Morrison stares down Liberal rebels
Treasurer Josh Frydenburg has previously said the government will continue the legislated increase to the superannuation guarantee to 12 per cent, but several backbenchers have criticised the move and are pressuring the Coalition to block it.
Prime Minister Scott Morrison reiterated Mr Frydenberg's position today in Question Time, saying of the planned super increases: "There is no change to the government's policy."
That is a slightly more vehement version of what Mr Frydenburg said on Insiders yesterday.
"We have no plans to change the legislated increase," he said, despite the Coalition's promise to launch a review into the effectiveness of the savings scheme.
The Productivity Commission's review into the efficiency and competitiveness of super, which was completed in 2018, found more than $30 billion was pocketed by super funds in fees, and one third of accounts were inflicted with "excessive and unwarranted fees."
"What we need to fully understand with this (legislated) increase is what is happening to retirement incomes, what is happening to the nation's balance sheet," Mr Frydenberg said.
Liberal MP Jason Falinski said he was "unconvinced" the retirement savings system was best serving its customers for its intended purpose, arguing that in these circumstances he could not support an increase.
Seven Liberal MPs, including Andrew Hastie, Mr Falinski, Amanda Stoker and Gerard Rennick, have been critical of the Treasurer's stance.
Among the arguments are that the rate should remain at 9.5 per cent or that the increase should be lesser for lower income earners.
Mr Hastie told The Australian he would prefer people had the choice to spend that money on home ownership and decreasing current debts.
"I'd rather have people have more of their own money to pay down their existing debt such as their mortgage and ease the cost of living now," Mr Hastie said.
Mr Rennick argued the increase in rate would not support local regions, with more funds going towards the funds management industry in Sydney and Melbourne.
"The money doesn't go into greenfield investments; they just buy existing shares rather than contribute money to the economy by starting infrastructure projects," he said.
"There's enough going to super now, and the best people to decide how they earn their money are the people who earn it."
The super debate is structured around arguments over what percentage contribution is required to adequately provide for one's retirement, as well as whether or not employees should experience super or wages growth, and what the economic impact of a super increase would be.
Liberal Senator James Paterson said he was concerned the review would "lock away" even more of workers' income.
"All the evidence shows it comes at the cost of their take-home pay today and might not even improve their standard of living when they retire," Mr Paterson said.
Ms Stoker said the government should prioritise wage rises over an increase in super contributions.
"This is an urgent economic and political imperative," she said.
Unless blocked, the increase will see the superannuation guarantee change from 9.5 per cent to 12 per cent by July 1, 2025. Increases will occur gradually, at a rate of 0.5 per cent annually, until maxing at 12 per cent.
While the Association of Superannuation Funds of Australia argues that the increasing rate will ensure retirement funds remain adequate, the Gratton Institute suggests the move would make Australians poorer as wages growth would slump in response to the increase.
ASFA research says that if a 30-year-old were earning $60,000 a year, with $20,000 in their super account, they would have $422,000 at retirement - $66,000 more than they'd have if the legislated changes did not go ahead.
Industry Super Australia (ISA) argues that the Gratton Institute's research was not conclusive, as it failed to consider that only 57 per cent of income earners would actually receive an increase to their super contribution.
ISA said almost two million workers already receive a super contribution of 12 per cent or more, and therefore would not be impacted by the rate change.
UNSW economist Nicholas Morris found in his study that Australian super funds are about four times more expensive than similar funds overseas, such as those found in the US and Europe.
Nobel prize winning economists Eugene Fama and Richard Thale have also been critical of the Australian system for its high fees and inferior default arrangements.