Employer groups: 12% compulsory superannuation will lower wages

Several Australian employer groups have backed the views of the Australian Treasury, the Henry Tax Review, the Grattan Institute, and the Parliamentary Budget Office, who claim that raising Australia’s superannuation guarantee (‘compulsory superannuation’) from 9.5% to 12% would lower wage growth. From The AFR:

Motor Trades Association of Australia chief executive Richard Dudley, whose industry body represents 400,000 workers and which appoints employer representative board directors to the Australian Manufacturing Workers Union-backed $10bn MTAA Super fund, said a higher savings rate would mean lower wage rises…

“In the current fiscal climate … which has constrained spending and low wage growth, it is anticipated this situation will be further and negatively compounded through even less wage growth due to employers factoring in an additional super payments”…

Business Council of Australia chief executive Jennifer Westacott said higher contributions would come out of workers’ pockets. “Whose pay does it come out off? It comes out of your pay”…

Innes Willox is the chief executive of the country’s biggest ­employer representative body, Australian Industry Group, which represents one million workers… said the government’s review of the retirement income system was vital to ensuring the legislated ­increase to the superannuation guarantee was the “right” decision.

Slowly but surely, pressure is building to scrap the legislated increases in the superannuation guarantee. Labor is looking increasingly isolated on this issue.

Unconventional Economist

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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