Opposition treasury spokesman Joe Hockey has cast doubt on whether a coalition government would follow through with the Gillard government’s promise to increase the superannuation guarantee from 9 per cent to 12 per cent.
In an exclusive interview with Investor Weekly, Hockey said: “The coalition has concern that this will be an impost on small business.
“The increase from 9 to 12 per cent will either have to be borne by small business or by employees.”
The Gillard government promised to increase the super guarantee “in 10 years” as part of its response to the Henry tax review. The move drew support from some parts of the super industry, with former New South Wales Liberal leader and current Financial Services Council head John Brogden exclaiming that “all our Christmases have come at once”.
Hockey argued Labor’s promise could backfire, affecting the ability of small business to offer adequate wages and maintain jobs.
“At a time when cost of living pressures are paramount for Australian families, the coalition believes this will simply reduce take-home pay and eat into already small profits of Australian small business,” he said.
Hockey also criticised the Gillard government for “winding back” important elements of the superannuation system at a time when investors were already taking hits from the global financial crisis (GFC).
“Since coming to government, Labor has reduced the concessional contribution caps for individuals contributing to superannuation as a savings measure to pay for its wasteful spending,” he said.
“The concessional contribution caps were reduced at a time when most individuals have experienced losses as a result of the GFC.”
The Better Super reforms of the Howard government placed super as a key vehicle for encouraging long-term savings by Australian income earners, he said.
He argued that since coming to power, Labor had broken former prime minister Kevin Rudd’s promise not to change the superannuation rules.
Since 2007, Labor has broadened the definition of income for income-tested benefits to include salary sacrificed super contributions; included super income in the means test for the Commonwealth Seniors Health Card, limiting investment options for older Australians; cut back the co-contribution scheme; and reduced the contributions cap from $50,000 to $25,000 with tax penalties for those breaching that limit.
He said on top of that, Labor had failed to implement real superannuation reform.
“The Labor Party has neglected real superannuation reform, particularly in relation to the 177 recommendations of the Cooper review to improve fund governance,” he said.
“Six months after the report was finalised, the government has released a 68-page response. It is notable and disappointing to see the government has opposed many of the recommendations to improve fund governance.”
While not specifically committing to return the contributions cap to $50,000, he made it clear the coalition would take a fresh look at super reform prior to the next election.
“The coalition will thoroughly review the government’s response and the 177 recommendations of the Cooper review and present our position in due course,” he said.
“We will consult extensively with industry bodies, superannuation funds and members before reaching a final position.”
