Abbott facing backlash over Budget reply

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In his Budget reply speech, Opposition leader Tony Abbott announced that the Coalition would defer the increase in the Superannuation Guarantee (SG) if it wins government.

The SPAA has asked the Coalition to “think carefully about such a move”. SPAA head of technical and professional standards Graeme Colley referred to the Coalition’s commitment not to make any changes to super, and said “any decision that defers an increase in the SG simply reduces the adequacy of Australians’ retirement savings”.

He added that for many employers there would be no increase in costs as a higher SG will be funded from employees’ salaries and will actually reduce the amount of take home pay.

The Finance Sector Union said the delay was an attack on the retirement savings of all Australian workers. “Finance workers are already feeling insecure about their jobs. This latest blow to finance jobs is unhelpful to say the least,” said FSU national secretary Leon Carter.

Deloitte National Superannuation Leader Russell Mason said the announcement to delay the increase was understandable but disappointing and not in the best interests of working Australians.

“We understand that the Coalition is proposing to help alleviate the deficit by allowing fewer tax concessions, and it will save the Government $1.1billion in 2016-17 and $2.5 billion over the forward estimates, but in the longer term it is in the national interest to reach the 12% superannuation guarantee as soon as possible.”

Deloitte research predicted that the Australian superannuation system would grow to $3 trillion by 2020, $4.5tn by 2026 and more than $6tn by 2030. These figures were driven by the 9% to 12% rise in the SG, population growth, and the ageing population.

“The decisions to increase the Superannuation Guarantee to 12% and lift the qualifying age for the age pension to 67 years were all about helping Australians provide for their own retirement,” said Mason. “This is to be achieved by Australians saving more and working longer.”

Do you think the Coalition should keep the proposed increase, or defer it by two years to save the Budget?

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  • Keith L. on 20/05/2013 7:20:19 PM

    I agree entirely with Brian's comment. It is a condition of employment of some jobs; in particular, Government jobs, that employees make personal super contributions of 5.5% or there abouts. Making mandatory employee contributions of 3% a condition of employment would eliminate much of the heat in the current debate and instead of phasing in the 3% increase over a number of years, it could be simply and quickly achieved through the mechanism used by the Labor party at the beginning of mandatory SG contributions which were funded by not passing on a productivity increase to employees. It would be difficult for Bill Shorten to then claim an axe was being taken to employees' retirement savings when the effect would be to significantly enhance such savings.

  • Brian on 20/05/2013 1:45:54 PM

    "He added that for many employers there would be no increase in costs as a higher SG will be funded from employees’ salaries and will actually reduce the amount of take home pay.'
    Therefore the choice lies with the employees to increase their contributions to 12% or by means of salary sacrificing.
    How about the Super funds and associations providing members with basic retirement planning projections to illustrate individual retirement capital shortfalls to encourage people to save for retirement instead of government and employers making the decisions.

  • alleycat on 20/05/2013 11:26:35 AM

    I wonder if those employees employed by small business who have a job would prefer to keep it, and forgo albeit temporarily any increase to their superannuation.
    I suspect that the flow on effect of any superannuation increase will also impact on workers compensation payments, payroll tax as an expenses to small business are an impediment to that small businesses survival.
    Tony Abbott clearly needs build confidence within the whole Australian community and the sooner the better.
    The sooner the FSU and other self interest groups understand that, the better off we will all be.

  • Andrew on 20/05/2013 11:21:03 AM

    Graeme Colley should stick to representing his constituency. SMSF members and their advisers are generally not impacted by small movements in the minimum contribution levels in relation to their present or future balances rather they benefit more from sound economic management and growth which dictate the returns their higher average account balances will earn. Another cost on business at present will impact negatively on business profitability and therefore returns.

    Increasing the SG appears a logical long term objective however Abbott is right to move slowly on increasing costs to business at present. (probably should rethink the maternity leave increases as well).

  • jason on 20/05/2013 10:20:55 AM

    i agree with TA its a expense to small business in tough times

  • John Walker on 20/05/2013 9:49:46 AM

    I am a small business, how does garme reckon my staff would take to a pay reduction ? there is an expectation pay stays same and bad luck if the employer has to put in an extra .25% into super... I support TA 100%

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