Over the weekend, Labor’s shadow Treasurer, Jim Chalmers, vigorously attacked Treasurer Josh Frydenberg for refusing to rule-out axing scheduled increases in Australia’s superannuation guarantee (compulsory super):
Labor’s treasury spokesman Jim Chalmers warned on Sunday that the government should rule out any future rollback.
“These weasel words from Josh Frydenberg are not good enough – especially in the wake of the campaign from Coalition backbenchers to axe the scheduled increase,” Dr Chalmers said.
“The Liberals have a long track record of winding back legislated superannuation increases. John Howard scrapped them, Labor reintroduced them, Tony Abbott’s attempts were blocked in the Senate, and now the Morrison government is at it again.”
On this issue at least, the Coalition is doing a better job representing the interests of working class Australians than the fake “Labor” Party.
No matter how many times I (and others) restate it, Labor cannot seem to get it through their thick skulls that raising the superannuation guarantee would rob workers of pay rises and cost the federal budget more than it saves in Aged Pension costs.
These facts were made clear as day by the Henry Tax Review, which explicitly recommended against raising the superannuation guarantee:
Although employers are required to make superannuation guarantee contributions, employees bear the cost of these contributions through lower wage growth. This means the increase in the employee’s retirement income is achieved by reducing their standard of living before retirement…
The retirement income report recommended that the superannuation guarantee rate remain at 9 per cent. In coming to this recommendation the Review took into the account the effect that the superannuation guarantee has on the pre-retirement income of low-income earners.
The Henry Tax review also explicitly warned than any compulsory superannuation lift would adversely impact the federal budget:
An increase in the superannuation guarantee would … have a net cost to government revenue even over the long term (that is, the loss of income tax revenue would not be replaced fully by an increase in superannuation tax collections or a reduction in Age Pension costs).
The Grattan Institute supports these findings:
Lifting compulsory super to 12 per cent of wages would cost taxpayers an extra $2 billion to $2.5 billion each year in super tax breaks, overwhelmingly to high-income earners. And those super tax breaks would dwarf any budget savings on the age pension until about 2060… both the short and long term, superannuation tax breaks cost the budget more than they save in pension payments.
As did the Parliamentary Budget Office in April:
The increase in the superannuation guarantee to 12 per cent will likely lead to lower wage increases, shifting a greater proportion of earnings into the superannuation system.
Heck, even former Labor leader, Bill Shorten, explicitly acknowledged that compulsory superannuation is paid for via lower wage growth:
Because it’s wages, not profits, that will fund super increases in the next few years. Wages are the seedbed of the whole operation. An increase in super is not, absolutely not, a tax on business. Essentially, both employers and employees would consider the Superannuation Guarantee increases to be a different way of receiving a wage increase.
As did former Labor Prime Minister Paul Keating:
The cost of superannuation was never borne by employers. It was absorbed into the overall wage cost… In other words, had employers not paid nine percentage points of wages as superannuation contributions to employee superannuation accounts, they would have paid it in cash as wages.
As I keep highlighting, there is no sense in raising the superannuation guarantee when we know that, because of the 15% flat tax on contributions/earnings, the lion’s share of benefits will flow to higher income earners, as suggested by the ABS:
In 2017-18, total household superannuation benefits received was $112,009m. Households in the highest income and net worth quintile received 47% and 74% of total household superannuation benefits, by comparison households in the lowest income and net worth quintile received 3% and 2% of total household superannuation benefits. There was an increase in the share of total household superannuation benefits received by households in each quintile from the lowest to the highest for both income and net worth quintiles, with the increase being particularly steep from the fourth to the highest net worth quintiles. The ratio of the value of the highest to lowest quintiles was 15.5 and 45.7 for income and net worth quintiles for superannuation benefits received.
Blind Freddy can see that any increase in the superannuation guarantee will rob ordinary workers of wage rises, will mainly favours those earning the most, and will worsen the Budget. The fact that the “Labor” party supports such a policy highlights, yet again, why it no longer represents Australian workers.
Somebody should sue the ALP and take the term “labor” from its title.