Labor hits out on wages-super trade-off

·3-min read

The Morrison government is stretching credibility to breaking point by pretending its motivation to cut super is higher wages growth, says Labor's Jim Chalmers.

The shadow treasurer has used a keynote speech to challenge the government as it weighs up whether to pause a lift in the superannuation guarantee due in July.

The guarantee is legislated to rise from 9.5 per cent to 10 per cent mid-year before gradually getting to 12 per cent in July 2025.

Dr Chalmers said as Australia climbed out of the deepest recession in almost a century, it was time to decide what sort of recovery people wanted.

"Whether we can make our economy and our society stronger and more secure post-COVID than it was before," he said.

When Treasurer Josh Frydenberg released his Retirement Incomes Review, the debate focused on the interaction of superannuation and wages.

"But that discussion obscured a more fundamental reality - that wages growth and retirement incomes have both been inadequate for too many Australians for too long," Dr Chalmers said.

In the six years before the government froze the guarantee in 2014, wages grew at about 3.3 per cent, but in the six years since, wages growth has averaged two per cent.

"Weak wages have reduced retirement incomes," Dr Chalmers said.

"If wages had not been so weak since the 2014 super freeze then the average 30-year-old could have an extra $40,000 in super when they retire."

The Reserve Bank expects wages growth to hit a new low of one per cent, not returning to two per cent until mid-2023.

"So to pretend now that their motivation to cut super is higher wages growth stretches credibility to breaking point," Dr Chalmers said.

"The Morrison government should stop pretending another super freeze is about higher wages instead of higher super, when the truth is they want neither and they have form on both."

He said Labor would prefer a bipartisan consensus on the right kind of economic recovery, "but if what's needed here is a clash of political armies, then so be it".

"We are on the side of the vast majority of working Australians who are struggling with stagnant wages and worry if they can afford a decent retirement."

Former Labor prime minister Paul Keating attacked the government this week for allowing the early release of superannuation during the coronavirus pandemic.

Mr Keating claimed super withdrawals were being wasted on Kia cars and new skis.

His intervention triggered a bitter personal attack from Superannuation Minister Jane Hume, who targeted his age and post-parliamentary entitlements.

"This is a prime minister whose prime ministership was, I might add, before the Spice Girls' first album, before internet broadband, before flip phones," Senator Hume told Sky News.

"He has condescended the Australians that have taken their money out, saying they have used it to spend on Kias and skis.

"From a man that's being driven around in a chauffeur-driven car for the last 25 years and will continue to do so until he dies, I think this is outrageous."

Senator Hume said early super access had been a lifeline for many Australians and the government was proud of the scheme.

"It was the right policy for the right time," she said.