The legislated superannuation guarantee (SG) increase will mean unavoidable higher costs for businesses and will adversely affect employee wages, a senior government minister has said.
Superannuation, Financial Services and the Digital Economy Minister Jane Hume warned employees would be left with little or no increase in wages when the legislated SG rise to 12 per cent came into effect, predicting employees would bear the brunt of the increased cost of the SG rise on businesses.
“The debate that we’re having now is really what the trade-off for the SG rise is,” Hume said during a presentation hosted late last week by PritchittBland Communications.
“There is a trade-off between wage rises and superannuation guarantee increase. SG is a cost of employment and if I’m an employer and I give a rise in the SG, that’s going to be passed on to my employees in one way, shape or form. Somewhere between 80 per cent and 100 per cent [of the cost] is going to be passed on. So to deny that is sticking your head in the sand, quite frankly.
“Everything that this government has done, everything that the Morrison government does, is about trying to lower costs to business, to try to employ more people, to encourage wage rises. This legislation does the opposite of that so it puts us in an awkward position.”
She also highlighted the results of last year’s one-off SG amnesty, noting the measure had exceeded the government’s expectations, with 28,000 employers coming forward to disclose almost $900 million of unpaid superannuation.
“Much of this was money that employees didn’t even know they were owed. It goes to show that super is absolutely a form of deferred wages and every bit must be paid, and paid in full,” she said.
In November last year, the final report of the government’s Retirement Income Review claimed a more efficient use of personal assets would allow most people to achieve adequate retirement incomes without an increase in the SG to 12 per cent.
In 2019, however, the Association of Superannuation Funds of Australia and Industry Super Australia said modelling used by the Grattan Institute to show an increase in the SG rate would reduce the wages of average Australians was flawed and contradictory.
