The Morrison Government is facing growing pressure from within its ranks to reconsider an increase in the superannuation guarantee from 9.5% to 12% by mid-2025. Andrew Hastie is among seven backbenchers who oppose the increase. Hastie says it would be preferable for people to use this income to pay off their mortgage now rather than have to wait until they retire. Senator Amanda Stoker in turn says wage increases should be a higher priority at present than changes to the superannuation guarantee. From The Australian:
Seven Liberal MPs in the four biggest states, including chairmen of two parliamentary committees, have criticised the increase as unfair and inefficient, urging the government to halt the legislated increase from 9.5 per cent, or wind it back for low-income workers.
The MPs include Andrew Hastie, chairman of the house intelligence and security committee; Jason Falinski, MP for Mackellar; Amanda Stoker, who succeeded George Brandis in the Senate; and the newly elected senator for Queensland, Gerard Rennick…
Senator Rennick said lifting the compulsory saving rate drained money from the regions, which needed it, to the funds management industry in Sydney and Melbourne, which didn’t need it.
The Henry Tax Review explicitly acknowledged that compulsory superannuation costs the federal budget more than it saves in Aged Pension costs:
“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 Henry Tax Review also explicitly recommended against raising the superannuation guarantee, in part because it would rob lower income earners of much needed disposable income:
“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 Grattan Institute has come to similar conclusions:
In short, raising the superannuation guarantee would rob workers of pay rises and cost the federal budget more than it saves in Aged Pension costs.
The Productivity Commission’s (PC) final report on the efficiency and competitiveness of Australia’s $2.8 billion superannuation system explicitly recommended “an independent public inquiry into the role of compulsory superannuation… in advance of any increase in the Superannuation Guarantee rate”:
RECOMMENDATION 30: INDEPENDENT INQUIRY INTO THE RETIREMENT INCOMES SYSTEM
The Australian Government should commission an independent public inquiry into the role of compulsory superannuation in the broader retirement incomes system, including the net impact of compulsory super on private and public savings, distributional impacts across the population and over time, interactions between superannuation and other sources of retirement income, the impact of superannuation on public finances, and the economic and distributional impacts of the non-indexed $450 a month contributions threshold. This inquiry should be completed in advance of any increase in the Superannuation Guarantee rate.
The Morrison Government should immediately implement the PC’s recommendation and let the PC investigate the merits of raising the superannuation guarantee.
This is how due process is supposed to work and would silence both the super industry rent-seekers and Labor.