Superannuation increase under cloud as employers grapple with coronavirus pandemic

Fears a superannuation increase will come at the cost of future wage growth is posing a threat to an already-legislated plan.

A planned increase to superannuation contributions could be derailed over fears it will come at the cost of future wage growth.

Over the next five years, contributions paid into workers’ superannuation funds is legislated to increase from 9.5 per cent to 12 per cent.

But Reserve Bank governor Phillip Lowe and think-tank the Grattan Institute have raised concerns forcing the rise on employers as they recover from coronavirus could result in stagnant wage growth.

Superannuation assistant minister Jane Hume said on Monday it would be irresponsible of the Federal Government not to consider a “trade-off”.

“It’s legislated so my understanding is that it’s going ahead,” Senator Hume told ABC Radio National.

When asked what her position on the increase was, she said: “I’m reasonably ambivalent. It’s going to be a political decision.”

Senator Jane Hume says the Government hopes it can come out of the COVID-19 crisis with economic growth and job creation. Picture: Tim Carrafa

Energy Minister Angus Taylor was also asked about his support for the superannuation guarantee.

“That’s our policy, and we’re sticking with it,” Mr Taylor told ABC’s News Breakfast.

“We’ve had to make some allowances to give people access to cash in the last little while.

“But we’ll continue to support the super industry as we have.”

The Grattan Institute report showed the early release of superannuation was not a valid reason for contributions paid by employers to increase from 9.5 per cent to 12 per cent.

Prime Minister Scott Morrison last week acknowledged the commitment to increase super contributions made by the Liberals during the 2019 election campaign.

“There’s been a rather significant event since then, but nevertheless they are matters we are aware of, and they have to be considered in the balance of all the other things the Government is doing in this space,” Mr Morrison said on Friday.

Opposition treasury spokesman Stephen Jones demanded the Government confirm its commitment to superannuation.

“Let’s not buy this argument that workers are going to get a wage increase if we freeze superannuation. It’s simply not true,” he said.

He also called on Treasurer Josh Frydenberg to release the recently finalised Retirement Income Review report.

Australian Council of Trade Unions president Michele O’Neil has also joined the push for certainty.

She said denying working people this increase would only deepen the looming retirement crisis.

“Jane Hume’s ambivalence could cost a 30 year old nurse $121,000 by retirement,” Ms O’Neil said.

“This is how the Morrison Government will repay the frontline workers who are saving lives during the pandemic.”