The Inflation Tax · Part 3
The Dial We Don't Use
Could super fight inflation instead of rate rises? Three ways to share the cost more fairly, and let households keep what they put in.
Opinion and general information only, not financial advice. Scott, Charlene, Levi, Paul, Madge and FMA are fictional. Income bands and figures are hypothetical.
"Why can't everyone chip in a little?"
It's Sunday night on Ramsay Avenue in Modbury. Bouncer is asleep on the couch, and Scott and Charlene are doing the budget again.
They know the story by now. Four RBA rate rises in 2026 added $323 a month to their $500,000 home loan (The $300 Question). They've learned that their bank, Fat Margin Australia (FMA), passed each rise on within a fortnight, and that loyal customers often pay more than new ones (Locked-In Profits).
Charlene puts the pen down. "If the whole country needs to spend less, why is it just us? Why can't everyone chip in a little, instead of us paying a lot?"
It's a good question. And economists have started asking it too. In August 2026, independent economist Saul Eslake discussed on the 7am podcast whether superannuation could be used to manage inflation (InDaily). The Australia Institute's Dollars & Sense asked the same question (Australia Institute).
The short answer
Yes, there are fairer dials, and we don't use them. Australia could temporarily divert a small slice of every worker's pay into their own super, levy a temporary tax returned as services, or turn part of each rate rise into home equity instead of bank margin. Each way, households keep what they give up, instead of handing it to a bank.
None of these ideas replaces the cash rate. The point is to add a second dial beside it, so the RBA doesn't have to lean so hard on one in three households.
1. The super dial: everyone chips in, and keeps it
Here's the idea in one line. When inflation runs too hot, a small share of every worker's pay goes into their own super account instead of their pocket. When inflation is back under control, the dial returns to zero.
Two things make it different from today's super:
- It comes from the worker's pay, not the employer's. The Super Guarantee your employer already pays stays as it is.
- It works like income tax bands, so lower earners pay less. Each rate applies only to the part of your income inside that band: nothing on the first $50,000, 2% on income between $50,000 and $120,000, and 3% on income above $120,000. Earning a dollar more never pushes your whole income into a higher rate. (Hypothetical bands, for illustration.)
Now put four households from our street through it:
| Household | Under the 2026 rate rises | Under the super dial (illustrative) |
|---|---|---|
| Scott and Charlene, mortgage, earning $95k and $60k | Pay FMA $323 more a month | About $92 a month into their own super |
| Levi, 28, renter, earning $70k | Little direct change | About $33 a month into his own super |
| Paul, owns outright, earning $200k | Earns more interest on savings | About $317 a month into his own super |
| Madge, retiree, term deposit | Earns more interest | Nothing: no wage, no diversion |
Notice what changes. The cost moves from one household to every worker. Scott and Charlene still feel a pinch, but it's shared with Levi and Paul. And every dollar lands in the worker's own retirement savings, not on a lender's books.
These numbers show who chips in, not exactly how big the dial would need to be. Matching the cooling effect of a rate rise would take proper modelling.
2. The other option: a tax returned as services
The second dial works differently. Everyone pays a small, temporary levy, which cools spending. Instead of handing the money back as cash, the government uses it to fund services that lower household bills, such as childcare, public transport or energy.
For Scott and Charlene, that might mean a slightly smaller pay packet, but cheaper childcare for the kids. For Madge, who has no wage, a levy could reach her too if it's designed that way, which the super dial can't do.
3. The principal dial: rate rises that build your equity
The third idea keeps the cash rate in charge but changes where the money goes. When rates rise, mortgage holders still pay more each month, so spending still cools. But part of that extra repayment comes off the loan balance instead of going to the lender as interest.
Banks would still need to cover their own higher costs, because they have to pay savers like Madge more when rates rise. So only the bank's extra margin would be redirected. In The $300 Question, we estimated that about $129 of Scott and Charlene's extra $323 a month was a gross funding-cost advantage for FMA. Under a principal dial, that share would go off their loan balance instead.
Same squeeze on the family budget, same cooling effect. The difference is that Scott and Charlene would own more of their home at the end of it, instead of FMA booking the windfall.
The catch: it would need new rules for lenders, and a fair way to measure how much of each rise is genuine cost and how much is margin. (An idea for discussion, not a worked-out policy.)
Here's how all four dials compare:
| Cash rate rises (today) | Super dial | Tax returned as services | Principal dial | |
|---|---|---|---|---|
| Who pays | Mainly variable-rate mortgage holders | Every worker, banded by income | Every taxpayer, designed by government | Mainly variable-rate mortgage holders |
| Where the money goes | To lenders as extra interest | Into each worker's own super | Into services that cut household bills | Margin goes off the loan |
| Do you get it back? | No | Yes, at retirement | Yes, as cheaper services now | Yes, as home equity |
| Who decides | The RBA, acting alone | Would need new laws | Would need new laws | Would need new rules for lenders |
| How fast | Within weeks | Slow to set up, then automatic | Slow to set up | Within weeks, once set up |
All three new dials share the same strength: households still do their part to cool spending, but they get something back instead of handing it to a bank.
4. The honest catches, and the answers
No dial is free. Here are the fair objections, and why they don't sink the idea.
"You can't touch super until retirement." True. A family in mortgage stress loses cash it needs today. But that happens under rate rises too. The difference is where the money ends up. Under rate rises it goes to the bank. Under the super dial it stays in your name. More super also eases pressure on the Age Pension later.
"It's harder on low earners." Also true, which is why the bands matter. A dollar hurts more on $50,000 than on $200,000. The aim is equal pain, not equal percentage. Getting the bands right is an open design question, and it deserves a public debate.
"Mortgage holders would just pay twice." Only if the second dial is added on top of the same rate rises. The point is that if every worker chips in and spending cools, the RBA could need smaller rate rises to do the same job. Smaller rate rises are how Scott and Charlene actually come out ahead.
A design question worth debating. The cash rate doesn't disappear, so Scott and Charlene would still feel some rate rise and pay their super slice. Should mortgage holders be exempt? A blanket exemption sounds fair to them, but it would push more of the cost onto renters like Levi. A middle path: give mortgage holders a credit, so every extra dollar of interest they pay reduces their super slice. That way everyone chips in roughly the same, whether their share goes to a bank or into their own super. (An idea for discussion, not a worked-out policy.)
"It needs politicians to agree." Yes. Today the RBA can move in weeks without asking anyone, and a new dial would need new laws and careful design. That's a real hurdle. But "it's hard to change" isn't the same as "it shouldn't change". The economy has changed since the cash rate became our main tool. Mortgages are bigger, and the burden is narrower. The tools can change too.
So what?
Charlene's question has a real answer. Australia doesn't have to fight inflation by leaning on one in three households while lenders collect the extra interest. A second dial could spread the cost across every worker and let them keep what they contribute, or turn a rate rise into home equity instead of bank margin.
It won't happen overnight, and the design needs work. But the question is no longer whether there's a fairer option. It's why we're not even discussing it.
This article is general information and the author's opinion. It doesn't consider your personal circumstances. The author is not a licensed financial adviser. Before making financial decisions, speak with a licensed professional. Figures are illustrative.