Labor has promised to increase compulsory superannuation contributions from 9.5 per cent to 12 per cent by 2025, a move supported by the government.
Last week, the Grattan Institute said that such a move would cause an extra $20 billion to be stripped from workers’ wages each year.
Speaking to Accountants Daily, CPA head of external affairs Paul Drum acknowledged that there was a need to increase compulsory superannuation contributions, but the timing and speed of the increase was not viable in the current economic climate.
“There’s nothing magical about the 9.5 per cent number — we know that all adequacy test says that’s not going to provide people with enough retirement savings,” Mr Drum said.
“Our issue is whether this fast-tracking of SG to 12 per cent has been thought through properly because, if you take money out of people’s wallets today, consumption and investment suffer, and we’ve just had a zero inflation quarter — unprecedented in my working lifetime.
“We know that retail sales are down, we know that the property market has come off the boil quite significantly depending with town or region you are in, we’ve got low wage growth, low business confidence, and cost of living pressures.
“Just because you force super up from 9.5 per cent to 12 per cent doesn’t mean they get a pay rise, it is taken out of what they get now. It doesn’t equate to a pay rise for everyone; in most cases, it will be taken from your current package.”
Further, Mr Drum said any increase that has to be borne by a business will place more pressure on owners who are struggling to keep their business afloat.
“While it is politically appealing in some quarters, it could be detrimental to economic growth, and conversely, if it does equate to a forced pay rise, over and above what a worker’s wage is now, who pays? Therefore, is it anti-jobs?” he said.
“These are concerns we are hearing from small business — who will pay if it is not already part of the package, because they can’t afford it.”
Jotham Lian is the news editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.