New research finds cancelling superannuation increase would not boost wages


The onus must lie on those pushing for a super freeze to prove beyond reasonable doubt that snatching a guaranteed remuneration boost from millions will result in an equivalent wage boost. We could not identify any evidence.

A new report to be launched by the McKell Institute today finds no evidence that increasing the super guarantee, from 9.5 per cent to 12 per cent, would cause take-home wages to drop.

The research was prompted by the Grattan Institute's well-publicised claim that "$20 billion" would come out of Australian take-home wages if the superannuation guarantee was increased as scheduled. Grattan's assumption is that every extra dollar paid by an employer into an employee's super would be a dollar withheld from a potential wage increase.

The new report finds no evidence to support Grattan's claim, which has been cited by several Liberal MPs agitating for the federal government to drop its scheduled super increase.

"Grattan's neat one-for-one tradeoff assumption is at odds with conventional economic theory, so our team wanted to see if historic data provided any evidence for the claim. We found none," said McKell Institute Victoria executive director James Pawluk.

"If Grattan's direct tradeoff theory were correct you'd see some sort of historic correlation over the past 30 years between super guarantee rises and trend-breaking wage dips. No matter what labour market data you use, and how hard you dig, no such correlation exists.

"This is consistent with what you would expect. In real world conditions you would assume extra costs on employers to be passed on and absorbed in a range of ways. What actual boss would respond to a mandated super guarantee increase by very carefully removing that exact same amount from their employees' future wage rise? The actual world just doesn't work that way.

"Frankly, it's irresponsible to use a completely unfounded assumption as a starting point for back-of-a-beer-coaster arithmetic. That $20 billion figure was erroneously derived for a headline and it should be discarded from the public discussion."

Mr Pawluk said the slow economy and stagnant wage growth actually added impetus to raising the super guarantee.

"The only direct lever Josh Frydenberg has that will mandate a hard increase in the remuneration of millions overnight is the super guarantee increase," Mr Pawluk said.

"Given the current economic conditions, anyone arguing for a significant transfer of money from employers to employees to be cancelled is making a monumental call.

"The onus must lie on those pushing for a super freeze to prove beyond reasonable doubt that snatching a guaranteed remuneration boost from millions will result in an equivalent wage boost. We could not identify any evidence."

Read the new report here

Business Business & Economy Employment & Training Money & Finance

Privately Submitted Article or Event :
See Above Article or Event for Address, Sunshine Coast Wide
Privately Submitted Article or Event
Showing 10+ recent articles for this business
Rental Guarantees Create Losses For Property Investors 07 November 2019 | As our property downturn finally starts to turn around, investors are being enticed by “rental guarantee” sales packages.   More information...
Staff notice requirements before the Christmas shutdown 07 November 2019 | Are you planning to shut down your business over the Christmas and New Year period? It's never too early (or too late) to start planning. More information...
Sexual harassment a familiar reality for 1 in 3 working Aussies 06 November 2019 | Since the 'Me Too' movement, sexual harassment scandals continue to claim the headlines. The headlines include high profile business leaders, political leaders, and movie directors; but for normal everyday working... More information...
Insurance Council Board approves industry's new General Insurance Code of Practice 31 October 2019 | The Insurance Council of Australia Board (ICA Board) today approved a new General Insurance Code of Practice (Code) after one of the most extensive reviews in the Code's 25-year history. More information...
The Race That Disrupts Workplaces Across The Nation 29 October 2019 | The race that stops a nation on Tuesday 5 November, the Melbourne Cup, will present multiple distributions and complications for employers dealing with the impact on their workforce. More information...
$50 million mitigation funding increase is a leap in the right direction 17 October 2019 | Today’s decision by the Senate to increase mitigation spending by $50 million a year will make a significant difference to communities exposed to the wrath of extreme weather and natural disasters. More information...
Australian Graduates finding their feet three years down the track. 08 October 2019 | The Social Research Centre has released the 2019 Graduate Outcomes Survey – Longitudinal (GOS-L) report as part of the Quality Indicators for Learning and Teaching (QILT) suite of surveys.  More information...
Gaps need closing for young children with allergies 08 October 2019 | An Edith Cowan University survey of Australian early childhood education centres has found worrying gaps in allergy management practices for children. More information...
2019 Chain Reaction Women’s 300 Challenge a huge boost for sick kids 09 October 2019 | From 11-13 October 39 female business executives will cycle 350 kilometres in a bid to raise in excess of $350,000 for major charity partners AEIOU Foundation and the Mater Foundation. More information...

comments powered by Disqus

All articles submitted by third parties or written by My Sunshine Coast come under our Disclaimer / Terms of Service