Per Capita’s report, called The Super Freeze: What You’ve Lost, analysed the average gain to Australian workers’ super accounts that would have occurred if the SG had risen to 12 per cent, rather than being frozen at 9.5 per cent in 2014 by the Coalition government.
The analysis found a worker on the full-time median wage had lost $4,332.99 in super over the past five years, while they had gained $3,432 in nominal wage increases. Adjusting for inflation based on today’s prices, however, median wages had actually gone backwards by $1,092, the group said.
Per Capita executive director and the report’s lead author, Emma Dawson, said the group had developed the research in order to quantify the cost to employees of foregoing SG increases.
“On any objective measure, workers have suffered a significant loss in net income since the SG freeze,” Ms Dawson said.
“This is rightfully workers’ money and they deserve to know exactly what they have lost. Instead of going into the pockets of workers, as the government promised it would, those lost super savings have been pocketed by employers.”
At the time of the SG’s freeze in 2014, then Prime Minister Tony Abbott told Parliament that as a result of this decision, “that money that would otherwise be squirrelled away in super funds will instead be in the pockets of the workers of Australia”.
At a Crescent Think Tank event late last year, former ACTU secretary and one of the super system’s key architects, Bill Kelty, said the lack of subsequent SG increases amounted to “stealing money off decent working people” and expressed suspicion that the government’s retirement income inquiry had been designed to prevent the SG from rising in the future.
If evidence indicates you cannot trust the employer to do the right thing then DON’T. Change the system.
There are options:
1. The amount of PAYG tax withheld is increased and the ATO make the super payments from this.
2. The extra collections are held and managed by the government (as recently suggested by one of the think-tanks)
2. Employers pay the money to the employee and the employee has to pay their own super.
At the moment it is “far easier” for the government to outsource responsibility for this system to businesses. But is this truly fair? The benefit for this system is to both the government (reduced pension payments) and the employee (retirement income), NOT the business which derive no direct benefit from performing this service, yet bear quite a bit of the cost!