A key Parliamentary committee was told weeks ago that the scheduled rise in the superannuation guarantee (SG) to 12% would need to occur to help workers overcome the retirement income shortfall they were facing because they had accessed the Government’s hardship early release regime.
Industry Super Australia (ISA) used answers to questions from the House of Representatives Standing Committee on economics to reinforce that lifting the SG would prove necessary to helping restore superannuation balances.
It said a gradual and manageable increase in the SG had been locked into law for a long time and had “already faced delays and the detrimental impact on workers' retirement savings due to that has been considerable, it has provided businesses with a longer lead time to adjust and factor the law into their operations”.
“Deepening the importance of this legislated gradual rise is the need to rebuild member balances particularly those reduced by accessing their super early under the government's temporary measures,” the ISA told the committee.
It noted that, “significantly in the current context there is evidence that following the 1991 recession the rebound in economic growth and employment coincided with an incremental but steady increase in the SG”.
The message to the parliamentary committee came as a precursor to ISA this week claiming some vocal coalition back-benchers were using the COVID-19 downturn as a cover for scrapping the SG timetable – something it said could see a couple on average wages lose between $150,000 and $200,000.
The ISA said the back-benchers were not only out of touch with public sentiment, but out of step with the Prime Minister, Scott Morrison, the Treasurer, Josh Frydenberg and the Assistant Minister for Superannuation, Jane Hume, who had had “already publicly quashed their ideologically driven plans to cut Australian workers retirement savings”.
“The MPs, who themselves receive more than 15% super, say that 9.5% is enough for the average Australian to fund a dignified retirement,” ISA said. “They use the specious argument that an increase comes at the expense of wages, despite recent historic evidence showing there is no equal drop in wages when the super guarantee increases.
“It was the same argument used to freeze the Super Guarantee in 2014, but wages have mostly flatlined since then – underlining the falseness of their arguments.
“The claim that because Australia is entering a recession that the Super Guarantee rate must be cut, doesn’t hold water either, as there is evidence that following the 1991 recession the rebound in economic growth and employment coincided with an incremental but steady increase in the SG – like what is planned now.”