Australia has built one of the largest retirement savings systems in the world. According to APRA, our collective superannuation balance reached a staggering $4.767 trillion in June 2026, growing by more than $400 billion in just twelve months.
That’s an enormous amount of money. Unfortunately, it’s also an enormous temptation for politicians who have never encountered a problem they didn’t think could be solved by spending somebody else’s money.
Saving, investing and building wealth are fundamental to financial independence. The libertarian objection to the current compulsory superannuation arrangements is that Canberra dictates how much of our earnings must be saved, when we can access them and, increasingly, how that accumulated capital might serve the government’s priorities.
Having compelled Australians to accumulate trillions in inaccessible accounts, our political class is now discovering that it would quite like to decide what happens to the money.
Under the Superannuation Guarantee, employers must contribute 12 per cent of eligible earnings to super. We’re told this is an additional employment benefit, generously provided by employers. Of course, anyone who has employed someone knows that businesses count the total cost of employment, not how remuneration is divided between wages and benefits.
Treasury-commissioned research by ANU economists Robert Breunig and Kristen Sobeck found that between 71 per cent and more than 100 per cent of increases in compulsory super contributions were offset by lower wage growth. In other words, workers ultimately bear most, if not all, of the cost.
The problem arises when political priorities begin influencing investment decisions.
Compulsory super isn’t free money; it’s deferred wages, with the government deciding when we’re allowed to spend them.
Consider a 25-year-old earning $80,000. Their employer must contribute an additional $9,600 annually to super, or $48,000 over five years, assuming unchanged earnings. That’s before investment returns, fees and taxes.
Imagine what that money could accomplish during those five years. It could help that young person save a deposit for their first home, repay expensive debt, finance further education, support a young family, or provide the capital to start a business.
Instead, most Australians cannot access their compulsory savings until retirement after reaching preservation age, generally 60 or 65 depending on individual circumstances, although even those goal posts keep shifting.
The conventional response is that $48,000 invested today will be worth considerably more in forty years. That may well be true. But it completely ignores the value of having access to that money today – that’s the opportunity cost.
A young couple struggling to buy their first home might reasonably prefer to own the roof over their heads rather than accumulate shares they cannot touch. Someone facing financial hardship might prefer to extinguish a high-interest debt rather than earn investment returns inside super.
Who is better placed to make those decisions? The individual who knows their circumstances, aspirations and priorities, or a bureaucrat imposing the same savings formula on millions of Australians?
As Tom Valcanis wrote last year, our housing crisis makes this contradiction particularly absurd. ABS figures show homeownership among Australians aged 25–39 fell from 65.8 per cent for Baby Boomers in 1991 to just 54.6 per cent for Millennials in 2021. The average age of a first homebuyer in Australia will soon be 40. Meanwhile, the government’s own Retirement Income Review recognises homeownership as fundamental to financial security in retirement and identifies poorer outcomes for retirees who rent.
So Canberra insists young Australians save for retirement while preventing them from using those compulsory savings to acquire one of the most important assets for retirement.
The First Home Super Saver Scheme hardly resolves the contradiction. It primarily allows access to eligible voluntary contributions, not compulsory employer contributions.
None of this means superannuation is a bad investment. APRA reported an annual return of 8.6 per cent for large funds to June 2026. You could even argue that many Australians would voluntarily contribute the full 12 per cent, or more. But it is still wrong to compel.
The case becomes particularly questionable for low-income workers, whose immediate financial needs may be greatest. Additional compulsory super can also reduce their future means-tested Age Pension entitlement, rather than increasing retirement income dollar-for-dollar.
And now there’s another, increasingly troubling problem: political interference.
More than 100 per cent of increases in compulsory super contributions were offset by lower wage growth.
In July, Prime Minister Anthony Albanese described the enormous superannuation pool as potentially a “national asset”, arguing that it could generate benefits for the nation as well as individual retirees. He encouraged greater domestic investment, particularly business lending.
Perhaps the Prime Minister has forgotten whose money it is.
Australia’s superannuation balances are private retirement savings, not Commonwealth revenue. Yet politicians are increasingly interested in mobilising this capital to address housing shortages, infrastructure requirements, the so-called energy transition and other government priorities.
Treasurer Jim Chalmers has convened Investor Roundtables to identify opportunities to channel capital towards national priorities.
In May 2026, the government announced another review of the superannuation performance test, explicitly discussing better alignment of investment with government productivity objectives.
There is nothing inherently objectionable about a member-controlled super fund voluntarily financing Australian housing, infrastructure or energy projects that they believe will deliver appropriate returns. The problem arises when political priorities begin influencing investment decisions.
If Canberra has a worthwhile infrastructure project, it can make the project commercially attractive and seek voluntary investment or fund it transparently through the budget. It should not pressure retirement funds into financing politically desirable ventures.
The distinction between private retirement savings and an instrument of national economic policy must be protected. Our political class already controls how much workers must save and when they can access their savings. Giving politicians influence over where that money is invested would compound the intrusion into individual financial freedom.
