Liberals at odds over superannuation increase as rebel MPs demand freeze

22 Jul Liberals at odds over superannuation increase as rebel MPs demand freeze

Paul Karp – The Guardian – Monday 22 July 2019

Mathias Cormann has apparently ruled out changing the timetable to lift superannuation to 12%, as renegade Liberal MPs call for increases to be delayed or scrapped.

Despite the finance minister’s intervention, the prime minister, Scott Morrison, twice refused to give the same guarantee on Monday, while Liberal senator James Paterson argued no more money should be put into compulsory retirement savings while the system is “broken”.

Last week the Grattan Institute released a report arguing that increasing the superannuation guarantee from 9.5% could harm workers by reducing their take-home pay, and reducing access to the age pension later in life.

As parliament resumed on Monday, Labor targeted the Coalition in both houses, citing a report in the Australian quoting seven Liberal MPs either calling for scheduled superannuation increases to be scrapped or arguing workers would prefer more take-home pay.

In 2014, the Abbott government froze the superannuation guarantee at 9.5% but – under current legislation – it is due to go up to 10% in 2021 and to 12% by 2025.

In the Senate, Cormann was asked: “Can you rule out any changes to the timetable for the legislated increases to the superannuation guarantee” contained in the current legislation? “Yes,” he replied.

But in the house, Morrison said there was “no change” to the government’s policy, refusing to rule it out in future.

After Senate question time, Paterson said the government had commissioned a review into retirement incomes on the recommendation of the Productivity Commission, which “recognised it is no good putting more money into super if that system is broken, as we believe it currently is”.

Paterson cited reforms to be introduced by the assistant minister for superannuation to prevent fees and inappropriate insurance coverage eating into workers’ savings.

“I also think it’s worthwhile for the government review to consider the wisdom of increasing superannuation from 9.5% to 12%,” he told the Senate.

Paterson noted that the Treasury under secretary Ken Henry had advised Labor in government against increasing superannuation “because it would hurt the take-home pay of Australians”, a result that was replicated by the Grattan Institute’s “very compelling work”.

“We need to carefully consider whether it’s a good idea [for workers] to potentially receive lower take-home pay and maybe not receive a higher retirement benefit as a result.”

Earlier, Liberal MP Tim Wilson told Sky News that he had “reservations” about the scheduled superannuation increases “as an alternative to allowing Australians to opt out” of compulsory increases.

Wilson said MPs were raising “legitimate questions about whether we should continue to increase the superannuation guarantee versus the alternative of giving people the choice to opt for wage increases so they can do things like pay down debt today”.

Wilson argued that increasing the super guarantee “principle benefits the wealthy” and said that Australians should have “maximum choice” over how they use their money.

The other Liberals quoted in the Australian’s report questioning the super increases were MPs Craig Kelly, Jason Falinski and Andrew Hastie, and Senators Amanda Stoker and Gerard Rennick.

The shadow treasurer, Jim Chalmers, and Labor’s financial services spokesman, Stephen Jones, said that Scott Morrison had “failed dismally” the test “to stand up to the extremists on his backbench and rule out thieving workers’ super”.

“The Liberals are clearly gearing up for another attack on the retirement incomes of Australian workers,” they said in a statement. “At a time when workers’ wages are stagnant, the Liberals also want less money going into their retirement balances as well.”

In 2018, the then finance and services minister, Kelly O’Dwyer, indicated the Coalition might prefer to keep the guarantee frozen at 9.5%, arguing that lifting the guarantee would exacerbate sluggish wage growth, but no change to the legislated timetable was formally proposed.

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