While the Morrison government is thought to be considering ways to scrap the legislated superannuation guarantee rise from 9.5 per cent to 12 per cent by 2025, former prime minister Malcolm Turnbull believes such a move would be a mistake.
Speaking at the launch of an independent report that showed increasing the super guarantee to 12 per cent would lead to a bigger economy, more jobs, higher real wages, and higher real incomes, Mr Turnbull said that the increase was important for those seeking security in retirement.
“Australia’s superannuation system is the envy of the world,” he said.
“The legislated increase to 12 per cent should be maintained, not just to deliver a more secure retirement for millions of Australians, but to build stronger economic growth and higher wages.”
Read more: ‘Government attacks on super deliberate and calculated’
The ACIL Allen report explains that increasing the superannuation guarantee would grow the economy by an extra $12 billion, while wages would also grow and more than 100,000 jobs would be created.
Industry Super Australia (ISA) claims that the report is the first study that comprehensively measures all the economic factors involved in the relationship between super and wages, debunking claims there is a simplistic, direct trade-off between the two whereby super disappears into a blackhole without making any contribution to the broader economy.
The report explains that the billions available in extra capital will expand the economy, leading to a demand for more labour – which in turn would fuel wage growth.
Read more: Cutting super would result in massive tax hike
The report shows that while job creation and wage growth might slow down initially, they are quickly turned around by this wave of economic growth generated from the increased investment.
Last month, YourLifeChoices reported that modelling from actuarial firm Rice Warner showed that not proceeding with the superannuation increase would slam taxpayers, with Age Pension costs predicted to balloon by $33 billion over time.
According to the Rice Warner modelling, each year that people retire without the benefit of the legislated superannuation boost, pension costs will climb by billions.
Read more: Calls to tax retirees’ super income
ISA chair Greg Combet said at the launch of the ACIL Allen report that any moves to change the legislated increase to super would leave Australians with a less secure retirement future.
“This report dispels the myth that once money goes into super it disappears into thin air and does not make a contribution to the economy,” Mr Combet explained.
“We know that’s not the case and the pool of patient capital has a positive and lasting impact on employment, wages and economic growth.
“The consequences of cutting super are crystal clear – it leads to permanently slashed wages, jobs lost and the economy crimped all while adding to the aged pension and leaving Australians far worse off in retirement.”
Do you support the legislated increase to the superannuation guarantee? Do you think the government will axe the increase in coming months?
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