Today's announcement by Tony Abbott that the Coalition will formally oppose the Resources Rent Tax and the package of reforms that accompanies it, including the increase in the Superannuation Guarantee and incentives for lower income earners and those nearing retirement age, confirms Tony Abbott's ideological opposition to Australia's compulsory superannuation system.
"The Coalition is now the greatest risk to Australia's national superannuation and the future of working Australians," the Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP, said.
"Blocking these reforms will leave an 18-year-old currently entering the work force, on average earnings, $200,000 worse off when they retire."
The former Reserve Bank Governor Bernie Fraser clearly summed up the need to boost retirement incomes of Australians by increasing the Superannuation Guarantee.
Mr Fraser said:
"I was very encouraged by that move because it will make a significant contribution to more Australians having a chance of having a half-decent retirement income, really. Nine percent is not sufficient for the vast majority of Australians...12 percent will be better."
ABC Radio 'AM' program
If the Coalition is successful in scuttling this package of reforms, it will mean:
- 8.4 million Australians will not receive an increase in their retirement incomes;
- 3.5 million Australians on lower incomes will continue to receive little or no concession on their compulsory superannuation contributions;
- 275,000 individuals who would benefit from a higher concessional contributions cap will not be able to make additional savings for their retirement when they are most able;
- 33,000 employees aged 70-74 will continue to miss out on SG contributions while they are working;
Not proceeding with these reforms would mean:
- An employee aged 30 today on average full-time weekly earnings, will retire with $108,000 less in superannuation.
- A female aged 30 today on average weekly earnings, with an interrupted work pattern, will retire with $78,000 less in superannuation.
Not proceeding with these changes will mean that by 2035:
- Annual private saving would be $35 billion per annum lower;
- National saving would be $19.5 billion lower;
- Annual age pension outlays would be $3.5 billion higher;
- The pool of superannuation savings would be $500 billion lower.
Industry research released by the Industry Super Network (ISN) today shows that the Rudd Government's super reforms, alongside the Future of Financial Advice reforms, could boost the retirement nest eggs of low paid workers by more than 75 per cent, massively improving the quality of life in retirement of ordinary Australians.
"These reforms will deliver substantial improvements in retirement savings and a fairer distribution of superannuation tax concessions, ensuring more Australians can enjoy a comfortable retirement and help us prepare for an ageing population," Mr Bowen said.
More information on the Stronger, Fairer, Simpler: Tax Plan for our Future is available at www.futuretax.gov.au.
6 May 2010