The Problem with Interest Rate Hikes

The RBA's 13 consecutive rate hikes (May 2022 – November 2023, from 0.10% to 4.35%) transferred $25–35 billion in additional annual interest payments from Australian mortgage holders directly to Big Four bank profits: - CBA: $10.19B net profit (FY2023) - NAB: $7.47B · Westpac: $7.20B · ANZ: $7.10B

Only 30% of Australian households carry a mortgage — yet they bore virtually the entire inflation-fighting burden. Renters paid higher rents. Cash-holders earned more. Banks extracted the wealth.

The MSSM Framework

The MSSM replaces interest rate hikes as the primary inflation-control tool. Instead of raising the cost of borrowing — which strips money from mortgage holders and hands it to banks — it temporarily lifts mandatory superannuation contributions by 1–3%. The same demand-reduction effect is achieved, but the diverted money lands in each worker's own retirement account rather than disappearing into bank profits.

How It Works

1. Inflation Trigger: If CPI exceeds 3%, the independent Macro-Stabilisation Board raises the Superannuation Guarantee (SG) rate by 1–3% (e.g. 11.5% → 14.5%) — structured as an employee contribution, not an employer on-cost, to avoid business cost spikes
2. Progressive exemption: The first $45,000 of income is exempt from any macroeconomic SG adjustment — protecting low-wage workers
3. Wind-Down Clause: The moment inflation normalises, the SG rate steps back automatically — full take-home pay restored instantly
4. Bank Profit Cap: Commercial banks that manufacture artificial interest spreads during stabilisation phases face an automatic profit-margin tax

A 2% SG increase on Australia's $1T annual wage bill removes exactly $20B/year from aggregate demand — the equivalent of multiple RBA cash rate rises, without transferring a cent to bank shareholders.

Precedent

Singapore's Central Provident Fund (CPF) has used variable contribution rates as a macroeconomic lever since 1968. The CPF rate peaked at 50% during the inflationary boom of the 1970s–84, then was deliberately slashed from 50% to 35% during the 1985–86 recession to stimulate spending. Singapore managed soft landings in both cycles without a single interest rate shock.

Australia's technical infrastructure is already in place: - Single Touch Payroll (STP) Phase 2 (mandatory 2022): real-time payroll reporting to the ATO for every pay event - Payday Super (from July 2026): super remitted within 7 days of pay events — creating near-real-time SG adjustment capability

Theoretical foundation: Keynes's 1940 "deferred pay" proposal — redirect purchasing power into deferred savings to reduce inflation without destroying household wealth. The MSSM applies the same logic to peacetime monetary policy using Australia's $4.3T superannuation pool as the instrument.