kevin rudd

Federal government ‘pokes another hole in super’

February 1, 2021 by Rayan Calimlim Leave a Comment

The Morrison government has flagged the prospect of ‘opt-in super’ when the whole point of superannuation is that it is compulsory.

The Morrison government continues to bob and weave as it tries to renege on its election promise to increase the super guarantee to 12 per cent.

The super guarantee is scheduled to rise from 9.5 per cent to 10 per cent this year, and then to 12 per cent by 2025. These increases are already legislated and in the lead-up to the 2019 federal election the Liberal government promised to implement them.

Last year the government indicated that the increases were unaffordable and would hurt wages and jobs. A prominent group of Liberal MPs called for the cancellation of the increases completely.

Now the government is pro-posing that the additions above 10 per cent be optional. Under this “option”, workers could choose to take additional payments as extra wages rather than as a superannuation contribution.

Critics from the superannuation sector, the union movement, economic commentators – and two former prime ministers – have savaged the government’s proposals.

Paul Keating, the architect of industry super, said the opt-in, opt-out approach would require the government to “legislate to compel employers to pay the 2.5 per cent as wages, because the enterprise bargaining system cannot pay them, as the last eight years (of little wages growth) have demonstrated”, the Sydney Morning Herald reported.

Industry Super Australia Deputy Chief Executive, Matthew Linden, said the federal government should follow through on the legislated rise rather than “exploring underhanded ways to renege on it”.

“Removing the guarantee in the super guarantee to make it ‘optional’ is a recipe for higher taxes, lower lifetime incomes, and a red-tape nightmare for business,” Mr Linden said. “This isn’t choice – it’s a sneaky tax grab that will leave people worse off and rip up one of the system’s founding principles.”

The government is being disingenuous

In The Guardian, economics commentator Greg Jericho brand-ed the government’s proposals  as “disingenuous”.

“If this government truly wanted to increase wages it would not institute a policy to reduce public servants’ wage growth. It would also not seek to reduce the bargaining power of workers as it has continually sought to do,” he said.

“If you want to fix wages growth, fix wages growth. And if you want to improve retirement incomes, don’t instead seek to destroy superannuation because you hate industry funds.”

Former Prime Minister Kevin Rudd was also highly critical of the proposal, describing it as a Liberal Party “ideological obsession”.

“(Superannuation) delivers a private benefit for individuals, who are helped to invest for decent retirement, and a public benefit by reducing pressure on the aged pension, creating a strategic pool of investment funds and stabilising the economy against international shocks,” he said.

ACTU Secretary, Sally McManus, said any delay to the compulsory superannuation guarantee rise would not lead to higher wages.

“At a time of great uncertainty and after hundreds of thousands of people emptied their super accounts under the early access scheme, the government should be focused on helping workers rebuild their super balances for a dignified retirement,” she said.

“We cannot allow the pandemic to be the opportunity the government uses to attack the very social institutions and safety nets that we should be treasuring.”

Opt-in, opt-out will hit workers with higher taxes

The federal government’s secret plan to tear up compulsory super by making the increase to 12 per cent optional would be a $20,000 tax grab on the average Australian family, which could also leave them with up to $200,000 less super by retirement, says Industry Super Australia (ISA).

Wages are taxed at a higher rate than super contributions, leaving little for workers once the tax office takes its cut. An ISA analysis shows that up to two-thirds of an increase could be lost in higher taxes and reductions in other government support payments.

“Figures from the government’s own Retirement Income Review reveal such a plan would leave all income groups worse off – with lower lifetime disposable incomes. It would also be an administrative nightmare to manage an opt-out system – wrapping small business in yet another layer of red tape,” said the superannuation peak body.

“Any Budget boost would be short-lived, as the super savings grab would lead to a far higher pension bill for future generations.”

Nurses and midwives would lose $56,000 under wage freeze: economist

July 27, 2020 by Rayan Calimlim Leave a Comment

NSW public sector workers would lose $56,000 from the NSW pay freeze, according to economic evidence presented to the IRC.

Dr Andrew Charlton, who served as Kevin Rudd’s economic adviser during the 2008 global financial crisis, said “freezing public sector salaries is not warranted” in NSW in a report tendered to the IRC.

