Date posted: 22/02/2021

12 per cent super: Right idea, wrong time

The Federal Government’s move to pause the super increase from 9.5 per cent to 12 per cent is not a backflip, nor a broken promise – it’s plain common sense.

The Federal Government's move to pause the super increase from 9.5 per cent to 12 per cent is not a backflip, nor a broken promise – it's plain common sense.

That's the verdict from Chartered Accountants Australia and New Zealand (CA ANZ), which backed the call to halt the increase to 12 per cent last year in recognition of the economic situation.

Yesterday, the Opposition Spokesperson for Financial Services and Superannuation issued a scathing statement about the revocation of plans to increase the superannuation guarantee, with:

"Scott Morrison, who promised to raise superannuation contributions to 12 per cent at the last election but broke his word and is now planning to repeal his own legislation." Media release from Stephen Jones MP, Shadow Assistant Treasurer, Shadow Minister for Financial Services and Superannuation

"Since the last election, there has been a global pandemic, the first Australian recession in 29 years, our highest unemployment in 20 years, record stagnancy in wage growth, and the world falling apart at the seams," said Tony Negline, CA ANZ's Superannuation Leader.

"The thing about a game-changer like a global pandemic is that it changes the game, which is why we need to call a time-out and look at the current state of play.

"The reason we paused our policy is jobs. Super is a percentage of a salary, and you need a job to get a salary.

"The priority right now should be keeping people who have them in jobs, and helping the unemployed get new ones.

"Accountants are on the front line of this crisis, and know Australia can't do anything to make it harder for a business right now to keep an employee, give them a pay rise or hire a new one.

"The research and recent Retirement Income Review tells us very clearly that increases in employer superannuation contributions often mean employee salary and wages increase at a slower rate.

"To say that we need to increase the super rate right now while we are still navigating out of this pandemic is to focus on the very pointy end of Maslow's hierarchy of needs, while everyone else is in survival mode."

Negline said that this is not to say that there are not some concerns with the way that super is managed in this country right now, and pointed in particular to:

"Our super system needs protection. Some are putting it to the sword, and it needs a shield," Mr Negline said. "But what we can't do is make it more generous right now."

"Accountants work first-hand with businesses who have been financially slammed. We've seen a decline in turnover and difficulty with cashflow; with many struggling just to keep staff employed.

"We need to be making it easier, not harder, to boost the economy for businesses to invest and for jobs to be created.

"Let's park the super increase priority to when the vaccine is rolled out, and when the employment and GDP numbers look a little less like a horror show."

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