Finance Your Super PM breaks super promise

PM breaks super promise

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The Government has broken an “explicit election promise” delaying increases to superannuation as part of its repeal of the mining tax, funds claim.

Finance Minister Mathias Cormann announced on Tuesday the Government had reached a deal with six senate crossbenchers, including members of the Palmer United Party, to axe the mining tax.

The Senate voted 36 votes to 33 to repeal the tax on Tuesday afternoon. The bills will now head back to the House of Representatives, where their passage is guaranteed.

Government reaches mining tax deal
Shorten slams super changes

Industry super funds are “very concerned” about the changes, which will hit the average Australian retirement nest egg by putting increases in compulsory super on hold for the next seven years.

Industry Super Australia called it a short-sighted deal which would cost a 25-year-old average income earner around $100,000 over their working life.

Mr Hockey said the deal with crossbenchers was not the Government’s “preferred option” but it was the only one on the table to axe the mining tax – a move which will cost the budget $6.5 billion.

The minerals resource rent tax was supposed to fund the cost to government of increasing the super guarantee rate to 12 per cent by 2019/20 through annual increases of 0.25 per cent.

The super contribution has already risen to 9.5 per cent, but will now stay at that rate until 2017, when it will increase by 0.5 per cent annually until it reaches 12 per cent.

This is a very disappointing outcome for more than one third of the Australian workforce and they deserve better.

The amendments also ensure that the low-income super contribution will remain until June 30, 2017 and the income-support bonus will stay until December 31, 2016.

The school-kids bonus will be means tested so that only families earning up to $100,000 will qualify and it will remain until December 31, 2016.

Senator Cormann said the changes will improve the budget bottom line by more than $10 billion.

Nest eggs will be impacted by changes to superannuation.

Australian Institute of Superannuation Trustees CEO Tom Garcia slammed the changes saying they will “hurt all working Australians”.

“We are very concerned about that the Government has broken its explicit election promise not to bring in any negative changes to superannuation,” Mr Garcia said.

AIST’s Mr Garcia said low-income super contributions should be retained permanently.

“This is a very disappointing outcome for more than one third of the Australian workforce and they deserve better.

“If the scheme is deemed worthy to retain until 2017, then why can’t it remain in place forever?”

First Super CEO Bill Watson called the changes allowing Treasurer Joe Hockey power to control worker’s superannuation “an utter disgrace”.

“We are quite concerned about what that means for our members having a far and adequate retirement.”

A broken promise?

Opposition Leader Bill Shorten, who unsuccessfully attempted to censure the prime minister in parliament for “violating the trust of the Australian people”, said the coalition had promised at the election to make no adverse changes to superannuation.

“We have seen today … the disgraceful, destructive and dishonest attack to freeze superannuation,” Mr Shorten said.

“This deal has been done and the arch-culprit is the most out of touch Prime Minister since the top hat wearing Stanley Bruce.”

He labelled Mr Abbott a “recidivist fairytale tellers of political lies” who had set a “new land speed record for a duplicitous government” and put the interests of 10 mining companies ahead of nine million Australians, Mr Shorten said.

Labor’s senate leader Penny Wong said the government rammed the legislation through parliament in a “stealth attack”.

“Another dirty deal they’re trying to ram through the chamber, just like we’ve seen before,” she said.

“Showing as much contempt for this Senate as they show for the Australian people as they break promise after promise after promise.”

Prime Minister Tony Abbott says there will be “no adverse changes”. Photo: AAP

Not a broken promise: Abbott

Asked by Mr Shorten in parliament whether the changes breached an election promise, Tony Abbott claimed there would be “no adverse changes”.

“By delaying the increase in the superannuation guarantee levy we are keeping more money in workers’ pockets.”

He defended the deal saying the Government was “fixing all the messes we inherited from members opposite”.

Mr Abbott has repeatedly assured the public his Government would not make any “negative changes” to superannuation in this term.

“The assurance that I give the superannuants and the superannuation savers of Australia is that there will be no adverse changes to their superannuation arrangements under this government,” he said after being elected.

‘A conflict of interest’: Greens

Greens leader Christine Milne said the government and Palmer United Party has treated the Senate with contempt.

“If ever there is a conflict of interest, it is this one,” she told the Senate.

“How is it possible that you can have a coal billionaire voting to vote down a mining tax?”

Clive Palmer dismissed the criticism.

“We don’t see it that way. First of all I don’t pay the mining tax. BHP doesn’t pay the mining tax. Rio Tinto don’t pay the mining tax.”

Business welcomes the repeal

Business Council chief Jennifer Westacott said it was disappointing the government had been unable to abolish some of the mining tax spending measures.

She said it underlined the need for wider tax reform rather than ad hoc measures.

– with Ebony Bowden, agencies

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