Scott Morrison is “carefully considering” whether to scrap or delay next year’s planned increase in the superannuation guarantee, flagging the decision could hinge on how well the economy has recovered.
The Prime Minister on Friday said he remained committed to the legislated lift in the compulsory rate of super contributions, which will increase from 9.5 per cent to 10 per cent in July next year.
But he said there was an emerging consensus that in the current economic context there was an argument against forcing workers to set aside more of their salaries for retirement.
“I’m aware of the commentary by … the Reserve Bank governor (Philip Lowe) who’s said that continuing with those arrangements would be bad for employment,” Mr Morrison said.
The Reserve Bank and Treasury forecast that the unemployment rate will rise to 10 per cent by the end of the year, and on Friday Dr Lowe warned national cabinet that the jobless rate would still be at 7 per cent in two years’ time — well above the 5.1 per cent level prior to the COVID-19 recession.
Recent data from the Australian Bureau of Statistics confirmed that private sector wages went backwards over the three months to June — the first quarterly decline in data stretching back to 1997.
With more than a million Australians unemployed, and many more receiving emergency income support, Mr Morrison said the decision of whether or not to go ahead with the planned lift in the superannuation guarantee was “something the government has to carefully consider”.
“I will do, and the government will do, what is in the best interests of people getting jobs and staying in jobs,” he said.
“That’s what this budget will be about. That’s what the next budget will be about. You’ve got to look at the situation as you find it. I don’t think there’s any undue haste that is needed here to consider these issues. I would certainly hope that by May of next year that we’re looking at a very different situation.”
He said the health crisis had created a very different set of “circumstances” than those leading into last year’s election, when the Coalition committed to maintaining the legislated staged increases in the rate of compulsory super.
The intensifying debate on the merits of forcing more workers’ pay into the super system comes as three million Australians have withdrawn a total of $31.1bn from their retirement savings via the government’s early release of super scheme. Dr Lowe told a parliamentary hearing last week that “if this increase (in the SGC) goes ahead, I would expect wage growth to be even lower than it otherwise would be”.