Luke Grant:
So much to talk to on this segment today with Adam Creighton, the chief economist at the Institute of Public Affairs, who’s switched on more than most. Put it that way. Good day, Adam.
Adam Creighton:
Good morning, Luke. Great to be here.
Luke Grant:
Thanks, mate. Really good to talk to you. One Nation will start there as one this seat in WA with Luke Herdegen claiming victory in the Secret Harbour by election. It’s One Nation’s first lower house seat in the state. Also, the first time the party has defeated Labour in a head-to-head contest since they surged in popularity. And the successful candidate, Mr. Herdegen, says there are no safe Labour seats in this country anymore. What did you make of that?
Adam Creighton:
Well, look, it was an extraordinary night indeed. And the last point that you made, I think is the main one, is that this was the first time One Nation has beaten. And not just beaten, but absolutely thrashed the Labour Party in what was a very safe seat. The Labour Party has huge majorities in various safe seats around the country, just like that one. And if that were replicated in Victoria or federally, it’d be extremely bad for the Labour Party. So I think there’d be some very, very anxious labour impedes today, especially in Victoria with the election just a few months away. And I think the shock will be so great from this outcome that they will probably panic and change a policy here or there to try to appease voters. But there’ll be a great deal of analysis about this because this was not expected. The Bookies did not expect this and it will cast a shadow over the next three months of politics in Australia.
Luke Grant:
You know, mate, another mate of mine tells me that he in fact grew up around Thornton in the Newcastle region of New South Wales. I don’t know much about him, but he just looked like, I’ll say just a punter, like one of us. He didn’t look like he came through the political school of advising, now look at you, you’re a candidate. I don’t know if he’s a knockabout, but he seemed like one of us. And I just wonder if there isn’t now, this will be so hard for the major parties to turn back if we’re sick of the spin of the carry on and we’re looking for legitimate, genuine figures and we’re prepared to give them a go.
Adam Creighton:
Yeah, look, I think that’s right. I think it is very hard. I don’t think it really matters what the Labour Party does now or the coalition policy wise. I think people have tuned out more or less from what they say because over the last 20 years there’s a general view. And I think it’s a reasonable one that the major parties have not really done a great job of the Australian living standards, especially in the last 10 years. So I think it’s a stressful time for both the coalition and the Labour Party. And I think you mentioned the hunter. Well, I mean that’s a region of historically labour region just like the seat of Secret Harbour in South Perth. So I think there’d be very anxious labour and peace there too because of course it’s not just the Victorian election coming up, the New South Wales election is too in March next year.
Luke Grant:
The other thing was I think it’s optional preferential in New South Wales. I don’t know if it’s compulsory or not in Victoria, but it certainly is in a national or federal poll. So you’ve got the Greens and Labour saying whatever you do, One Nation goes last. So by default, the Liberal Party would be ahead or the coalition would be ahead of a ballot in the casting of those preferences. So isn’t it funny that by virtue of the fact that there’s One Nation there, Labour and Green preferences when it comes down to it, in some seats they’re going to be key to electing coalition MPs. That’s just a fact of the way the systems work, isn’t it?
Adam Creighton:
Yeah, certainly that’s true. And it’s also compulsory preferential voting in Victoria, but the one downside, although it’s really a very… Not a downside, the one negative for One Nation, even though it’s a very small one, was that the preference flows in Secret Harbour, 40% of preference flows went to One Nation and 50% went to Labour. So Labour gets you far more of the preferences.
Luke Grant:
Wow.
Adam Creighton:
So that’s an issue and that is because of, I think what you just mentioned, that the Labour Party and the Greens insist on putting One Nation last on their tickets. And so that is a problem actually for One Nation in the federal election, in the Victorian election. It was [inaudible 00:05:27]. It could mean that the coalition win the seats rather than One Nation if it really comes down to preferences.
Luke Grant:
You wrote, and you’ve spoken about this through the week brilliantly as you always do, and this is about superannuation. In fact, you said in the Australian, “Whatever their personal difference is, Pauline Hanson and Andrew Bragg have two admiral things in common, a willingness to speak their minds and the confidence to question one of the great sacred cows of Australian politics, that’s compulsory superannuation.”
It’s really easy mate, isn’t it? If you’re like the government, if you’re out of that mind, that opinion to say hands off super. But at the end of the day, that is the worker’s own money and we’re entitled to be sure that it’s not used in any kind of raw surely.
Adam Creighton:
Yes, certainly that’s true. And the main point I was making is that the rate has just risen far too high. I mean it’s now 12% of people’s gross wages or salaries are basically taken from them and put in these accounts that they can’t touch until they’re 60. And we’ve lived through a huge decline in living standards in the past four or five years. I think that people should have the option if they want to go to the boss and say, “Look, I’d rather have, say, 3% of it upfront now.” And so the 9 is locked in maybe as compulsory, but that extra 3, which the Labour Party insisted on, that’s increased it to 12, if they want, they can have that now paid as their wages. I mean the employer wouldn’t care. They’ve got to pay it as wages or super. So I think that’s a reasonable option to help people with the cost of living and raising a family and renting or buying a home or whatever. That’s the one main problem.
