Treasurer Josh Frydenberg has returned to the language of ‘no plans’ to change increases in the Super Guarantee rate, only days after the Review of Retirement Incomes started.
The Treasurer was asked on ABC’s Insiders if the Government was committed to increasing the SG rate to 12% by 2025. Frydenberg answered: “Well it’s legislated and we said we haven’t any plans to change it. We’ve been very clear, both the Prime Minister and I, on that.”
This echoes the language Frydenberg used in a previous Insiders interview – “no plans”. However it is different from the answer given in Question Time by the Treasurer earlier in the year. In late July, when speculation was growing that the Government – driven by backbench agitation – wanted to pause or stop increases in the SG rate, the Treasurer answered “yes” when asked if he would rule out changes to the timetable. The Minister for Finance Mathias Cormann gave the same answer in the Senate. Though the Prime Minister was less categorical, saying at the time that “there’s no change to the Government’s policy”.
On Friday, Treasury released the consultation paper for the Review of Retirement Income. Some, including Labor, are concerned the Government will use the Review – which won’t give recommendations, instead provide a ‘fact base’ – to build a case for stopping increases in the SG rate.
The Review of Retirement Incomes was a recommendation of the Productivity Commission, which said the review should be completed before any increase in the SG rate. In the consultation paper, the Review appears concerned that the interaction of superannuation savings and the Age Pension can result in income actually being higher in retirement than while working. Though the paper also notes the significant tax concessions going to people on high incomes, and says that the purpose of super is not to “assist with wealth accumulation in order to provide for inheritance”.
Jane Hume, Assistant Minister for Superannuation, Financial Services and Financial Technology, has reportedly said that 10% was a “nice round number” that people could relate to, but said this shouldn’t be taken as an intent to freeze the SG rate at this level.
The Review of Retirement Income is set to give its report to Government in June 2020; the increase in the SG rate to 10% is legislated for 1 July 2021.
Under the previous legislated timetable, the SG rate would have already reached 12% – but it was delayed under the Coalition until July 2025. Labor appears committed to the current legislated timetable, and will not accept any further delays.