The report, co-authored with Angela Jackson from Equity Economics, says “the macroeconomic benefits of a pay rise to the 400,000-strong public workforce would substantially outweigh the costs”.

“A 2.5 per cent increase in the average public servant’s income for 2020–21 equates to $2198 in 2020–21, but an increase of $56,150 in future income over the next 20 years.

“A freeze in public sector wages would represent a real cut in incomes for 407,999 employees across the state. This will have a direct impact on the spending by these employees, due to a reduction in disposable income and borrowing capacity.

“This is precisely the opposite direction economic policy needs to be headed to achieve the government’s goal of supporting economic recovery,” it says.

The Equity Economics analysis points out that the current position of the NSW government to cut the real wages of all public sector employees regardless of their role or their level of pay is not consistent with advice given by the International Monetary Fund (IMF).

The IMF recommends any pay freeze:

exclude priority areas like health, social workers; security workers; transport, and other employees involved In ensuring the continuation of essential services; and
be progressive in its design, with lower paid public sector workers sharing less of the burden.

Don’t delay the Super increase

July 27, 2020 by Rayan Calimlim Leave a Comment

Nurses and midwives stand to lose thousands of dollars a year in retirement income if the Morrison government freezes the superannuation levy.

Is the Morrison government about to take an axe to the retirement savings of workers, including nurses and midwives?

A group of 10 Coalition federal MPs has urged the government to delay or cancel scheduled increases to the compulsory superannuation levy.

They claim employers cannot afford an increase due to the coronavirus pandemic.

Those MPs get superannuation of 15.4 per cent on top of their parliamentary pension and other post-parliamentary benefits.

For the rest of us, superannuation is due to rise from 9.5 per cent to 10 per cent in July 2021 and 12 per cent by 2025.

Freezing the levy at its current rate would cost a 30-year-old worker earning $40,000 a year about $10,000 less each year in retirement, according to former Labor prime minister Kevin Rudd.

Rudd said the Liberal Party was “softening the electorate up” for a superannuation freeze even before Covid-19 struck.

He pointed out that the government commissioned a former Liberal government staffer, Mike Callaghan, to head an inquiry into retirement incomes. Callaghan’s report was due in late July.

The public intervention by 10 Liberal MPs “dispelled any doubt as to the strategy” Rudd wrote in the Sydney Morning Herald.

“You simply do not get one-in-five backbenchers speaking in unison like that unless it has been authorised by the leader, especially when the group includes a gaggle of ministerial aspirants,” he said.

“Using the bushfires and pandemic as political cover, Morrison is determined to fulfil the Liberal Party’s long-held desire to freeze the compulsory super guarantee levy at its current 9.5 per cent rate.”

Pandemic political profiteering

ACTU Assistant Secretary Scott Connolly described Liberal attacks on superannuation as “pandemic political profiteering”.

“If the Liberal Party’s only solution to the problems of the pandemic is to raid people’s super, then they’ve clearly run out of ideas,” Connolly said.

“These backbenchers need to be put in their place by the Morrison government, and workers need to be given reassurance that their retirement savings will go up as currently legislated.”

Until the late 1980s, only high-income earners and public servants enjoyed decent superannuation. Most workers – including almost all women – had no super at all.

From the late 1980s, unions began to win superannuation as a part of enterprise and award bargaining.

Unions set up industry super funds such as Hesta to look after the retirement savings of their members.

In 1992, the Keating Labor government introduced a com-pulsory superannuation levy as part of a tripartite agreement between the government, employers and the unions.

The Liberals opposed any levy.

Labor planned for the levy to reach 15 per cent but the Howard government halted it at 9 per cent.

In 2010, the Rudd government announced it would incrementally raise the rate to 12 per cent by 2020 but Tony Abbott froze the rate at 9.5 per cent in 2014, citing a “budget emergency”.

According to former prime minister Kevin Rudd, this was “classic Abbott bullshit to advance a long-standing, ideological agenda”.

Rudd disputes the current claim by many Liberal MPs that businesses cannot afford a super increase.

He said labour productivity had risen about 9 per cent since the Abbott freeze, easily outstripping the stalled 2.5 per cent rise in contributions.

“They also conveniently ignore that (Rudd’s announced increase to 12 per cent) was coupled with business-friendly measures including a company tax cut, phased implementation and an instant asset write-off.”