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Coalition backbenchers push to dump 12 per cent super guarantee rise

Dr Allen said an increase risked making it tougher for businesses already stressed by the pandemic.

“I’m against a rise in the superannuation guarantee at this point during the COVID crisis because some experts predict it will result in lower wages as employers pass on the impact to employees,” she said.

Mr Sharma, the member for Wentworth, said it was hard to make the case for an increase in the current economic environment.

“It has to correlate to the economy and conditions at the time. There’s a retirement income review going on … I don’t think the super system is working as it was intended to,” he said, listing low performance and high fees as among his concerns.

Mr Broadbent said small and medium-size businesses were facing the toughest circumstances many would ever encounter, and increasing the guarantee would only cripple them.

“Employers will find it very difficult to find that extra money and, perhaps most importantly, now is the time where you want more money in the pockets of Australian workers,” he said.

Senator Abetz said postponing the super guarantee increase would lift disposable income and stimulate the economy, while former deputy prime minister Barnaby Joyce, the MP for New England, said it was “probably not” a good idea to increase it now.

“You get no super if you haven’t got a job. Just hold off until things settle down a bit,” Mr Joyce said.

The Coalition would probably face a major backlash from Labor and the powerful super industry if it was to again delay an increase in the guarantee. The Abbott government froze the rate at 9.5 per cent in 2014 and delayed its gradual increase until between July 1, 2021, and July 1, 2025.

Labor leader Anthony Albanese has accused the government of using the COVID-19 crisis to undermine the super system, particularly in allowing young Australians early access to their savings.

But West Australian senator Matt O’Sullivan told this masthead it was not the right economic environment to go ahead with the increase.

“We need to have a good look at it, in my view. It’s part of the overall discussion we’re having about superannuation,” he said.

NSW MP John Alexander said it was “not an appropriate time to be doing it” because it was taking money out of people’s hands when they needed it most.

“It should be determined in consideration of the current phenomenal circumstances,” he said.

Liberal MP Craig Kelly, Queensland senator Gerrard Rennick and NSW MP Jason Falinski are also against lifting the rate.

“At this point the circumstances have changed radically,” Mr Falinski said. “We need to pull every lever we can [for the economic recovery].”

NSW senator Andrew Bragg, a fierce critic of the super system, said the retirement review was a critical inquiry within government to evaluate these issues.

Victorian MPs Tim Wilson and James Paterson, who have both previously called for Treasurer Josh Frydenberg to dump the measure, declined to comment, citing the review into Australia’s retirement income.

Assistant Minister for Superannuation and Financial Services Jane Hume said the super guarantee was legislated and it would be “very difficult to wind it back”.

“The Morrison government has no current plans to do so,” she said.

Industry Super Australia research shows more than 8 million Australians could be worse off in retirement if the scheduled super rate is cut, losing more than $14.1 billion in super a year, or about $1630 a year for the average person.

However, research conducted by the union-backed fund lobby group recently found higher superannuation will come at a cost to workers through fewer jobs or lower wages.

Grattan Institute household finance program director Brendan Coates said the case against an increase was “pretty clear cut” before the pandemic.

He said it prioritised retirement savings above workers’ current incomes and would not improve the federal budget position because the extra tax breaks would exceed the decrease in the pension for decades.

“In the current environment the case is even weaker. We’ve already seen a big jump in the savings rate and we’re likely to see a big jump in the June quarter,” Mr Coates said.

Council of Small Business Organisations Australia chief executive Peter Strong said the 9.5 per cent rate should not be increased.

“Even research from the industry super funds show it would be a negative impact on jobs, wages and the economy,” he said.

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