An increase in the superannuation guarantee (SG) levy will benefit low-to-middle-income earners despite it resulting in some employees receiving a lower amount of take-home pay, an industry consultant has said.
QMV principal consultant John Steffanoni described the intention to increase the SG from its current level of 9.5 per cent to 12 per cent as sound economic policy, but acknowledged the elasticity of the labour market, which will determine how much of the associated cost can be absorbed, and broader economic conditions would play a critical part in the process.
“Broad assertions that the planned increase in SG will add to the cost-of-living pressures faced by many Australians don’t really stack up to closer scrutiny. This may simply be due to misunderstanding of the complexity and nuance in the way the SG and labour markets function,” Steffanoni said.
“Rather than adding to cost-of-living pressures by reducing take-home salary, an increase in SG for the 23 per cent of Australian workers on lower salaries set by modern awards will increase the retirement savings of those who are set to benefit most, as wages aren’t set by the market and provide for SG in addition to salary.”
According to Steffanoni, superannuants who have just entered the workforce and causal employees earning below $450 a month and not currently eligible for SG contributions will be among the Australians to benefit most from the change.
Further, he argued the number of individuals who will not experience a reduction in take-home pay as a result of the SG increase outnumber those that will. With regard to this claim, he said 37 per cent of workers have remuneration contracts inclusive of the SG, while 40 per cent of employees were covered by a collective bargaining agreement that would avert such a decrease.
He said an increase in the SG is a mechanism by which labour market efficiencies can be improved during economic conditions of low wage growth and unemployment currently being experienced in Australia.
Several arguments in favour of an increase to the SG have been put forward over the past month, including one from actuarial firm Rice Warner saying it would be beneficial for the government and consumers.
