I believe you have the right to be heard by your politicians. That's why I want your advice on this issue.
Should super payments go up this year?
The Government’s deciding whether to give up on the scheduled rise in the superannuation guarantee later this year. If they try to put it off, I might be the last vote that decides if they can do it.
The superannuation guarantee is the amount of money that your employer has to put into your super fund as part of your pay packet. At the moment it’s set at 9.5% of however much you earn. That’s supposed to go up to 10% in July, and it’s meant to keep going up to 12% by the middle of 2025.
Here’s the thing: some people say that forcing your boss to put more money into your super will mean they’re less willing to give you a pay rise down the track. The thinking is that when your employer is deciding how much they can afford to pay you in wages, they’ll take into account how much money your super payments are already costing them.
The others say that there’s no guarantee that taking extra super off workers will mean wages go up. They reckon we’d be better off forcing employers to give workers something, because otherwise they’ll probably get nothing.
One other thing to think about. The tax breaks on super are really generous. Very wealthy people with millions in their super accounts can get tax breaks that are so high they’re worth more than the age pension. Increasing the super guarantee will make that inequality worse.
Arguments for increasing super:
- A lot of people don’t trust that taking businesses off the hook for super will make wages grow any faster.
- Keeping the superannuation guarantee where it is will mean more people retire with less. They’ll have to rely on the age pension.
Arguments against increasing super:
- Business owners might not be able to pay more super and pay more in wages. For a lot of them, the choice might be between putting money into one or the other. So wages could grow even slower.
- Super tax breaks increase inequality because they benefit people who earn more. Tax breaks are also expensive for the government.
- The extra cost of super could weigh down businesses just as the economy is starting to pick up again.
Ok, now it’s over to you. Should I back the super guarantee going up, even if it means lower wages in the future?
- 1 To put that in context: if the superannuation guarantee goes up to 12%, someone who makes $60k a year would be getting an extra $1,500 in their super account every year. That money will be invested by their fund, so it could be worth a lot by the time they retire.
- 2 See “Retirement Income Review: Final Report”, Callaghan et al., published by the Department of the Treasury, July 2020, for sources.
- 3 “Super: What you need to know”, Australian Unions, December 2020.
- 4 “The higher the income, the bigger the subsidy”, Inside Story, February 2021.