Aussies could be forced to choose between superannuation and take-home pay under a proposal being considered by the federal government.
The government will mull making an increase in superannuation optional, giving workers the choice to receive a pay rise instead, in a bid to resolve internal division over the issue.
The move would draw a key election battleline amid speculation of an early vote this year, with Labor, the unions and the super industry prepared to campaign heavily on the issue.
The Coalition committed to raising the super guarantee from 9.5 per cent to 12 per cent by 2025 at the last election.
But Treasurer Josh Frydenberg confirmed the pledge would be reviewed following the release of the Retirement Income Review in November, arguing the COVID-19 pandemic had drastically altered the economic outlook.
With several Coalition backbenchers pushing to scrap the increase altogether, government frontbencher Sussan Ley confirmed on Wednesday the Coalition would consider the compromise among a range of options.
“That is a discussion that members of the government will have as we go forward around this and many other important financial considerations,” she said.
Industry Super Australia said the proposal would effectively force Australians to dip into their future savings to fund their own pay rises, leaving the average 30-year old couple $200,000 worse off in retirement.
Labor financial services spokesman Stephen Jones described the proposal as a “pretty sneaky backdoor tax increase”, saying the government was papering-over economic cracks by damaging workers’ long-term financial security.
“Scott Morrison is not going to be around to take the blame when those workers find themselves 100 grand short in their retirement savings,” he told NCA NewsWire.
“I’m sure cane toads seemed like a good idea at the time. We’re going to look back at this and say it was about as dumb as introducing cane toads.
“We might be dealing with a short-term problem, but the long-term consequences far outweigh it.”
The Income Retirement Review found the “weight of evidence suggests the majority of increases in the super guarantee come at the expense of growth in take-home wages”.
But Mr Jones said it was not a “one for one” system where every dollar forgone on super was made up in wages.
“Whatever they do, workers are going to be worse off and with less money in their super. They’ll get a tax whack because of it and have less money for retirement income,” he said.
“You’ve got to stay the long-term (course) on this. Nobody says ‘times are tough, we should just stop private health insurance’.”
And in what could be considered an early salvo ahead of the next election, Labor Treasury spokesman Jim Chalmers warned the opposition would fight the Coalition “tooth and nail” over the proposal.
“This government is using the pandemic as an excuse to cut superannuation and cut wages at the same time,” he told Sky News.
“This is not about giving people a choice between more super or more wages. They’re coming after workers on both fronts.”
Australian Institute of Superannuation Trustees CEO Eva Scheerlinck said the Coalition seemed intent on undermining outcomes for Australian retirees.
“Consumer research has repeatedly shown that Australians strongly support our compulsory super system rather than one which is opt-in,” she said.
“There is a broad understanding that unless we are compelled to save a portion of our wages, very few of us will have enough money for a financially secure retirement.”