Senator Andrew Bragg has used Budget estimates to attack the superannuation guarantee (SG) increase for stagnant wage growth.
Bragg asked Dr Steven Kennedy, Secretary to the Australian Treasury, if that was the case based on Budget forecasts.
“The Grattan institute, Reserve Bank of Australia (RBA) and Retirement Income Review have all concluded the increases in the rate of super will all be paid for by slower wages growth – do you agree with that?” Bragg said.
“It looks to me, from the reading of these forecasts that the next couple of years the consumer price index (CPI) outstrips wages growth and we have a couple of years where CPI and wages growth are at level pegging.
“Then it looks like in 2024/25, wages growth goes just ahead of CPI – have the super increases been scheduled into these projections?”
Kennedy said the SG was legislated policy and the increase in the SG was reflected into Treasury’s wages forecast.
“Obviously, it’s still people’s earning but it goes into super and they lower the wages forecast,” Kennedy said.
Kennedy said the effect was that for every 1% increase in super would result in a 0.8% loss of wages, according to Treasury forecasts.
“That means a 0.5% increase in the SG means wages are less by about 0.4%,” Kennedy said.
Bragg asked if without the SG rise would there be positive wage growth to which Kennedy responded: “There would be small positives, yes”.
The research house has offered a silver lining after super fund returns saw the end of a five-month streak last month.
A survey of almost 6,000 fund members has identified weakening retirement confidence, particularly among those under 55 years of age, signalling an opportunity for super funds to better engage with members on their retirement journey.
The funds have confirmed the signing of a successor fund transfer deed, moving closer to creating a new $29 billion entity.
A number of measures, including super on Paid Parental Leave, funding to recover unpaid super, and frameworks to encourage investment in the energy transition, have been welcomed by the superannuation industry.
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