12% SG rise a right idea at a wrong time, says CA ANZ
The professional accounting body believes any move to pause compulsory super increasing from 9.5 per cent to 12 per cent is neither a backflip or broken promise from the government, but “plain common sense” amid economic uncertainty.
Chartered Accountants Australia and New Zealand (CA ANZ) has backed calls to halt the increase to 12 per cent in recognition of the economic situation and its impacts.
“Since the last election, there has been a global pandemic, the first Australian recession in 29 years, our highest unemployment in 20 years, record stagnancy in wage growth, and the world falling apart at the seams,” Tony Negline, CA ANZ’s superannuation leader, said.
“The thing about a game changer like a global pandemic is that it changes the game, which is why we need to call a time-out and look at the current state of play.
“The reason we paused our policy is jobs. Super is a percentage of a salary, and you need a job to get a salary.”
The priority right now, said Mr Negline, should be keeping people in jobs, and helping the unemployed get new ones.
“The research and recent Retirement Income Review tells us very clearly that increases in employer superannuation contributions often mean employee salary and wages increase at a slower rate,” said Mr Negline.
“To say that we need to increase the super rate right now while we are still navigating out of this pandemic is to focus on the very pointy end of Maslow’s hierarchy of needs, while everyone else is in survival mode.
“Accountants are on the frontline of this crisis and know Australia can’t do anything to make it harder for a business right now to keep an employee, give them a pay rise or hire a new one.”
However, Mr Negline said that there are concerns with the way that super is managed currently, pointing in particular to reports that 24,000 Australians accessed half a billion dollars from super last year for things like surgery and IVF, and how the early release scheme allowed some 3 million Australians to remove $36 billion out of their super accounts.
“Our super system needs protection. Some are putting it to the sword, and it needs a shield. But what we can’t do is make it more generous right now,” Mr Negline said.
“Accountants work first-hand with businesses who have been financially slammed. We’ve seen a decline in turnover and difficulty with cash flow, with many struggling just to keep staff employed.
“We need to be making it easier, not harder, to boost the economy for businesses to invest and for jobs to be created.
“Let’s park the super increase priority to when the vaccine is rolled out, and when the employment and GDP numbers look a little less like a horror show.”
CA ANZ’s call comes as new modelling by an actuarial firm had revealed the legislated increase in the super guarantee would add $33 billion to age pension costs over the coming decades.