“People need to understand that there is a trade-off,” Senator Hume said in an interview. “If their wages don’t go up over the next five years and they are scratching their head and wondering why, you can say: ‘Well actually your super guarantee has gone up’.
“And there are a lot of people that won’t be happy with that.”
The move to a higher rate has attracted criticism from 10 Coalition MPs including Katie Allen, Dave Sharma, Russell Broadbent and former employment minister Eric Abetz, but is supported by Labor and the unions, which believe a higher rate helps fund an adequate retirement.
RBA governor Philip Lowe said on Friday a rise in the super guarantee would “certainly have a negative effect on wages growth” though acknowledged some people accepted the trade-off.
Wages increased 1.75 per cent in the year to June 30. The RBA is forecasting growth of 1.25 per cent this financial year and 1.5 per cent in 2022.
“[The government is] dealing with the fallout of the biggest economic crisis in history … the super guarantee has to be looked at in that context as well as its historical intentions,” Senator Hume said.
“Australians need every dollar in their back pocket right now to see them through and businesses need to see that government is on their side, not imposing more costs on their operations that would prevent them [from continuing] to operate or hire more people or pay them higher wages.”
However, she said unwinding legislation was “extremely difficult” and the government’s responsibility was to ensure the public understood the compromise.
Treasury has yet to publicly release a 650-page report from a review of the retirement income system, which Senator Hume said caused her to “think very differently” about the role of super, pensions and voluntary savings.
Industry Super Australia chairman Greg Combet said claims an increase in the super guarantee could limit wages growth did not stack up next to real-life experience.
“In the 1990s for example, Australia was coming out of a deep recession [and] there was a 7 per cent increase in the super guarantee. During that decade wages grew, the economy grew and jobs grew,” he said. “If you look at the last seven years, there has been no super guarantee rise, no wages growth and all labour productivity benefits have accumulated to business.”
Labor assistant treasury spokesman Stephen Jones said it appeared the government was considering the same strategy as in 2013, when the Abbott government delayed rises.
“They froze the super guarantee [then] and wages flat-lined,” Mr Jones said. “It didn’t work between 2013 and 2020 – why do they think it’s going to work now?”
Hostplus trustee Tim Lyons acknowledged super contributions had an impact on wages but said there were other policies the government could use to boost pay such as extending its JobKeeper scheme.
“You wouldn’t be mucking around with super. It’s a sad show,” Mr Lyons said. “This is, to me, another sense of them softening up the public of a dismantling of compulsory super.”
Australian Institute of Superannuation Trustees chief executive Eva Scheerlinck has said ordinary workers would be most impacted by a delay.
“The timeline to lift the super guarantee is gradual, with the next scheduled rise to 10 per cent amounting to the equivalent of $5 a week for a median wage earner.”
Labor senator Deborah O’Neill said the government should not go back on its election promise to increase superannuation.
“There is nothing decent or sensible about changing legislation that, right now, is the only certain way to give every Australian a guaranteed right to more income in their future retirement.”
Jennifer Duke is an economics correspondent for The Sydney Morning Herald and The Age, based at Parliament House in Canberra.
Charlotte is a reporter for The Age.