Once the darling of government investment strategy, the super industry should feel like a lover scorned.
The 2011/12 federal budget promised greater certainty for fund investment in infrastructure projects by delivering tax reform and promising to establish a national ‘schedule’ for infrastructure projects.
The budget also provided a one-off refund for eligible income earners who breach the concessional contributions cap by up to $10,000.
Yet in the context of all we have lost, this nod to the super industry in the budget is akin to damning with faint praise.
It was the super industry that bore the brunt of the ‘belt tightening’ as a result of the global financial crisis.
As part of the 2008/09 budget, Labor broadened the definition of ‘income’ for income-tested benefits to include salary sacrificed super contributions.
This saw many mum and dad investors who used salary sacrifice as a means to top up their super savings facing the real possibility of having their family benefits slashed.
The government also included super income in the means test for the Commonwealth Seniors Health Card, limiting investment options for older Australians.
The co-contribution scheme was hamstrung for those on a small to medium wage. Originally, every dollar invested by an individual up to $1000 was matched by the government with $1.50. This was pared back to $1 and the threshold for the co-contribution more heavily means tested.
The removal of tax on drawing down super introduced under the previous government’s Better Super saw Australians rushing to pour capital into superannuation.
This was clawed back under Labor, with a contributions cap established and tax penalties for those ‘breaching’ this limit; excess contributions are taxed at 31.5 per cent, in addition to 15 per cent tax when contributions are made to the fund.
While painful, these losses would almost have been understandable if the government had made wise use of its hefty surplus.
However, in the context of government mismanagement it is difficult for the super industry not to feel that our pain was unnecessary and unwarranted.
Since 2007 the education revolution has blown out by $2 billion to $5 billion; the failed pink bats scheme cost taxpayers $2.45 billion; the solar panel rebate has blown out by $850 million; and the computers in schools measure has overshot by $1.25 billion.
With the economic recovery reaching full steam, the super industry should rightly expect some return to the Better Super reforms.
Unfortunately, it appears from the 2011 budget that the super industry remains not politically sexy enough to warrant the support it once enjoyed.
Brad Emery was press secretary to assistant treasurer Peter Dutton under the Howard government.
