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Treasury: super levy will costs jobs

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The inescapable conclusion to be drawn from the correspondence with the Secretary of the Treasury, Mr Cole, is that Treasury considers the Superannuation Guarantee Levy (SGL) will cost jobs.

In paragraph 15 of his letter Mr Cole states that Treasury in their own work "...assumed that the net additional labour costs from the SGL over time would not be significant..."

This means that Treasury assumed that the SGL will not be fully offset over time; that is, the SGL will cost jobs.

I note that Treasury's assumptions in paragraph 15 were not incorporated fully in the One Nation scenario. In paragraph 16 of Mr Cole's letter, he states "...there is an implicit full

offset to the SGL from reductions in other wage costs" for the period 1993-94 to 1995-96.

That is, wage rises under the One Nation scenario would be less because of the SGL.

In paragraph 17 Mr Cole states that the wage forecasts for 1992-93 "...implicitly provide for some offset flowing from the introduction of the SGL but no estimate is made of the likely pace of wage settlements in the absence of the SGL and, hence, no specific estimate of the offset is able to be derived."

That is, the SGL will cost jobs for 1992-93.

The fact is there will be both job losses and lower wages for workers because of the SGL.

Obviously, Treasury expects some jobs to be lost in 1992-93 because of the SGL, but neither the Treasurer nor the Treasury will admit honestly to how many jobs Treasury expects to be lost.

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7 May 1992 Canberra

Contact: David Turnbull (06) 277 4277 D75/92