Verdict on superannuation rise verdict delayed over cost to pay and jobs

Scott Morrison signalled in August that he was no longer wedded to lifting the super guarantee. Picture: Sarah Matray
Scott Morrison signalled in August that he was no longer wedded to lifting the super guarantee. Picture: Sarah Matray

Scott Morrison will delay a decision on whether to ditch next year’s scheduled rise in the compulsory superannuation contribution until the May budget over concerns that lifting it would smash wages as the economy recovers from the pandemic.

The government will on Friday release the long-awaited review into retirement incomes.

The Australian understands the review warns that ballooning tax concessions in the super system would outstrip the cost of the Age Pension, currently costing the budget almost $70bn a year, by 2050. It also warns that raising the super guarantee to 12 per cent by 2025 as scheduled would deliver an intolerable equity gap between men and women.

The review is believed to strongly argue the case that wage earners and women would end up paying for an increase in the current 9.5 per cent rate.

The Prime Minister signalled in August that he was no longer wedded to lifting the super guarantee, acknowledging that it could suppress wages and cost jobs, despite promising at the 2019 election to continue with the scheduled increase to 12 per cent.

He said the emergence of the COVID-19 global pandemic had been a “rather significant event” and that pausing the increase would need to be “considered in the balance of all the other things the government is doing.”