Superannuation Policy in Practice

The Australian on April 14, 2018 reported that Tony Shepherd, a highly respected executive with significant engagement in the private and public sectors and Chairman of the Abbot government’s cost-cutting taskforce, recently questioned whether Federal public servants and politicians should enjoy a 15.4% employer superannuation contribution when other workers receive only 9.5%.

Estimates suggest the difference between Federal public-sector superannuation contributions and the majority of Australia’s employees cost taxpayers $1.6 billion each year.  Mr Shepherd was reported as saying, “there really needs to be a review. The argument for having a higher rate of superannuation in the public sector doesn’t stack up now.”

Data from the Australian Bureau of Statistics reveals that the rate of increase in public sector salaries (full time adult average weekly earnings) in recent years exceeded that in the private sector.  Tracking this movement back over the last three reporting periods is revealed in the tables below.

Private Sector

November 2014 – 2015 November 2015 – 2016 November 2016 – 2017
1.1% 1.9% 2.3%

Public Sector

November 2014 – 2015 November 2015 – 2016 November 2016 – 2017
3.1% 3.4% 2.8%

The above figures show a clear response by the private sector to variable prosperity and the challenges associated with private sector employers endeavouring to remain competitive regionally and internationally while surviving in domestic and export markets.

While the anomaly of private versus public sector superannuation contributions should be addressed, it is equally important that all sectors look at pay comparisons in the context of total employment cost, not salaries and superannuation separately. It is also important that any analysis should also have regard to the average hours worked to achieve average earnings.

It would not be our view in work value terms, on a like for like position comparison, that the public sector is leading the market. Notwithstanding this observation, transparency and equality of opportunity would address the challenge.

Click here to find out more information on these topics.