Opinion: For the next six months employers' compulsory 9.5 per cent superannuation contributions should go into workers' pay packets.
The government is doing an outstanding job in keeping the economy going while the restrictions imposed appear to be flattening the infection curve, but it’s too early to say that with certainty. There is a limit to how much the government can borrow to deal with the economic challenges.
A simple non-budget solution would be to legislate so that for the next six months every salary and wage earner in Australia may choose to take their compulsory 9.5 per cent superannuation contribution in their pay packet. Compulsory contributions will automatically return to normal at the expiration of the legislation unless otherwise approved by Parliament.
The nation must decide its best path forward: People lining up at a Centrelink office amid the COVID-19 shock.That is equivalent to a 9.5 per cent overnight increase in pay available to every working Australian. An increase on which they will pay tax according to their tax bracket. There is no cost to government and, in fact, an increase in income tax revenue. There is no cost to business, which is important as many businesses are struggling to survive.
Theoretically the Australian annual GDP is approximately $2 trillion and wages and salaries are approximately 55 per cent of that - say $1 trillion a year. A 9.5 per cent increase is worth approximately $100 billion a year. Last year super contributions totalled $120 billion. Assuming conservatively that 50 per cent choose to keep paying into their super, that is an instant $50 billion to $60 billion per year increase in overall pay.
The super funds are a major portion of our savings pool. This is not a proposal to dip into the existing pool. It is a proposal to temporarily reduce the growth of the pool at a time of great economic and social distress. Most of business is suffering and are playing their part in keeping things going. It is not unreasonable to ask the super funds who have a rare, privileged position in our economy to make a short-term contribution.
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