Super on the line
In July 2021, compulsory employer superannuation contributions are scheduled to increase from the current 9.5 per cent to 10 per cent, then slowly increase to 12 per cent by 2025.
This is a legacy of the Julia Gillard years, when super increases were linked to the mining tax. However, when Tony Abbott won office in 2013, his government did a deal with Queensland MP Clive Palmer to abolish the mining tax and delay the super increases until 2021.
It’s probably no secret that there are elements of the Liberal Party who are hostile to Australia’s compulsory superannuation scheme, and to the legislated increases in particular, and they have been looking for a reason to abolish them.
The Coalition committed at the last election to honour the planned increases, but the fallout from the pandemic has given them an opening to defer them further or abolish the increases altogether.
The Coalition argues that employers have taken an almighty hit from the restrictions associated with the pandemic, so a compulsory increase in super may push some over the brink. They also argue that Australia’s already low wages growth will slow further, and that employees would be better off with that money in their pockets than in their retirement funds.
However, these arguments don’t really wash. The increase for 2021 is set at just 0.5 per cent, a tiny increase in the greater scheme of things, and not likely to prove especially onerous by this time next year.
Further, there is no guarantee that any foregone increase in super will immediately translate into a commensurate increase in wages – the most likely outcome is that employers will pocket the difference.
The scheduled super increases are legislated, so the government will need to get any proposed changes through Parliament. The Senate crossbench has made noises that enough of them are willing to support deferring the increase, but this is not set in stone.
There is still some time before this legislation is likely to come before the Senate, and much will depend on how overall conditions improve or otherwise between now and then.
Find out more: Scott Morrison indicates 2021 super rise may not go ahead
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