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We are a 10-speed economy: NAB chief
NAB chief Cameron Clyne.

Talk of a two-speed economy in Australia is damaging, says National Australia Bank chief executive Cameron Clyne.

Mr Clyne told an American Chamber of Commerce in Australia luncheon today that Australia was more like a 10-speed economy.

He said describing the economy as having two speeds was hurting confidence.

"Part of the problem with this constant reference to two speeds is that people feel that if they are not in the express lane, they're going backwards, which is not the case," Mr Clyne said.

He said confidence, not interest rate cuts, was the key to boosting the economy.

"Part of what's needed to restore confidence is broadening the debate from two speeds," he said.

Mr Clyne said talk of two speeds ignored the fact that the economy was in transition and that the changes that the economy was undergoing had happened many times in the past and would happen many times in the future.

The term two-speed economy general refers to those sections of the economy enjoying the benefits of the resources boom, compared to those that are not.

A higher superannuation rate of 15 per cent would have great benefits for the economy, he said.

The federal government’s superannuation guarantee, currently at nine per cent of an employee’s basic earnings, is set to rise in increments to 12 per cent, starting with an increase to 9.25 per cent in 2013.

Mr Clyne told the lunch that as a banker, his business would benefit from a higher superannuation guarantee.

"I’m a rent-seeker in this industry, so therefore my comments should be taken (as pertaining) to that,” he said.

"Naturally, I’d love the superannuation guarantee to be 15 per cent.

"That’s narrow debate, look, that’s from my perspective."

But Mr Clyne said he thought there was a broader series of benefits associated with having a 15 per cent superannuation guarantee levy.

"If you went back to the original architecture of the (superannuation) guarantee levy from 1992, you could find a strong case that we would have been virtually untouched by the GST (goods and services tax) because we would have had $600 billion extra in superannuation even without fairly modest participation of fixed income that would have pretty well closed the optional funding gap.

"So I think it’s a much broader economic debate about the benefits of superannuation."

Mr Clyne said superannuation funds were a source of capital for industry, and during the global financial crisis it had enabled many companies to recapitalise.

It also boosted the financial services industry, supported the development of technology, and provided a critical platform for an ageing population.

Mr Clyne said that at the time the superannuation guarantee was introduced it had been predicted that it would destroy the Australian economy.

"It has in fact been one of the great benefits for the Australian economy, without a question,” he said.

The West Australian

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