Coronavirus: Pressure to push pause on increase in super guarantee

The peak accountants’ body has called for a pause to the increase in the compulsory superannuation rate.

Industry Super Australia chair Greg Combet has strongly backed the scheduled increase, which begins in July next year. Picture: Nick Cubbin

Employer representatives of major industry funds AustralianSuper and Hostplus are backing a review of the superannuation guarantee increase because of concerns about the economic recovery from COVID-19.

The calls came amid new figures showing Australians pulled more money out of the superannuation system than they put in over the three months to June — the first quarterly drop in net ­contributions since the compulsory super regime began in the early 1990s.

The push by employer representatives for a rethink of the legislated lift in the super guarantee to 12 per cent by 2025 creates a key rift with unions and Labor. Industry Super Australia chair Greg Combet — a former ACTU secretary — has strongly backed the scheduled increase, which begins in July next year.

Stephen Ferguson, the chief executive of Australian Hotels Association, which appoints the employer representatives to the board of Hostplus, said an increase to the super guarantee should not go ahead next July as scheduled.

“Our aim at this stage must be to ensure that as many employers as possible can come out the other side,” he told The Australian.

“Therefore, unfortunately, an increase to the super guarantee at this time represents another cost to employers that could tip the scales against employers being able to open and stay open.”

AustralianSuper director and Australian Industry Group chief executive Innes Willox endorsed the Morrison government’s decision to review the timing of the staged increase.

“We understand the Prime Minister’s desire to reassess whether July next year is the best time for this phase-in to begin,” Mr Willox said.

“The sharp downturn in the economy, the expected continued rise of unemployment and the likelihood of a further extension of the period of low wages growth are all grounds for a reassessment.”

Mr Willox said AiGroup and its 60,000 members — covering the manufacturing, construction, engineering and transport sectors — were concerned about the impact of the superannuation guarantee increase from next year.

“While a rise in the superannuation guarantee will have longer-term benefits, we need proper and mature consideration of whether July 2021 is the right time to phase in the next increase,” he said.

The Australian can also reveal the peak accountants body representing 120,000 members is urging Scott Morrison to delay the superannuation increase.

Chartered Accountants superannuation leader Tony Negline said a pandemic was “not the right time to add more financial burden to small businesses already struggling to cope”.

“Superannuation was put in place to ensure people have enough money to live off when they retire — it is one of the pillars of Australia’s retirement system,” Mr Negline said.

“But the events of this year, from bushfires to the pandemic, have been extraordinary, with small businesses slammed. Adding yet another layer of expenses to small business in a recession lacks commonsense. It could result in stagnant wage growth, limited investment, and the continued fall in employment.”

Reserve Bank of Australia governor Philip Lowe and independent think tank The Grattan Institute have warned that lifting the rate of compulsory super will come at the cost of wages growth.

Council of Small Business Organisations Australia chief executive Peter Strong hit out at the “same old faces” who were calling for the superannuation guarantee increase to go ahead as planned.

“They are saying that, even though more sensible and better placed organisations like the RBA have said it would have a negative impact on jobs and businesses,” Mr Strong wrote in an opinion piece for The Australian online.

It came as parliament on Tuesday passed legislation giving Australians powers to choose their own super fund, instead of being compelled to direct savings into a fund because of enterprise bargaining agreements.

Josh Frydenberg said the law would “allow around 800,000 Australians to make choices about where their hard-earned retirement savings are invested, representing around 40 per cent of all employees covered by a current enterprise agreement”.