The increase in the compulsory superannuation contribution, legislated to rise next July from 9.5% to 10%, is being fiercely debated following the release of the retirement income report.
In this podcast we hear the views of Brendan Coates, Director of the Household Finances Program at the Grattan Institute and Greg Combet, former Labor minister, and chair of Industry Super Australia.
Coates, who opposes the July and later scheduled rises, says ultimately the money comes out of the worker’s pay because employers will increase wages more slowly.
Coates argues the present superannuation arrangements are adequate for most retirees who own their homes, and will be in the future.
Although he says retirees potentially face financial stress if renting, Coates wouldn’t favour letting people dip willy nilly into their super for a deposit on their first home. But “if the rate of compulsory super goes to 12% as legislated, I think the right answer is not … to let them take out their super for housing, it’s to let them take out anything above 9.5% each year” for any purpose.
Combet flatly opposes the use of super accounts for housing.
“If we are concerned about housing affordability and trying to lift the level of home ownership in the country, you don’t go and cannibalise another part of the retirement income system, the superannuation system.
"You address the issues of housing supply. You address the issues of housing affordability, and you can take some specific public policy measures for helping first home buyers.”
In response to the criticism that higher contributions will diminish wage growth, Combet says: “Let’s go back to the 90’s. Paul Keating promised to get to a 12% super guarantee. John Howard froze it… No compensating pay rises that are discernible anywhere.”
A List of Ways to Die, Lee Rosevere, from Free Music Archive.
Authors: Michelle Grattan, Professorial Fellow, University of Canberra