Super increase plan ‘would hit wages’, faces the axe - NEWS.com.au

An increase in superannuation would cut lifetime wage earnings for the average Aussie by 2 per cent and lower-income earners would be hit the hardest, a long-awaited review has found.

The government is paving the way to scrap a legislated super rise after the retirement income review found current policy settings were “effective, sound and … broadly sustainable”.

The review warns the “weight of evidence suggests the majority of increases in the super guarantee come at the expense of growth in take-home wages”.

It instead emphasises “voluntary saving” and home ownership as key to long-term financial security.

Treasurer Josh Frydenberg said most Australians would be better off if super wasn’t increased.

“Working life income, for most people, would be around 2 per cent higher in the long run,” he said.

“So the report goes into some detail about the trade-off between a working life income and people’s wages, and that with an increase in the superannuation guarantee.”

The report should “give Australians confidence about the soundness and the sustainability of Australia’s retirement income”.

“(It) points out that the most effective way for people to secure themselves in retirement is not necessarily an increase in the superannuation guarantee, but by more efficiently using the savings that they do have,” Mr Frydenberg said.

“Government policies to boost homeownership … (are) helping to increase home ownership, which is clearly something the report points out is a positive for people in retirement.”

The Coalition had committed to boosting super from 9.5 per cent to 12.5 per cent by 2025. Labor also backed the move.

But Prime Minister Scott Morrison has since walked back the pledge, saying the economic impact of the COVID-19 pandemic meant the policy must be reconsidered.

The rate was set to rise to 10 per cent in July, but Treasurer John Frydenberg confirmed the decision would be reviewed.

“We are living in a very different economic environment than we were this time last year. We have been subject, as a nation and a global economy, to a once in a century economic shock,” he said.

“It has had a major impact on employment, on wages, on the labour market more generally. So we need to make decisions based on the economic facts at the time.”

But Opposition Leader Anthony Albanese said Labor would resist “the government’s ongoing attack on superannuation”.

“They look for any excuse to break the promises, as they have done in each of the previous two terms of this Coalition government,” he said.

“The fact is, we have a legislated increase for universal superannuation to 12 per cent. The Coalition committed to not change that. But once again, they’re laying the groundwork for a backflip.

“We have 600,000 Australians who have been left with superannuation balances of zero.

“That will have an impact on their quality of life in retirement, but it will also have an impact on the future budget position of future governments down the track.”

The government has also allowed Australians to dip into their super up to $20,000 due to the COVID-19 pandemic, a policy Mr Frydenberg said had been vindicated in the report.

“It points out that people’s early access to superannuation during the COVID crisis has been justified … and that this hasn’t had a significant impact on people’s retirement incomes,” he said.

The report made no formal recommendations and will only be used to “inform” government policy.

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2020-11-20 00:10:14Z
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