The superannuation cold war has gone hot, with both sides trading barbs over a potential freeze in the SG increase while industry bodies insist there’s “no evidence” it will hit wage growth.
The once-remote possibility of the legislated SG increase being frozen now looks increasingly likely, with Prime Minister Scott Morrison opening the door to the idea last week amid commentary from the RBA and Grattan Institute that the increase to 9.5 per cent would hit wage growth.
But according to AIST CEO Eva Scheerlinck, there’s “no evidence” to support an automatic trade-off between wages and super.
“Claims that leaving super at 9.5 per cent will deliver a pay rise to workers are not based on reality,” Ms Scheerlinck told Investor Daily. “There is no mechanism to guarantee this and we know that wages have been flat for some time.
“Millions of Australians either receive the legislated minimum wage or are not in a position to bargain for a raise. The extra 2.5 per cent of super is money to invest in super they may not otherwise receive.”
The AIST also lashed MPs calling for the freeze for receiving 15 per cent super and warned that the government’s “backflip” on an election promise would cost Australian workers. The AIST forecasts that the next scheduled rise to 10 per cent amounted to the equivalent of $5 a week for a median wage earner.
The nation’s leaders also took to Twitter to voice their opinions on the potential freeze. Former prime minister Kevin Rudd said that Scott Morrison and Josh Frydenberg have become “the enemies of working families” and called Jane Hume a “rolled-gold hypocrite” for attacking the superannuation industry after working for AustralianSuper. Ms Hume has herself been a proponent of the legislated increase, telling media in June that it would go ahead despite COVID-19.
“It has always been the government’s intention to increase the superannuation guarantee, and we haven’t deviated from that intention or that message,” Ms Hume said. “That said, I would not be surprised if we get a lot of pushback when that goes ahead next year – particularly from the business community, who [understands] that there is a limited amount of money out there to pay employees, and when you increase the superannuation guarantee something has to give.”
The prime minister has only offered restrained comment on the matter, saying the government would have to look at the SG increase in a new light as the impacts of COVID-19 continue to roll through the economy. However, the Labor Party has already seized on the issue, demanding the government release the retirement income review and downplaying the potential hit to wages.
“It’s time for the government to step forward,” said shadow finance minister Stephen Jones. “Over $30 billion worth of stimulus has come from workers’ own superannuation accounts because the government hasn’t got a plan for jobs and hasn’t got a plan for economic recovery. Surely they have got something better than this than to renege on an election promise.”
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