But the other point I made is super, the rate is far too high. I mean at that rate, people will have far too much money, if you like, in retirement and they’ll be passing on with these huge sums from superannuation where they could have been spending that when they were in their 30s, 40s and 50s and they could travel overseas and so forth and enjoy themselves. So I think it’s very, very skewed to retirement when, let’s face it, it’s true that when you’re young you can enjoy your life more, you’re more able to, so why not have the money then?
Luke Grant:
Yeah. And the other point you make about this whole industry is the system-wide fees, and this is an eye watering amount of money and you say it’s the biggest racket in the country. It’s impossible to argue against that I have to say.
Adam Creighton:
Well yeah, look, it’s $35 billion a year of fees for the whole system. There’s about $3 trillion in I guess what you could call big funds, the big industry funds and the big finance sector funds. And then there’s another trillion I think in self-managed super funds. So it’s about four or up, something like that, maybe a bit more. But to manage all that money costs $35 billion a year and some funds have very low fees. But even the big funds, obviously they have a preference for people being in the more expensive funds and that’s what they tend to do. I mean, personally I’m in something called an index fund, and I’d really encourage your listeners to go and have a look at what that means. Basically that means it’s very, very cheap. So the annual fee is about 0.02% a year, whereas the average is about 0.8. So that’s a very large difference. So people really should go and look at their fees. It’s really, really important. But yeah, certainly, overall it is a big racket.
Luke Grant:
The other point that I thought was fascinating is this idea that you’ve got super to sustain you in retirement. So in a perfect world, without being silly, but in a perfect world you’d whittle down your super until the end. Now, no one knows when they’re going to die. Let’s all hope we live forever. But didn’t you make the point that members who died had left about 90% of their balance at retirement there?
Adam Creighton:
That’s right. Yeah, that’s kind of what I was saying before. And that suggests that the rate set far too high, doesn’t it? The people when they retire, say at 60, 65 or 70, they get their super and then when they pass away maybe 20 years later or something like that, they’ve still got 90% of the super. So yeah, that saves far too much. And I think what that is, that’s an insight into human nature. We’re all kind of [inaudible 00:09:55]. We just love saving regardless of the stage of life. We just like to increase our wealth. But there’s a theory behind super, as I say, that’s all drawn down and spent because of course it’s had tax concessions the whole time. So the idea is that you spend it all, but that’s not happening at all.
Luke Grant:
Yeah. Let’s break down inflation a bit more. This is great work you’ve done at the Institute of Public Affairs. You say inflation has risen because of high and rising government spending and interference in the economy. Australia’s current wave of inflation is a homegrown problem, and government inflation is much higher than market inflation. Tell me through your analysis here. Talk me through it rather.
Adam Creighton:
Yeah, certainly that’s true. So the CPI comes out, well the main CPI comes out every three months. There are 11 categories and the categories that are most influenced by government, which is health and education and childcare and housing, they have over time risen at twice the rate of the other sectors which are more just private sector, so fuel regulations. So the food sector is a good example, restaurants and businesses like that, supermarkets, et cetera. The inflation in those areas is far, far lower. And the reasoning here is that when government gets involved in sectors and starts regulating or subsidising things or actually running things themselves, which is probably the worst of all, the goods and services that they provide get very, very expensive because they’re just not efficient.
Luke Grant:
Yeah. So government saying, to be fair, if that’s what I’m trying to be here, I’m not sure that I am, but they say, “Hey, listen, we’ve cut the deficit from what it would have been under the last mob and we’ve got spending under control.” I mean, that’s just rubbish, isn’t it? They’re talking about in terms of the deficit projections that were made half a dozen years ago or more in the middle of COVID, et cetera.
Adam Creighton:
Oh, there you go.
Luke Grant:
I mean, that’s just rubbish, isn’t it?
Adam Creighton:
Yeah, that is complete rubbish. I mean, the projections are just not relevant at all. Who cares what they are? What matters is actually what happens. And we just had a federal budget in May and the deficits projected were 30 or 40 billion dollars a year every year for the next four years. And actually that’s a massive understatement because if you include all the money going into the NBN and the various other, the renewable energy funds and so forth. It’s a much, much larger deficit of around $50, $60 billion every year. So gross debt’s still going up. As you know, it recently went through a trillion dollars at the federal level, and that’s just federal. The states have another 700 billion of debt. So people shouldn’t think that the public debt’s a trillion. It’s a lot more than that because the states have debt too.
So yes, when the government says that, it’s just nonsense. And we have an inflation problem. It’s almost, I think it’s 3.5%, which was the latest figure, or 3.6 was the headline one. But when you take out the volatile items, which is always worth doing because there’s always things coming in and out in terms of subsidies, it’s almost 4%, which is the highest in the Western world actually. And it’s been that way for some time now. So I think it’s almost inevitable that the reserve bank will have to put up rates next month and then maybe even a second time later in the year, which will almost certainly reduce the price of houses and apartments, which is good I guess if you’re young, but it’s not so good if you have one or you’ve just bought one.
Luke Grant:
Yeah. Yeah. Well said. Adam Creighton, the chief economist at the Institute of Public Affairs. Love your work, mate. Stay well. We’ll talk again soon.
Adam Creighton:
Thanks, Luke. Thanks very much.
Luke Grant:
Good on you, Adam Creighton.
This transcript with Adam Creighton talking on Weekends with Luke Grant 2GB from 30 August 2026 has been edited for clarity.
