RBA Governor Philip Lowe has warned that the legislated super increase will hit wage growth, but that Australians need to weigh the trade-off between current and future income.
In response to a line of questioning from Liberal MP Tim Wilson, who has been a proponent of freezing the legislated increase of the super guarantee to 12 per cent, Governor Lowe warned that “increases of this form do get offset by lower wage growth over time”.
“It will certainly have a negative effect on wages growth,” Governor Lowe said. “If this increase goes ahead I would expect wage growth to be even lower than it otherwise would be. There will be an off set in terms of current income. Some people say that’s perfectly fine because people will have a higher future income.
“So there’s a trade-off here. Do we want people to have the income now or do we want them to have it later on?"
Governor Lowe said that he would not enter into a debate on that trade-off because it was “potentially politically controversial”, but noted that both parties currently supported the legislated super increase.
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