The Australian Adam Creighton has tweeted suggesting that freezing compulsory superannuation contributions would provide the economy with the “best possible stimulus”:
The best possible stimulus would be suspension of mandatory superannuation contributions, supercharging take-home pay by around 10 per cent and avoiding the waste that accompanies government spending.#auspol
— Adam Creighton (@Adam_Creighton) March 9, 2020
Adam Creighton’s suggestion has merit. The superannuation guarantee comes directly out of workers’ take-home pay, thus reducing their disposable income and consumption. Moreover, cash-strapped lower income earners are most adversely impacted by this policy.
Making superannuation contributions voluntary would boost pre-tax disposable incomes by 9.5% for those that opt to take home extra pay. And since lower income earners, who have a high propensity to spend, are most likely to take up the option, it would provide much-needed stimulus to the economy.