Liberal senator Andrew Bragg has called for compulsory superannuation to be optional for low-income earners in his maiden speech to parliament. However, Prime Minister Scott Morrison says that will not be happening, even if it is recommended by a proposed review into retirement incomes. Similarly, even if the review also recommends that a legislated increase in the superannuation guarantee to 12 per cent by 2025 should not proceed, Morrison says the government has no plans to change this policy. From The AFR:
“The government’s policy, let me be very clear, is what is set out in what the law of this country is and our policy hasn’t changed,” he said of the legislated plan to lift the super guarantee to 12 per cent in increments, beginning in 2021.
“Reviews look at all sorts of things, but they are reports of reviews, not of the government, and the government responds as appropriate…
Before this week’s contributions from the back bench, the government at senior levels, including Mr Morrison, was leaving open the option of stopping the super guarantee increasing to 12 per cent.
This is crazy stuff from Scott Morrison. 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.
Therefore, to rule out making changes prior to this review is ridiculous and undermines the very principle of policy due process.
As we already know, both the Henry Tax Review and the Grattan Institute found that raising the superannuation guarantee will rob workers of much needed disposable income. It will also cost the federal budget more than in saves in Aged Pension costs (see yesterday’s post).
In fact, the only winners from this policy are the rent-seeking superannuation industry, which will be able to ‘clip the ticket’ on more funds under management and earn fatter fees and profits.