Shock horror! Workers pay for superannuation increase

Has the ABC been living under a rock? Last night The Business reported in disbelief that many Australian workers will have their take home pay cut when the superannuation guarantee (SG) is lifted from 9.5% to 10% on 1 July:

Employment lawyers say if an employee’s contract says their super is included in their total package, it might be legal for their boss to take that money out of their base pay…

“There have been instances of this in the past, but I fear it’s becoming more prevalent for the simple reason that more and more employees are on the kind of contracts that allow it to happen” [Australia Institute’s chief economist Richard Denniss said]…

“But let’s be clear, if thousands of employers do this, that’s exactly why we don’t get wage growth in Australia”…

Unions are outraged, saying that for most employers, the cost of delivering the point-five per cent increase is less than $5 a week.

“It is absolutely shocking to me that employers would be trying at this point to try and avoid paying that small increase in superannuation,” says ACTU President Michele O’Neil.

Seriously, how can anybody be surprised by this result – least of all Richard Denniss and the ACTU?

The Henry Tax Review explicitly stated that lifting the superannuation guarantee (SG) comes at the expense of workers’ take home wages. Last year’s Retirement Income Review from the Australian Treasury noted the same, as has analysis from the Reserve Bank and the Grattan Institute. MB has noted similar for years. Heck, even the latest federal budget took the scheduled lift in the SG into account in producing its wage growth forecasts.

It has literally been stated over and over again across a wide range of sources over many years that there is a direct trade-off between the compulsory SG and wages.

The only ones that have denied reality are the industry super funds and Labor, both of whom have a vested interest in seeing the SG increase.

Unconventional Economist

Comments

  1. LabrynthMEMBER

    What is the point of super?

    Low Income = Doesn’t matter you will be on the pension as you won’t have saved anywhere near enough to get you past 5 years after retirement.
    Middle Class = Doesn’t matter you will take out in bulk and spend it to get on the pension while living in a nice house with a fancy car
    Upper Class = A vehicle to reduce your tax bill during your working years with enough money outside super to sustain their lifestyle

      • Even StevenMEMBER

        Jason, can’t speak for the thinking of the Retirement Income Review, but can categorically tell you my parents are getting excellent value out of super and would be in the top 1% – 0.1% wealth cohort.

        Sure, the recent changes capped the amount that can be held in pension phase (0% tax rate) but they still have plenty sitting in accumulation phase (15% tax rate) plus plenty of assets outside super. It’s not right. Some sort of reasonable benefits limit should be implemented to avoid it being used as a tax-advantaged wealth accumulation vehicle.

    • + many.

      Sort out the mess of a tax system and provide an adequate pension for those who need it, as well not ticket clipping for those who are able to invest to prepare for their retirement.

    • > What is the point of super?

      Buggered if I know 🙂 I thought it was just a Scam that acted as a Tax Free Safe Haven which rorted the rest of us. Also a Labor money chest to skim the froth off all the earnings so they could fund Unions and stay in power.

      I got rid of all my super. I figured it wouldnt last long in the future I believe we are heading into.

      Pensions a better system. We should be using that instead.

  2. Employers who do this should be named.

    If you are going to treat your employees so poorly it doesn’t bode well as to how you would treat your customers.

  3. Our contract allows for this – super comes out of Total Remuneration (TR). So if TR doesn’t change then your take home goes down if super goes up.

    We have some Industry Funds as owners so they wanted to make sure we didn’t do this. So our TR is going up the super amount – no change to your take home pay. In past years you actually got a pay rise but this year that pay rise is going all to super. Now the funds will say that employers PAID for this. Kind of, but not everyone is getting a take home pay rise this year.

    Now, technically our Total Remuneration is up by the increase in super but we are getting no wage rise …

  4. > Has the ABC been living under a rock?

    It excites me to see MB appearing in all the local media. I find it unlikely that the idiots just grew a brain all of a sudden. The moneys run out and now they are all pretending they actually care about something other then themselves. Still, some result is better then no result.

    I still think Fairfax is running out of subscribers and ABC’s readership has probably fallen off drastically, while MB’s keeps rising lol.

    MB are awesome. I dont think I’ve ever had this much fun.

  5. “Unions are outraged, saying that for most employers, the cost of delivering the point-five per cent increase is less than $5 a week.”

    Should that be $50?

  6. Jumping jack flash

    Presently super is a waste of money. The money should be freed to be fed to the banks, ploughed into debt, and used for buying houses which double every 7-10 years, government guaranteed.

    I have amassed the princely sum of just under an entire year’s worth of salary in my super after working 20 years at an above average income pretty much the entire time. If it doubles in 7 – 10 years I’d be astounded. If my income doubled in 7-10 years I’d be equally astounded.

    But then again, CPI has been artificially suppressed for 10 years, and now the great global inflation approaches.
    We’ll see what happens I guess. Maybe incomes and super will get a rocket up them, and become relevant again?

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