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Retirement

‘RBA helping the government knock off’ super increase: Keating

  • February 11 2021
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Retirement

‘RBA helping the government knock off’ super increase: Keating

By Cameron Micallef
February 11 2021

Former Prime Minister Paul Keating has accused the Reserve Bank of Australia of laziness, opining that the bank is aiding the government in knocking off the legislated superannuation increase at the detriment of workers.

Paul Keating

‘RBA helping the government knock off’ super increase: Keating

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  • February 11 2021
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Former Prime Minister Paul Keating has accused the Reserve Bank of Australia of laziness, opining that the bank is aiding the government in knocking off the legislated superannuation increase at the detriment of workers.

Paul Keating

Superannuation is currently legislated to rise in July from its current rate of 9.5 per cent to 10 per cent, before increasing further by 0.5 percentage point a year until it hits 12 per cent in 2025.

However, Liberal backbenchers and the RBA are now arguing that higher superannuation contributions could have an impact on future wage rises. 

When asked whether the SG rise would go ahead, the Minister for Superannuation, Financial Services and the Digital Economy, Jane Hume, recently said “the superannuation guarantee rise is legislated for 1 July”.

“But the debate we’re having now is about what that trade-off for that is.”

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"The SG is a cost to employment, and if I’m an employer and I give a rise to the SG, it’s going to be passed on to employees one way shape or form," Ms Hume said. 

Mr Keating has slammed the wages focus, noting that its an old and irrelevant argument. 

“The RBA is helping the government knock off the 2.5 per cent,” he told the annual conference of the Association of Superannuation Funds of Australia (ASFA) on Wednesday.

The former Prime Minister instead pointed to a roughly 10 per cent increase in labour productivity in the eight years from 2012, arguing that “not a cent of it has gone to wages”, with balance sheets collecting the gains.

“If the employees don’t pick up the 2.5 per cent super, which the Parliament has legislated – this is not just a policy, this is legislated – then ordinary working people, they get nothing,” Mr Keating said. 

Mr Keating also criticised the government’s early super release measure, arguing that its rollout should have been followed JobSeeker and JobKeeper.  

“Individuals had been able to wipe years of compounded interest and savings for discretionary purchases such as a ‘new Kia car or skis or something else’.”

“The truth is, JobSeeker and JobKeeper should have been there first, before the government decided to let people get in and breach the preservation rule in respect of super and reach in for $20,000 or $30,000,” Mr Keating said. 

“Whereas if ordinary people had known, ‘don’t you worry, JobSeeker will be there for you, at a higher rate, and by the way, your employer will pick up JobKeeper’, then the great rush to take the money out might not have occurred and need not have occurred.”

‘RBA helping the government knock off’ super increase: Keating
Paul Keating
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About the author

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Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

author image
Cameron Micallef

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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