Superannuation: PM’s broken promise could cost couple’s $200k

Scott Morrison has dropped his biggest hint yet that he considering an about-face that could cost young Aussie couples up to $200k.

Scott Morrison has dropped his biggest hint that he is considering dumping the super increase in a move that Labor warns could cost young couples up to $200,000.

The Prime Minister confirmed today that he was considering delaying the legislated increase to workers superannuation from 9.5 per cent to 12 per cent to protect jobs.

But he stressed that he “hoped” it would not be necessary. Mr Morrison said he would make a final decision on the basis of what was the best decision to protect workers’ employment in the COVID-19 economy.

“I will do and the government will do what is in the best interests of people getting jobs and staying in jobs,’’ he said on Friday.

“You’ve got to look at the situation as you find it. The situation today is different to what it was previously. That doesn’t necessarily mean you go down that path but you have to deal with the situation as you find it. Not as we would like it to be.”

If it is scrapped, it would represent dumping a legislated 2.5 per cent pay increase for every worker in Australia and would require legislation to take the money away from workers’ nest eggs.

But Labor has warned the impact on retirement incomes over a lifetime could be as much as $200,000 for a young couple in their 30s today.

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The Prime Minister Scott Morrison speaks during a press conference in Parliament House, Canberra. Picture: NCA NewsWire /Gary Ramage

Last month, news.com.au exclusively revealed a Treasury report will warn that Australian workers face years of lower wages if the legislated increase to superannuation in the post COVID-economy proceeds.

The superannuation guarantee is set to increase to 10 per cent in July 2021, before rising to 12 per cent in 2025.

According to the confidential 650-page report, there’s a “trade off” between super increases and wage increases and workers would face years of even lower wages if it goes ahead.

“I am aware of the commentary by everybody from the Reserve Bank governor who said continuing those arrangements would be bad for employment,’’ the Prime Minister said today.

“And it is the circumstances that have occurred since the election which have made that the case.”

Mr Morrison also referenced his pre-election pledge that he would not dump the super guarantee.

“Prior to the election, it was certainly my view, and I articulated that those were legislated changes, increases, and we had no plans to change any of those and that was certainly our view,’’ he said.

“COVID-19 has occurred and people’s jobs are at risk. But that said it’s something the government needs to carefully consider.

“This doesn’t come into effect until July of next year so I don’t think there’s any undue haste that is needed here to consider these issues.

“I hope, I would certainly hope, that and I am an optimist, that by May of next year we would be looking at a very different situation. I hope we are.”

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Young couples stand to lose up to $200,000. Picture: Supplied

Labor’s superannuation spokesman Stephen Jones said it was now clear the Prime Minister did not intend to keep his word.

“It’s clear that he intends to break his promise,’’ he said.

“They are using COVID as a cover. They have been planning this since they started the Retirement Income Review.”

Mr Jones said it was no accident that there had been a steady stream of Liberal MPs calling for the super increase to be scrapped or frozen.

“All those backbenchers have been out on a licensed revolt,’’ he said.

“It will cost a 30 year old couple a massive $150,000 to $200,000 in retirement savings. How can the PM take 15 per cent (in super) while arguing the person cleans his office should only get 9.5 per cent?”