The Financial Services and Superannuation Minister has attacked the coalition for its failure to support the passage of the federal government’s mining profits tax, which will help boost the retirement savings of millions of Australians through a rise in the superannuation guarantee (SG).
Bill Shorten said the passing of the Minerals Resource Rent Tax (MRRT) on Monday night gave the green light for an increase in the SG to 12 per cent from 9 per cent, a reform the coalition had attempted to block at every step.
Shorten said coalition members of Parliament, including opposition leader Tony Abbott, had refused to support the reform.
“Tony Abbott and all these MPs think there is more benefit for Australia in giving a tax cut to billionaire mine owners than there is in improving retirement savings for regular Aussies,” he said in a statement.
“When the time comes and Australians are out in the garden, or taking a holiday, or doing whatever it is they want to reward themselves in their retirement, they’ll remember that it was this Labor government which boosted their superannuation.
“They’ll also remember it was Tony Abbott who just said no to better retirement savings for all Australians.”
Financial Services Council (FSC) chief executive said the increase in SG would allow millions of Australians a better and more secure retirement.
“Every working Australian will face retirement with greater security and confidence due to the increase in compulsory superannuation,” Brogden said.
Earlier this week, the FSC lobbied for the passage of the bill through the Senate with the release of research that found Australians would be $184 billion better off as a result of the increase in the SG.
“Australia will have a retirement savings gap of $836 billion under 12 per cent superannuation, compared to $1.02 trillion,” Brogden said.
“Increasing compulsory superannuation will also have significant benefits for the Australian economy and the federal budget. Higher savings will reduce Australia’s reliance on international investment, lower the current account deficit and ultimately provide a cheaper and more stable pool of funds for Australians to draw on.”
The phased-in increase, combined with cuts in corporate tax, meant the higher SG would not be a burden on employers.
Industry Super Network (ISN) chief executive David Whiteley said the passing of the laws would ensure Australians were able to “build adequate super savings for a dignified retirement and provide for low-income earners”.
“The lifting of the [SG] to 12 per cent represents an important milestone in the history of superannuation in this country,” Whiteley said.
“The rise is anticipated to provide up to $500 billion in superannuation savings by 2035, contributing to an increase in the super account balances of working Australians and an even greater pool of capital that can be invested back into the Australian economy.
“The passing of the LISC (low-income super contribution) is also a significant win for low-income earners. It addresses a grave injustice for low-income earners, who until now paid as much if not more tax on their super contributions than their wage income.”
The new law would provide a tax rebate of up to $500 for more than 3.6 million Australians earning $37,000 or less, ISN said.
“We have long advocated for reforms that contribute to an adequate and equitable superannuation system, and these new laws will go a long way to achieving these outcomes,” Whiteley said.
Australian Institute of Superannuation Trustees (AIST) chief executive Fiona Reynolds said she supported the rise in SG, calling the measure “long overdue”.
“It’s nearly 10 years since super contributions were last increased and yet we’ve known for many years that 9 per cent is simply not enough for a comfortable retirement,” Reynolds said.
AIST research released this week found 75 per cent of all Australians supported an increase in the SG to 12 per cent, though one in three thought the six-year phase-in period, which begins on 1 July 2013, was too slow.
“Unfortunately 12 per cent super has come too late for many older workers approaching retirement, but the extra 3 per cent super will significantly boost the retirement income for millions of younger generations,” Reynolds said.
Association of Superannuation Funds of Australia (ASFA) chief executive Pauline Vamos said the reforms were “good for the economy, affordable, equitable and necessary”.
“An increase in the SG will take the pressure off the age pension and assist more working Australians to a better quality of life in retirement,” Vamos said.
“Boosting superannuation also boosts the Australian economy, increasing the nation’s GDP (gross domestic product), creating jobs and providing much-needed private and public infrastructure investment.”
ASFA data showed an increase in the SG to 12 per cent would lead to a 0.33 per cent rise in real GDP by 2025 compared to the no-reform scenario.
“This will equal about $195 extra in the hands of every Australian in 2025, or an extra $520 for every household,” Vamos said.
