CoPS/IMPACT Working Paper Number G-266

Title: A modelling framework for analysing the role of superannuation in Australia's financial system

Author: Jason Nassios, James A. Giesecke, Peter B. Dixon and Maureen T. Rimmer


The proportion of employee wage income compulsorily allocated to superannuation is set to increase from 9.5% to 12% by July 2025. In this paper, we investigate the implications of an expanded superannuation system for the Australian commercial banking sector. This leads to a discussion of the structural implications of such a policy, particularly on the financing of Australian residential property. We find that an increase in the superannuation guarantee drives important short-run structural shifts within the Australia economy that persist in the long-run: namely, a reduction in Australia's foreign financing requirement, an increase in the ratio of debt-to-equity used to finance the residential housing stock and the private debt to income ratio, a shift in the capital structure of the commercial banks towards corporate bonds and away from bank deposits, and an expansion of the financial intermediaries, e.g., the commercial banks, the non-bank financial intermediaries, life insurers and the superannuation sector. In future work, we intend to explore the implications of these structural shifts within the corpus of research relating to macroeconomic stability.

JEL classification: C68, G11, G17, G21

Keywords: Financial CGE model, superannuation

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