Battlelines drawn on super as Labor senses a backflip
A political row has erupted over whether freezing the scheduled increase in the super guarantee would lift living standards for working Australians.
A political row has erupted over whether freezing the scheduled increase in the super guarantee would lift living standards for working Australians, with Labor accusing the government of preparing the ground to backflip on a key election promise.
An independent review of the retirement system released on Friday found that working life income for most people would be about 2 per cent higher if the guarantee stayed at 9.5 per cent rather than be increased to 12 per cent.
Josh Frydenberg said the government would consider the report but argued that Australians were “living in a very different economic environment than we were this time last year” following the economic shock of COVID-19. “That has had a major impact on employment, on wages, on the labour market more generally, as well as the economy and so we need to make decisions based on the economic facts at the time,” the Treasurer said.
The review, chaired by former Treasury secretary Mike Callaghan, found that halting the super guarantee increase would hand middle-income earners a pay boost ($32,400) across their working lives roughly equivalent to the reduction in their retirement savings ($32,900).
However, for lower income earners, the wages boost ($12,200) would fail to make up for the losses in their retirement nest eggs ($28,000). Wealthy Australians would receive an income boost ($58,200) that failed to match the erosion in their retirement savings ($147,400).
Opposition Treasury spokesman Jim Chalmers rejected suggestions that pausing the super guarantee increase would deliver higher living standards, arguing wages growth fell after Tony Abbott delayed the increase in 2014. “The government’s argument that freezing super will boost wages growth does not stand up to scrutiny given wages were historically stagnant after the last time this government froze the super guarantee,” Dr Chalmers said. “Does Scott Morrison seriously believe that cutting super will see wages rise by the same amount, let alone reverse the unprecedented period of wage stagnation seen under his government?”
The report also found that older Australians tended not to eat into their savings, with data from a large super fund showing members who died left “90 per cent of the balance they had at retirement”.
Mr Morrison promised to continue with the scheduled increase in the super guarantee to 12 per cent by 2025 during the 2019 election, with Anthony Albanese on Friday saying the review was evidence the government was “laying the groundwork for another backflip”.
The Opposition Leader also continued his assault on the government’s early access to super scheme, arguing that 600,000 Australians had been left with superannuation balances of zero.
Framing any pause in the super guarantee increase as a potential election issue, Mr Albanese said the government’s “ongoing attack on superannuation will be resisted by Labor”.
Chartered Accountants Australia and New Zealand superannuation leader Tony Negline said the super guarantee rate should remain at 9.5 per cent. “We need to be making it easier, not harder, to boost the economy,” he said.
Association of Superannuation Funds of Australia chief executive Martin Fahy said: “AFSA research found that 75 per cent of Australians support the legislated increase to 12 per cent SG which is a cost to business of less than one dollar a day for the average worker.”
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