Superannuation needs better friends
The Government is pursuing those who have demonstrated a lifetime of thrift
In March the Abbott Government’s Assistant Treasurer Josh Frydenberg issued a statement declaring that the Liberal/National Coalition “is the best friend super ever had.” This brings to mind the idiom: “With friends like these…”
Before commenting on this year’s Budgetary changes, it’s necessary to reflect on those changes to superannuation the Government has introduced since its election.
Already the Government has cancelled the schedule of increases to the Superannuation’s Guarantee from the current 9.5 per cent to 12 per cent. The Superannuation Guarantee remains frozen at 9.5 per cent. The Superannuation Guarantee is the minimum super payment that must be made for workers. Most workers receive only the Superannuation Guarantee.
The Government has also scrapped the tax offset on superannuation contributions for the very low paid. The latter was designed to address the contradiction that these very low paid workers don’t reach the low pay threshold for tax purposes, and therefore pay no income tax, are nevertheless are subject to a 15 per cent tax on their compulsory superannuation contributions.
Now let’s consider this year’s Budget.
In an environment of the Government’s own making, where it insists on using language such as “lifters and leaners,” “double-dippers,” and “rorters,” the Government has determined to change both the assets test and income test that applies to eligibility for the Commonwealth age pension or part pension.
While the extent of the impact is not entirely clear from the Budget papers, eligibility for the Commonwealth’s Seniors Health Card will also be affected. What is clear is that many public sector employees including nurses, fire fighters, police as well as teachers and other public sector employees have become the focus for delivering budget cost savings.
This was presented as the only alternative in a Budget process that had initially been focused on driving down the safety net that is the aged pension by removing the nexus with average weekly earnings. The Government’s initial proposal was to reduce the purchasing power for those who rely solely on the age pension as defence against financial destitution.
The Government has targeted the poor and middle class with its superannuation changes while leaving superannuation tax concessions, which overwhelmingly favour the wealthy, largely untouched. These tax concessions will exceed the cost to the Budget of delivering the age pension by 2016–17.
Having been forced to stop attacking those on the poverty line the Government is now pursuing those who have demonstrated a lifetime of thrift. Conservative governments usually defend thrift but this is a Conservative government like no other.
The Coalition has always been opposed to universal superannuation. It has also now shown itself to be no friend of self-funded retirees who have contributed, throughout their career, additional pay in an attempt to fund a reasonable standard of living in retirement.
Originally published at education.nswtf.org.au.