An Australian superannuation group has urged Financial Services Minister Kelly O’Dwyer to reconsider her claims that lifting the super guarantee will be detrimental to wages.
Responding to the minister’s claims that the 9.5 per cent compulsory superannuation guarantee has a “detrimental impact” on wages and raising it would exacerbate the effects, the Australian Institute of Superannuation Trustees (AIST) argued there is no evidence that increasing the superannuation guarantee would impede wage growth.
AIST CEO Eva Scheerlinck said, “Leaving the super rate at 9.5 per cent would not deliver an adequate retirement income for most working Australians.
“Lifting super to 12 per cent addresses the challenges of Australians living longer in retirement and ensures that our retirement income system is sustainable in the face of a rapidly ageing population.”
Continuing, she said there was no evidence to support Ms O’Dwyer’s contentions.
“Many low-income earners receive the minimum wage, which is set by the Fair Work Commission Expert Panel. There is no evidence the employers of these individuals have lifted wages in response to delays in the super guarantee timetable,” Ms Scheerlinck said.
However, the Grattan Institute would disagree with this analysis. According to a working paper put out by Grattan Institute’s Brendan Coates in February, increasing the super guarantee would put downward pressure on wage growth.
“There is no magic pudding when it comes to superannuation,” Mr Coates wrote in the report.
“Higher compulsory super contributions are ultimately funded by lower wages, which means lower living standards for workers today.
“Therefore, increasing the super guarantee to 12 per cent will hurt the living standards of low income earners, the bulk of whom are women.”
Nevertheless, Ms Scheerlinck contended on Wednesday that Australia’s superannuation system is the “envy of other countries”, and that lifting the superannuation guarantee is “about taking the responsible steps now for the long-term benefit of Australia”.
As it stands, the superannuation guarantee is legislated to hit 10 per cent from July 2021, with an aim of hitting 12 per cent in July 2025.
Under the previous ALP government legislated schedule, the superannuation guarantee was set to hit 12 per cent in the 2019-20 financial year.
Speaking at a Fairfax summit on Wednesday, Ms O’Dwyer warned that a return to Labor governance would see the superannuation guarantee increased.
She said, “The shadow treasurer has already flagged that … He is open to increasing the superannuation guarantee, which will lower wage growth in an already low wage growth environment, which will hit low income earners hardest.”
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