Think tank blasts ‘self-interested’ calls for SG increase
A public policy think tank has called out super industry participants advocating an increase in the guarantee rate to 12 per cent as self-interested, given a rise could see workers miss out on wage increases as the economy recovers from the COVID-19 crisis.
Speaking as part of a panel for AIST’s digital Conference of Major Superannuation Funds, Grattan Institute chief executive John Daley said increasing compulsory contributions in the current environment was likely to benefit the super industry more than workers.
“The industry will be really keen on getting to 12 per cent, and I can’t possibly imagine why that would be the case — as the architect of the super system himself, Paul Keating, said, ‘Always back the horse called [self-interest]’,” Mr Daley said.
Mr Daley said research undertaken by the Grattan Institute had shown that despite the protests of industry participants to the contrary, enterprise bargaining agreements containing an SG increase usually offset this with a lower take-home pay increase for workers.
“We looked at a series of 80,000 different workplace agreements that all had slightly different time periods, and that meant we could look at the impact of having a super increase inside the period of the agreement as opposed to agreements that didn’t have one,” he said.
“About 80 per cent of the super increase was being passed through into wages — in other words, any time a bargaining agreement included a period where super went up, wages didn’t go up by as much as you’d expect if it didn’t have that super increase in it, and didn’t go up by as much as a bargaining agreement that didn’t include an increase.”
Mr Daley said current savings rates also indicated there was little need to increase the guarantee rate as, if anything, some retirees were saving too much.
“Given the work we and other people have done, it looks like, for most people, if they save 9.5 per cent for super, taking into account the aged pension and owning their own home, they will have enough money to live the lifestyle they had when they were still working,” he said.
Mr Daley suggested calls to further increase the SG rate amounted to scare tactics from some pockets of the super industry, given that retirees overall displayed higher levels of financial security than younger generations.
“I’m comfortable that Australians will overwhelmingly be living a comfortable retirement, because the people that are retired in Australia are the least worried about financial security,” he said.
“The people who are most worried about financial security are people who are not yet retired, probably because they are receiving messages saying, ‘You should be worried’.”
The comments come following calls from Industry Super Australia to raise the SG rate to 12 per cent, given at least 50,000 super fund members have had their fund balances wiped to zero due to the government’s early access scheme.
