Outside the Australian capital cities, the average level of superannuation savings held by Novocastrians is the highest of all major cities and regions, according to the Association of Superannuation Funds of Australia.
This is very good news. It shows two things. First, the Labor Party's initiative in 1992 to create a superannuation scheme for all Australian workers is paying off for the residents of a traditional working class region.
Second, it shows Newcastle is a popular retirement centre for cashed-up retirees. And, like Queensland's Gold Coast 50 years ago, Newcastle has the thumbs up from well-off seniors, a portent of good things to come for people of all ages.
It's a rare thing to see a major public policy intervention experience enduring success. Support for Australians in retirement started with the national old-age pension scheme in 1908. Priority access to public housing became an important state-based provision for those without home ownership. Then federal Labor's establishment in 1984 of Medicare guaranteed older Australians free access to health and hospital services. But insufficient free cash was always a problem for the elderly. Working people retired with little cash.
Labor's Superannuation Guarantee Act 1992 has changed this dramatically.
The act made it compulsory for employers to make superannuation contributions on behalf of their employees. Today, the superannuation savings of Australian workers and retirees totals $3.5 trillion. This pool of money could buy every Australian-listed company 1.5 times.
Moreover, the national superannuation savings pool is growing rapidly.
Each week Australian employers tip $1 billion into workers' superannuation accounts. It's little wonder the big superannuation funds are now major investment houses owning corporations, utilities, motorways, real estate and agricultural trusts the world over. As one superannuation manager described it to me recently, as fast as a fund can clear a lift full of $100 notes and find places to safely invest it, the next one is opening.
The Australian superannuation system is the world's fifth largest by value, even though by population size we rank only 54th. Industry experts predict Australia's superannuation savings pool will exceed $10 trillion by 2040. This is an extraordinary sum of money.
So why are Newcastle workers and retirees enjoying a disproportionately large share of the nation's superannuation savings? Why is Newcastle leading regional Australia? I have three explanations.
The first, as I observe above, is that Newcastle has become a popular retirement destination. Here we can observe a new phenomenon for Newcastle: retired property owners from elsewhere in NSW happy to land a new apartment with water views after selling a house or farm, re-energising their lives with a healthy superannuation balance jingling in their pockets.
A second reason is that the Newcastle workforce is more regulated than most; more people belonging to unions, working under awards and enterprise agreements, where superannuation obligations of employers are closely watched, where the gig economy has limited penetration, where women are more likely to have access to maternity leave, where young people are made aware of their superannuation entitlements from the get-go. Newcastle may have shed much of its industrial past, but making sure employers meet their obligations to workers lives on. Healthy local superannuation balances are the consequence of this vigilance.
A third reason is a negative one, the out-migration of young workers. Take away the low superannuation balances of the young and the city's overall average rises. Unfortunately, as Newcastle lags in developing a genuine professional services sector, its best and brightest head elsewhere to start their careers. The best from elsewhere fail to replace them.
Newcastle is enjoying the fruits of successful Labor Party policy from three decades ago. But can we look forward to Labor in 2023 delivering something as powerful and permanent for the city?
- Phillip O'Neill is professor of economic geography at Western Sydney University.
