Retirement
Super increase will hurt wages: governor Lowe
Reserve Bank of Australia governor Philip Lowe has warned that the legislated increase to the superannuation guarantee to 12 per cent will hit wage growth.
Super increase will hurt wages: governor Lowe
Reserve Bank of Australia governor Philip Lowe has warned that the legislated increase to the superannuation guarantee to 12 per cent will hit wage growth.
The RBA governor has placed industrial relations at the top of the list of areas where the economy can generate growth but pointed out that changing the legislation would hurt wage growth.
“There is a process going on at the moment to make the enterprise bargaining system more flexible where businesses and employees can get together more effectively instead of being weighed down by process, which is what is happening at the moment,” Dr Lowe said.
In response to a line of questioning from Liberal MP Tim Wilson, who has been a proponent of freezing the legislated increase of the super guarantee to 12 per cent, governor Lowe warned that “increases of this form do get offset by lower wage growth over time”.
“It will certainly have a negative effect on wages growth,” governor Lowe said. “If this increase goes ahead, I would expect wage growth to be even lower than it otherwise would be. There will be an offset in terms of current income. Some people say that’s perfectly fine because people will have a higher future income.
“So, there’s a trade-off here. Do we want people to have the income now or do we want them to have it later on?"
Governor Lowe said that he would not enter into a debate on that trade-off because it was “potentially politically controversial”, but noted that both parties currently supported the legislated super increase.
Former prime minister and super advocate Paul Keating previously stated that the country can afford to increase the rate of superannuation.
He pointed out that since 2013 there has been no real wage growth, while productivity growth has increased by 9.6 per cent.
“None of this has been distributed to wages. It all went to the balance sheet of companies. So, the proponents of the SG going to 12 per cent are saying there’s 10 per cent labour productivity banked, and we are asking for a quarter of it back,” Mr Keating said.
RELATED ARTICLES
About the author
About the author
Superannuation
Superannuation guarantee rate rises to 12 per cent as parental leave changes take effect
The superannuation guarantee rate has increased from 11.5 per cent to 12 per cent from Tuesday, with super contributions also being added to Commonwealth Parental Leave Pay for the first time. Read more
Superannuation
Rest's Sustainable Growth option achieves highest sustainability classification
Rest superannuation fund has achieved the highest sustainability classification for its Sustainable Growth investment option from the Responsible Investment Association Australasia. Read more
Superannuation
Aware Super slashes admin fees for retirees by up to 25 per cent
Aware Super has reduced administration fees for members with a retirement income account by up to 25 per cent and lowered the maximum annual fee. Read more
Superannuation
SuperAPI co-founder criticises Labor's superannuation tax as 'sneaky tax on young people'
The co-founder of SuperAPI has labelled Labor's proposed tax on superannuation balances above $3 million as a "sneaky tax on young people, tomorrow" disguised as a policy targeting wealthy retirees ...Read more
Superannuation
Election policies could reshape Australia's superannuation landscape, expert warns
Competing superannuation policies from Australia's major political parties could have significant implications for investors and retirees, according to a financial expert. Read more
Superannuation
Industry leaders weigh in on concessional super tax as Budget confirms $55bn investment
Changes to the taxation of superannuation earnings and contributions have drawn mixed responses from financial and payroll sector leaders, as the Federal Budget confirms over $55 billion in ...Read more
Superannuation
Call for indexation on super tax cap as $3m threshold draws criticism
A senior executive in the superannuation technology sector has criticised the Federal Government for failing to index the proposed $3 million superannuation tax cap, arguing the measure will unfairly ...Read more
Superannuation
Rest members back calls for fairer superannuation rules ahead of Federal Budget
Rest has called on the Federal Government to implement superannuation reforms aimed at improving fairness across the system, after member survey results showed strong support for a range of proposed ...Read more
Superannuation
Superannuation guarantee rate rises to 12 per cent as parental leave changes take effect
The superannuation guarantee rate has increased from 11.5 per cent to 12 per cent from Tuesday, with super contributions also being added to Commonwealth Parental Leave Pay for the first time. Read more
Superannuation
Rest's Sustainable Growth option achieves highest sustainability classification
Rest superannuation fund has achieved the highest sustainability classification for its Sustainable Growth investment option from the Responsible Investment Association Australasia. Read more
Superannuation
Aware Super slashes admin fees for retirees by up to 25 per cent
Aware Super has reduced administration fees for members with a retirement income account by up to 25 per cent and lowered the maximum annual fee. Read more
Superannuation
SuperAPI co-founder criticises Labor's superannuation tax as 'sneaky tax on young people'
The co-founder of SuperAPI has labelled Labor's proposed tax on superannuation balances above $3 million as a "sneaky tax on young people, tomorrow" disguised as a policy targeting wealthy retirees ...Read more
Superannuation
Election policies could reshape Australia's superannuation landscape, expert warns
Competing superannuation policies from Australia's major political parties could have significant implications for investors and retirees, according to a financial expert. Read more
Superannuation
Industry leaders weigh in on concessional super tax as Budget confirms $55bn investment
Changes to the taxation of superannuation earnings and contributions have drawn mixed responses from financial and payroll sector leaders, as the Federal Budget confirms over $55 billion in ...Read more
Superannuation
Call for indexation on super tax cap as $3m threshold draws criticism
A senior executive in the superannuation technology sector has criticised the Federal Government for failing to index the proposed $3 million superannuation tax cap, arguing the measure will unfairly ...Read more
Superannuation
Rest members back calls for fairer superannuation rules ahead of Federal Budget
Rest has called on the Federal Government to implement superannuation reforms aimed at improving fairness across the system, after member survey results showed strong support for a range of proposed ...Read more
