Superannuation and Public Investment

By Harold Levien

This year contributions to super funds will exceed $60 billion in Australia. However this will neither promote security in retirement - because of corporate collapses and looses - nor significantly assist Australia's economic development.

The vast majority of contributions flow into the purchase of paper securities - shares, debentures and bonds - and property, both in Australia and overseas. The effect is simply t raise the value of these securities and property that redistributes income - particularly to higher income groups and investment trusts. Some of this income will flow into increased consumption especially of imports that enlarge our current account deficit.

By leaving superannuation to the market Australia squanders a magnificent opportunity both to provide absolute security to superannuants and to fund sorely needed improvement to public infrastructure and the environment.

(Australian Options; no 41, Winter 2005)