Finance Your Super Liberal backbenchers are undermining retirement incomes review, says COTA
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Liberal backbenchers are undermining retirement incomes review, says COTA

Four of the 10 Liberal backbenchers calling for the legislated increase in the superannuation guarantee to be delayed. Photo: TND
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Calls by 10 Liberal Party backbenchers to hold the superannuation guarantee (SG) at 9.5 per cent due to the COVID-19 recession are inappropriate and reflect internal party disagreements, according to Council on the Ageing CEO Ian Yates.

The group of backbenchers, which includes Dave Sharma, Katie Allen, Russell Broadbent and Eric Abetz, told the Nine newspapers the rise needed to be postponed.

“I’m against a rise in the superannuation guarantee at this point during the COVID crisis because some experts predict it will result in lower wages as employers pass on the impact to employees,” Dr Allen told the Nine newspapers.

However, Mr Yates said it was an inappropriate time to call for an SG pause as the results of the government’s retirement incomes review are due to be handed to the Treasurer on July 24.

“All this is seemingly driven by a desire of people to get their personal agendas up before we can be informed by a very detailed review of the retirement incomes system that is due next month,” Mr Yates said.

“We should be very cautious of people trying to use the coronavirus to reinforce the agendas they were pushing prior to the virus.

“There are some people within the Liberal Party who don’t like compulsory super and give a high priority to spending time working to undermine it.”

Minister says no change

Assistant Minister for Superannuation Jane Hume told The New Daily there were no plans to abandon the SG rise of 0.5 per cent scheduled for July 2021.

“The government understands the very real pressures faced by Australian businesses due to the COVID-19 pandemic. However, the super guarantee is legislated and legislation by its very nature is generally hard to wind back,” Senator Hume said.

Jane Hume.
Senator Jane Hume says she plans for rises to go ahead. Photo: AAP

“There has been no change to the government’s policy in relation to the super guarantee.

“The Morrison government is focused on measures that create jobs and keep people in jobs right now.”

Meanwhile, a Liberal Party insider told The New Daily that “there is no mood or appetite to change that, especially with the retirement incomes review due soon”.

Changes are needed

Mr Yates said “there are very sound political reasons for legislating the [SG] increase to support retirements”.

“But we believe there is a need to address the imbalance of tax incentives going to high-income people to make the [superannuation] system more equitable,” Mr Yates said.

“We are looking forward to receiving the results of the retirement incomes review.”

National Seniors Australia chief advocate Ian Henschke said Australian superannuation entitlements are less than those of comparable countries and the planned increase in the SG would not put businesses under undue stress.

“There is no increase planned this financial year or the next, and the first move will only be 0.5 per cent in July 2021. The move to 12 per cent for the SG is five years away,” Mr Henschke said.

Low-income workers, particularly women, need an increase as soon as possible, Mr Henschke said.

“Politicians get 15.4 per cent. If they think that ordinary Australians shouldn’t get an increase to 10 per cent, then perhaps they should cut back their superannuation rate and give it back to the Australian taxpayers.”

Australia’s retirement contribution rates are relatively low. Source: OECD

Meanwhile, Industry Super Australia CEO Bernie Dean said pausing or scrapping the SG would have a devastating effect on ordinary workers.

“Using the coronavirus-caused downturn as cover, the backbench MPs have called for the legislated super rate increase to be scrapped or frozen – a move which would see a couple on average wages lose between $150,000 to $200,000,” Mr Dean said.

“More than 170,000, mostly young Australians accessing their super early through the emergency early release scheme have wiped out their savings.

“The only way to now avoid the long-term legacy of this downturn being a generation of Australians who have lost their savings and are forced onto the pension is to stick to the already legislated super rate increase.”

Mr Dean added: “These MPs are out of touch not only with the community. The Prime Minister and Treasurer wouldn’t want to risk a generation of Australian workers being dumped on the pension to be their lasting legacy; they know we would all pay for that through higher taxes.”

Meanwhile, Shadow Assistant Treasurer Stephen Jones described the scheduled SG rise as “very modest”.

“For someone on $50,000 a year it is less than $5 a week,” Mr Jones said.

“A cut would further leave behind the 500,000 young workers who have already been forced to raid their super instead of receiving timely government support.”

The New Daily is owned by Industry Super Holdings