Labor’s Jim Chalmers drowns in ocean of super lies

There’s a new super idiot on the block and his name is Jim Chalmers, Labor’s treasury spokesman. Yesterday, Chalmers launched an extraordinarily deceitful attack on the Morrison Government, claiming it was seeking to “kill” compulsory super in Australia and “rob workers” by cancelling legislated increases in Australia’s superannuation guarantee to 12%. From the New Daily:

In Parliament, Labor treasury spokesman Jim Chalmers accused the Liberals of preparing to “rob workers of their superannuation”.

“They say they want workers to have the freedom to choose between wages or super,” Dr Chalmers said.

“What they really mean is freedom to be broke – during their working years and then afterwards too.”

Dr Chalmers said the Morrison government’s real agenda was to “kill” compulsory super in Australia.

“But we didn’t hear peep about it at the election,” he said.

“A government which has banged-on about mandates and retiree taxes is now ambushing workers with a retiree tax of their own…

“According to one estimate, a 30-year-old earning $80,000 a year would be denied close to $90,000 in super by the time they reach retirement if the Super Guarantee remains frozen at 9.5 per cent.

“The Liberals have never believed in super.”

This is flat out lies.

The evidence overwhelmingly shows that compulsory super is paid for by workers through lower wages. Thereby, abandoning the 2.5% lift in the superannuation guarantee to 12% would raise workers’ wages, other things equal, and improve their standard of living over their working lives

The Henry Tax Review made this point clearly:

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.

Which is why the Henry Tax Review explicitly recommended against raising the superannuation guarantee because it would adversely harm lower-income workers (which Labor is supposed to represent):

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 Parliamentary Budget Office came to a similar conclusion 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”.

As has the Grattan Institute:

Even slower wage growth will be the result of increasing compulsory superannuation contributions from 9.5 per cent to 12 per cent…

If compulsory super contributions go up, wages will be lower than they otherwise. And the cut to wages from raising compulsory super is big. Really big. By the time it’s fully implemented in 2025-26, a 12 per cent Super Guarantee will strip up to $20 billion from workers’ wages each year, or nearly 1 per cent of GDP…

Former Labor leader, Bill Shorten, has also 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 has 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.

Clearly, Jim Chalmers cares far more for the industry rent-seekers than ordinary Australian workers, who would have their wages cut to foot the bill for his idiotic 12% compulsory super obsession.

Stop lying and start representing your working class constituents, Jim.

Leith van Onselen

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

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