Right-wing crossbench Senators have voted for a Liberal plan to withhold scheduled increases in workers’ Superannuation, potentially leaving employees at least $44 billion worse off.
Superannuation is a percentage of wages that bosses must pay to workers for their retirement. It is legislated to increase incrementally from 9.5% to 12% by mid-2019. The government wants a freeze until at least mid-2016, increasing it to 12% only in 2021.
Each 0.5% increase is today worth $390 a year to the median worker. On the government’s preferred plan, collectively workers would be $67.6 billion worse off by mid-2021. After ten years that could compound to $139.2 billion.
The ALP had originally planed for the increases to coincide with their modest mining tax. The Liberals have now cynically attached the repeal of the mining tax to changes to the Low Income Superannuation Contribution, the Income Support Bonus and the Schoolkids Bonus. The corporate media has hardly reported on the plans.
Workers and unions need to oppose reductions to Superannuation contributions. At the same time they need to fight for control of the profits that workers produce in order to guarantee everyone a dignified retirement.
By W. van Leeuwen
In early September, after this article was first written, the Liberals and the Palmer United Party (PUP) voting bloc did a deal to repeal of the mining tax. It included keeping the schoolkids bonus only until December 2016, the low income super contributions until June 2017 and the low income bonus until December 2016.
While the rest of deal’s details are not fully known, it also included delaying superannuation increases until at least mid-2021, when it is scheduled to increase to 10% of wages. It will not reach 12% until mid-2025 – 11 years away! It takes some special negotiating skills to ‘gain’ an even worse deal than was on the table earlier. The PUP Senators were clearly looking after their boss’ business interests.
Even worse, the relevant minister now has the discretion to stipulate any changes without parliamentary approval – almost guaranteeing no super increases and perhaps even attempts to cuts it. The Financial Services Council, a finance industry lobby group, estimated workers will now forego an extra $128 billion over the next decade. With compounding, that figure doubles every 10 years.
The only choice workers have is to build their own organisation to push for increased wages and retirement payments out of the profits they produce.