New report shows increase in super payments could kickstart economy

One of Australia’s major industry superannuation groups says the scheduled rise in payments to workers will help boost rather than hinder the economy.

Industry Super Australia says the legislated rise in superannuation payments for workers will enable the sector to kickstart the economy.

From July 2021 employers will increase payments to workers from 9.5 per cent to 10 per cent, and by July 2025 it will be 12 per cent.

An ISA economic survey shows the superannuation increase would provide nine of the group’s industry funds with an additional $33 billion in forward capital expenditure.

The estimated figures coincide with growing political tension for the legislated rise to be either ditched or delayed due to the recession sparked by the coronavirus pandemic.

Its scrapping is being called for by a group of Coalition MPs and senators who believe the rise would be detrimental to Australian wage growth and place further cost pressures on businesses to retain workers.

Former prime minister Paul Keating and Industry Super Australia are against the scrapping of the rise in superannuation payments. Picture: Nikki Short

The intended increase in the investment pipeline also comes as the sector continues to be drained of funds through the Federal Government’s early release of superannuation scheme, which allows fund members to access up to $20,000 in the 2020 and 2021 financial years.

As of August 30, $32.6 billion has been sapped from the savings pool from Australians claiming financial hardship during the pandemic.

ISA believes the additional inflow of funds would stimulate business activity and create hundreds of thousands of jobs in all facets of the Australian economy, assisting in alleviating the country’s rising unemployment rate.

ISA chief economist Stephen Anthony said funds were able to invest in major public projects that assist in boosting productivity within the economy.

“Funds are looking to invest for the next 40 years for member interests,” he said.

“Everyone benefits from a strong industry super system. It is proven to strengthen the economy, create jobs and grows workers’ retirement nest eggs …”

ISA chief executive Bernie Dean says a strong superannuation system benefits the economy. Picture: Supplied

Of the projected $33 billion, ISA’s report anticipates $19.5 billion of capital expenditure will generate more than 200,000 jobs between 2020 and 2023.

Mr Anthony said a change to the planned increase in superannuation guarantee payments would hinder the projected investment pipeline into Australia’s near $3 trillion retirement pool.

ISA said investments through superannuation save the federal budget $2.7 billion through higher tax receipts and low interest payments.

“Our economic recovery and workers’ dignity in retirement both hinge on stable and optimal policy settings, including the promised super guarantee rise and preserving savings for retirement,” ISA chief executive Bernie Dean said.

“Industry fund members are deeply invested in Australia’s future which is helping to rebuild their retirement savings, keep businesses in business and Australians in jobs.”