Coalition MPs ‘frustrated’ by super rate rise

Coalition MPs ‘frustrated’ by super rate rise

Eryk Bagshaw – The Sydney Morning Herald – Monday 22 July 2019

A group of up to a dozen Coalition MPs are now in open rebellion against the government’s planned increases to compulsory superannuation, warning Treasurer Josh Frydenberg they are “frustrated” by his position to raise the rate from 9.5 to 12 per cent.

Finance Minister Mathias Cormann moved to swiftly shut down the uprising, which has grown from two MPs to a dozen within a matter of weeks, as concerns grow that it would be unethical to put more workers money into an inefficient system worth almost $3 trillion.

Senator Cormann ruled out changes to the legislated timetable on Tuesday that will see super increase gradually to 12 per cent from 2021 in a move the Grattan Institute estimates will cost workers up to $20 billion a year in wages once it is fully implemented.

The Morrison government is preparing to announce a retirement income review that will take into account superannuation, pensions and taxation following a recommendation from the Productivity Commission, of which the scheduled rise to 12 per cent is expected to form a key part.

Frontbencher Simon Birmingham left the door open to pausing the increase from 9.5 per cent to 12 per cent, stating the government had no plans to change the increase “at this stage”.

But backbenchers are ramping up pressure on cabinet to declare its hand before the review has begun.

“Frustration is building around the fact that we have been talking about this for so long and there is just no movement,” said NSW Liberal MP Jason Falinski.

The Grattan Institute found the typical worker would sacrifice up to $30,000 over their lifetime in wages for super, while the largest benefits would flow to higher-income earners through tax breaks.

But this has been disputed by Industry Super which said the modelling was misleading because it assumed continuous careers from age 30 to age 67.

“Any attempt to wind back the proposed super increase or freeze it altogether would not only affect Australians’ quality of life at retirement, it would increase the burden of the age pension on the budget,” said Industry Super Australia acting chief executive Matthew Linden.

One option being floated is a compromise to increase the super guarantee to 10 per cent and halt it at that rate.

Liberal MP Tim Wilson, a staunch free-marketeer, said that was a misdiagnosis of his concerns.

“The data shows the increase in [super] primarily benefits the rich, and we should give people the choice to take increased wages today or top up their super for tomorrow,” he said.

Mr Falinski and Mr Wilson, the leaders of the ginger economics group, said the system needs to become more efficient and any further increases to super should be a conscious decision made by workers.

Mr Falinski said there were at least a dozen like-minded Liberal MPs who shared his views.

Liberal senator James Paterson said the retirement incomes review was the appropriate forum to investigate the increase.

“The Productivity Commission recognised it’s no good putting more money into superannuation if that system is broken, as we believe it currently is,” he said.

The new minister responsible for superannuation, former Australian Super policy advisor Jane Hume, is sceptical about the industry’s efficiency and said it would be immoral to ask workers to put more money into it if is not improved.

She has now begun implementing recommendations of the Productivity Comission’s 2018 review – which found workers could be more than $500,000 better off by the time they retire by abolishing high fees, duplicate accounts and underperforming funds.

Asked twice in Parliament on Monday whether he would rule out changes to the Super Guarantee Administration Act, Senator Cormann said “yes” and added that when the Coalition last paused a scheduled superannuation rise in 2013, it took the decision to the election.

There was no debate over the rise in the superannuation guarantee in the lead up to this year’s federal poll.

Prime Minister Scott Morrison said there was “no change to the goverment’s policy” but would not categorically rule out one in future when asked in Parliament on Tuesday.

Shadow treasurer Jim Chalmers accused the the Coalition of preparing to “ambush” the retirement incomes of Australian workers.

“At a time when company profits are very high and wages are incredibly stagnant, the Liberal Party wants less money going into wages and less money going into the retirement balances of people who work in this country,” he said.

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