Paul Keating, former Labor prime minister and architect of the superannuation system has weighed in on signals from the Morrison government that it will defer the already legislated increase to mandated super contributions.
The amount that employers will need to pay into workers’ superannuation accounts is scheduled to rise in July, from its current rate of 9.5 per cent of wages to 10 per cent, before it eventually reaches 12 per cent in 2025.
But voices from the Coalition, as well as Treasury, Grattan Institute and RBA have all expressed that higher super contributions would come at the cost of take-home pay – a concern made only more pertinent following the COVID economic crisis.
Mr Keating has slammed the wages focus, saying it is beside the point. Despite there being a roughly 10 per cent increase in labour productivity in the eight years from 2012, “not a cent of it has gone to wages”, with balance sheets collecting the gains.
“If the employees don’t pick up the 2.5 per cent super, which the parliament has legislated, this is not just a policy, this is legislated, then ordinary working people, they get nothing,” Mr Keating said.
“And the Reserve Bank, they can publish a monthly bulletin… of little changes marked out in the newspapers in little texta lines, nuanced to the nth degree, but they can’t nuance the point that working Australians have had no wages growth in eight years. And… they wouldn’t have any, because the Reserve Bank is helping the government knock off the 2.5 per cent.”
But Australia is unlikely to see any real wage growth for the foreseeable future, the former PM warned.
“It’s not going to change while ever the legalism of the current enterprise bargaining legislation is as it is – this is the response of the Gillard government, to the Howard government’s Work Choices,” he commented.
“If it went back to the principles I’d articulated originally in 1992, enterprise bargaining could work again. But against that, you have a big deflationary force in the world coming from technology, basically technological changes changing the nature of work and jobs.”
Mr Keating also criticised the government’s early super release measure, stating its roll-out should have been scheduled after workers and individuals were able to access the higher JobSeeker payments and JobKeeper wage subsidies.
Individuals had been able to wipe years of compounded interest and savings for discretionary purchases such as a “new Kia car or skis or something else”, he lamented.
“The truth is, JobSeeker and Jobkeeper should have been there first, before the government decided to let people get in and breach the preservation rule in respect of super, and reach in for $20,000 or $30,000,” Mr Keating said.
“Whereas if ordinary people had known, ‘don’t you worry, JobSeeker will be there for you, at a higher rate, and by the way, your employer will pick up JobKeeper’, then the great rush to take the money out might not have occurred and need not have occurred.”
The early super scheme allowed 3.5 million Australians to withdraw a total $37.3 billion, APRA data revealed this week.
Sarah Simpkins
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
