS researchers emailed every Friday on the issues of the week.

Real choice in superannuation

Simon Cowan

26 July 2019 | Ideas@TheCentre

It has been an article of faith on the left for several years that one of the best things that could be done to improve retirement for working Australians is to raise the compulsory super contribution rate.

Currently set at 9.5%, legislation has been in place for some time mandating an increase to 12% (scheduled to take place by 1 July 2025).

The Coalition has had the good sense to delay it once already. They need to go further and scrap it altogether. It offers little benefit and a whole lot of downside.

There is no question from an economic perspective that superannuation is paid for by reductions in workers’ take-home pay. This fact was something that more or less everyone used to agree on (from Paul Keating on down), at least until it became politically convenient to pretend otherwise.

The Grattan Institute found that the increase in compulsory super will strip $20 billion a year from workers’ wages.

It is scandalous that, at a time when we are battling low wage growth, that we have committed to further wage reductions for the next six years.

For low income people in particular super is a bad deal. High fees, low returns, multiple accounts, useless insurance and a reduction in much needed take home pay leading to difficulty in buying a home and supporting a family — all for what? A mediocre super balance and a lifetime on the age pension.

Super should be voluntary, at least for those earning minimum wage and below.

Offering people a tax-efficient option to save for their retirement during their working lives is absolutely mandatory. Compelling everyone to do so is mistaken policy.

Nor should we be concerned about the misuse of the tax concessions under a voluntary system. With caps on concessional contributions and concessional balances in retirement, the system is already set up to prevent it.

In his maiden speech to Parliament, newly elected NSW Senator Andrew Bragg made a case for voluntary super simply. He said, ‘I do not believe this system is working for Australians.’ Spot on.

Stop talking about the future of work

Glenn Fahey

26 July 2019 | Ideas@TheCentre

Ernst and Young’s recent reportStop Talking about the Future of Work – implored radical action of education ‘ecosystems’ (they mean workplaces and educators). In their view, the science is settled, and it’s time for workers, en masse, to drop the hardhat and don the keypad. The time for talk is over and the revolution must begin.

They are right about one thing – it is time to stop talking about the future of work – at least a moratorium. Well-intentioned as engaging in foresight is, in the interim, it can risk doing more harm than good because it distracts from addressing immediate — and urgent — needs.

The best way to prepare for the uncertain future is ensuring today’s systems are robust. This should be the focus for now — rather than thrusting toward a dystopian future.

This means dropping the trendy buzzwords bandied about by ‘futurists’ and knuckling down on rebuilding confidence in vocational education and training (VET).

The Joyce review into the VET sector, released in April, offered a pathway for just that. Its recommendations are broad, but not especially bold: improve quality assurance; make funding nationally consistent; improve national coordination; simplify the apprenticeship system; help people make more informed career choices.

In recent weeks, both Minister Cash and the Prime Minister have been bullish on VET in ‘delivering skills for today and tomorrow’. For his part, the PM signalled VET’s ‘upgrade’ as a key priority for this term of government.

As Morrison put it, “as our economy is growing and changing, our skills system needs to grow and change with it.” On this, everyone is on board. But there are competing views on how to get there — whether to push today’s ‘hard’ skills or tomorrow’s ‘soft’ skills.

EY and the soft skills crowd, prioritise ‘deep and transferrable skills’ that ‘transcend’ specific industries and occupations. They take inspiration from a 2018 World Economic Forum report that champions forming skills like: ‘leadership and social intelligence’; ‘emotional intelligence’; ‘resilience, stress tolerance, and flexibility’; ‘active learning’; and ‘initiative’.

They see plugging today’s (hard) skills gaps as short-sighted. But we need hard skills to address urgent deficiencies.

Many school leavers do not achieve the basic literacy and numeracy needed to succeed at work. This impacts on business – 44 per cent of employers faced difficulty recruiting the necessary skills in 2017-18, jumping from 37 per cent in 2016-17.

The RBA Governor also singled out the high vacancy rate and pockets of skills shortages as drags on the economy, with 35 occupations remaining in national shortage.

Despite suffering these shortages across almost all technical and trade occupations, enthusiasm for apprenticeships remains sluggish, with numbers declining for the sixth year in a row.

As for the future, skills prospects may be less revolutionary than futurists suggest. Five of the top six jobs expecting the highest demand require ‘harder’ skills than you might think: carers; nurses; childcare workers; waiters; and education assistants.

If the PM is to successfully ‘lift our skills capabilities,’ an eye on the future is prudent, but he mustn’t lose sight of jobs and growth for the ‘quiet Australians’ who won the election in May. He should double down on hard skills for jobs today and steer well away from the utopian drive of his predecessor’s ‘innovation and science agenda’.

The writing is on the wall — stop talking about the future of work, and focus on the now.

The North Sydney Nannies

Monica Wilkie

26 July 2019 | Ideas@TheCentre

Not only are nanny state laws illiberal and infantilising for adults, they often overlook better solutions. Nowhere is this clearer than with government anti-smoking policies.

North Sydney Councillors have unanimously voted to ban smoking in their CBD. Not content with prohibiting adults from engaging in a lawful activity, councillors also indicated they wish to extend the ban to cover vaping.

They are ignoring that vaping has proven effective at rapidly reducing smoking rates in the UK and US. By removing harmful substances and leaving the nicotine, e-cigarettes are 95% less harmful than tobacco. But despite being an effective harm reduction tool, nicotine vaping remains illegal in Australia.

Governments say they want people to stop smoking. However, their smoking cessation strategies punish smokers instead of assisting them in quitting.

North Sydney Mayor Jilly Gibson echoed this thinking when she said, “…this is about non-smokers tonight. Smokers have been considered over the decades.”

A stroll through the excessively extravagant recent history of smoking legislation shows just how lavishly smokers have been ‘considered.’

Tobacco advertising was banned in 1976. Continued tax increases and excise rates mean Australia now has the most expensive cigarettes in the world. Cigarette packaging has gone from vibrant colours to graphic health warnings, to a dreary plain olive green.

There are smoking bans in government buildings, shopping centres, sporting grounds, pubs, clubs and restaurants.

Further, all this ‘consideration’ has caused unintended consequences. Plain packaging has been a boon for the illegal tobacco trade as counterfeiting becomes easier and packets are significantly cheaper.

These illegal products not only fund human trafficking and terrorism but avoid the quality controls of regulated tobacco products.

Everyone who smokes knows it is bad for them. But the decline in smoking rates has stagnated since 2013.

E-cigarettes are largely flavoured compounds, the ‘exhaust’ of which are tiny amounts of nicotine dispersed into the air in water vapour that evaporates within 10-15 seconds. What the government has banned is essentially lolly-flavoured steam.

There is a growing argument that if we really want to help people quit, we should explore the potential benefits of vaping. But we need to overcome the heavy-handed, nanny state tactics that are intent on shutting off that path.