Treasury chief Ken Henry, in the draft report of his tax review, recommended against any increase in compulsory contributions but the Minister for Superannuation, Chris Bowen, said last week debate was needed on the adequacy of the 9 per cent.

His comments suggest the Government is prepared to consider an increase as a means of boosting national saving, increasing retirement incomes and reducing the long-term reliance on pensions.

The statement by Mr Bowen coincided with the launch of a campaign by the industry lobby group, the Association of Superannuation Funds of Australia, to lift contributions to 12 per cent.

However, the ASFA said it wanted the extra 3 per cent to come from workers, with an option for those requiring the money to opt out.

ASFA chief executive Pauline Vamos said the current system would deliver workers retirement incomes of about 52 per cent of pre-retirement salary whereas the 12 per cent would generate returns of closer to 70 per cent.

Ms Vamos said Treasury was concerned that tax breaks on superannuation were costing the Government $12billion a year but an analysis conducted by Allen Consulting showed superannuation generated economic growth and cut costs in the longer term.

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