Former Treasurer and Prime Minister Paul Keating continues to lobby for his super industry mates over working Australians.
Yesterday, Keating gave a speech to the Association of Superannuation Funds of Australia (ASFA) – the peak policy, research and advocacy group for superannuation funds – where he lashed out at the Reserve Bank of Australia for stating that wage growth would fall if the superannuation guarantee (SG) is lifted to 12%:
Keating said [the RBA]… were “confusing an old argument.”
…“Since 2012 there has been no real wages growth,” he said.
“Therefore if the employees don’t pick up the 2.5 per cent increase (in super) then ordinary working people get nothing.”
The only one that is confused here is Paul Keating. While real inflation-adjusted wage growth has stagnated, nominal wages in Australia have grown by 18% since 2012, averaging 2.2% annual growth:
Even in 2020, amid the sharpest economic downturn since the Great Depression, Australian wages grew by 1.4%.
Thus, there is plenty of scope for wage growth to slow should the SG be increased.
Keating is right that “there had been a 10 per cent increase in labour productivity since 2012”, and this is reflected by the collapse in wages share of national income (see next chart). But workers’ income share has been falling for decades. It is not some new phenomenon that has magically appeared since 2012.
Moreover, why would bosses absorb the cost of increasing the SG when workers’ bargaining power and share of national income is at all-time lows?
If employers are not currently under pressure to give decent pay rises, why would they suddenly feel pressed to absorb the cost of lifting the SG?
Let’s get real for a moment. Employers are only concerned with their total employee cost. They don’t about what share of wages is paid directly to employees, what share is paid to the ATO in tax, and what share is paid into a superannuation account. The overall cost to the employer is the same regardless.
Therefore if the SG is raised, employers will simply transfer more of workers’ total remuneration into superannuation (other things equal). Paul Keating said so in 2007:
“The cost of superannuation was never borne by employers. It was absorbed into the overall wage cost.”
Finally, the large fall in the labour income share over the period when the SG was increasing is inconsistent with Paul Keating’s new found argument that employers absorbed the cost of compulsory superannuation.
Stop lying Paul.