No ‘magic’ wage rise from SG cut: ISA

Lachlan Maddock
— 1 minute read

Freezing the SG increase won’t lead to higher wages, according to Industry Super Australia (ISA).

The possibility that the legislated SG increase will hit wage growth at a time many Australians can ill afford to lose take-home pay has been a key point in the Morrison government’s arguments for cutting super. But while the government has backed off since the budget, ISA has warned that a cut won’t deliver the promised pay rise. 

“When the super rate was last delayed in 2014 there was no wage rise, and millions of workers’ pay packets were cut. Politicians could wave a magic wand to increase wages then, and they don’t have a wand now,” said ISA chief executive Bernie Dean. 


ISA analysed 8,370 enterprise bargaining agreements and found that the average wages growth in agreements certified before the SG freeze in 2014 was the same as agreements certified after it. Average remuneration was higher for agreements certified before the 2013 election, and there was no “catch up” wage increase for agreements certified afterwards.

“These small staged increases are affordable for employers and the key to giving people more choice about when they can stop work and control over their life in retirement,” Mr Dean said.

“The community won’t take kindly to a broken promise that will make millions more Australians dependent on the pension and hike taxes for those still working.”

ISA’s position echoes that of AIST CEO Eva Scheerlinck, who said 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 InvestorDaily in August.

“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.”


No ‘magic’ wage rise from SG cut: ISA
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