More than enough credit has been given for those changes. Some of us had also observed that the lower paid, younger workers still looked like falling short. For years, AIST has advocated the payment of the superannuation guarantee (SG) to women on maternity leave, the extension of the co-contribution to more of the low paid, and the need to get those same young people saving more than the compulsory 9 per cent.
The Standing Committee on Economics, Finance and Public Administration has now produced some well-considered, constructive and affordable recommendations. If implemented they would make all the difference down the track for those at present under 40. The report’s authors are to be congratulated.
Trustees and others who understand the structure of today’s workforce particularly welcome their stand on retaining the threshold for the payment of the SG at $450 per month, or lowering it. To raise this figure to $800 per month, as proposed by a recent Productivity Commission report, would leave massive numbers of young and other casual workers out of super altogether, even where over a range of casual jobs they were working the equivalent of full-time hours.
I hope this will be the final official comment on the threshold, unless the Government wants to take another bold step and do away with it entirely. There is a strong equity argument that every dollar earned should attract the SG.
The report carefully balances the need for more super savings with respect for the voluntary principle. The suggestion that new entrants to the workforce have an extra 3 per cent from their salary paid into super, with the capacity to opt out, could provide a big and painless boost to the super savings of many young workers.
The committee understands the importance of more and better financial education and as part of this theme makes the sensible recommendation that super funds provide long-term projections to their members in annual statements.
These projections, by focusing the mind of the young worker on where they could end up, must encourage voluntary savings. The report also builds on the budget 2006 decision to extend super tax benefits equally to the self-employed by suggesting that unincorporated small business owners be brought into the SG system.
The recommendation that a component of the maternity payment be paid as SG should be implemented without delay.
In relation to the co-contribution, the committee preferred to see the current arrangements better promoted and understood rather than changed to cover more low earners. There is certainly scope for more young workers to use this scheme in its current form, although trustees would like to see wider eligibility.
The other standout recommendation was that all super funds, not just employer default funds, be required to offer a minimum level of death, and total and permanent disability insurance, again on an opt-out basis.
Chairman Bruce Baird and his committee colleagues have done the parliament a service by drawing attention to shortcomings for the under 40s and offering effective solutions. I fervently hope the Government takes this report on board and acts promptly to put the major suggestions into superannuation policy. Otherwise our system will become more lopsided, unfairly favouring the older and better off.
