This is what the architect of Superannuation in Australia thinks!
"Paul Keating lashes ‘tawdry’ deal to freeze super"
Former prime minister and compulsory superannuation architect Paul Keating said the superannuation freeze negotiated by Clive Palmer and the government would sabotage Australia’s universal savings scheme. His criticisms were echoed by Reserve Bank of Australia board member Heather Ridout, who described the seven-year freeze of the guarantee at 9.5 per cent as retrograde. Ms Ridout, who is also the chairman of Australian Super and a former chief executive of the Australian Industry Group, told The Australian Financial Review she supported the demise of the mining tax which, she said, was a poorly designed regulatory impost. Ms Ridout, who was also a member of the Henry tax review panel, said she agreed with the government’s pre-election promise to freeze the guarantee for two years. But she said this week’s deal – which will freeze it at 9.5 per cent until 2021 and not increase it to 12 per cent until 2025 – was “retrograde”. “It will strip away confidence in the sector and undermine the substantial contribution it will make to financial retirement income pressures,” she said. Ms Ridout welcomed the three-year stay of execution granted to the low-income super contribution under which the government contributes $500 a year to the super savings of low income earners. She said the super system was “fundamentally inequitable to those on low incomes” and the delay would enable a case to be mounted to retain it permanently. The deal was struck to help offset the budget losses inflicted by being forced to keep for a limited period three of the eight spending measures associated with the mining tax. The deal will cost the budget $6.5 billion over the next four years but will be budget-neutral over a decade because the super freeze will claw back the losses over time. Treasurer Joe Hockey rubbished claims by the industry that the freeze would strip $128 billion from retirement savings over a decade and claimed workers would keep the money as wages. “I’d love to see some of the assumptions behind it, including the fees they’re deducting,” he said. “There’s no reason why you couldn’t apply the same assumptions, maybe more generous assumptions, to the ability of individuals to spend their own money and get a better return than they might have got out of their super.” LONG-TERM PAIN FOR SHORT-TERM GAIN Mr Keating, who established the compulsory super scheme when treasurer, said this week’s decision was motivated by cheap ideology not balancing the budget. “The Prime Minister and Mr Palmer trotted out the tawdry argument that working people are better off with more cash in their hand today than savings for tomorrow,” he said. “They omit to say that superannuation savings represent deferred consumption, not lost consumption. More than that, their superannuation contributions become compound savings.” Mr Keating said the decision flew in the face of ending the “age of entitlement” and “puts the pension back at centre stage”. “[The] decision is an appalling one, by a government lacking any genuine or conscientious concern for the nation’s workforce.’’ He equated it to that of the Howard government in 1996 which dropped his policy to phase the guarantee from 9 per cent to 15 per cent, which he said cost the average worker $250,000 over their working life. As Labor accused the government of sacrificing people’s retirements to look after miners, Minerals Council of Australia chief executive Brendan Pearson said it was wrong to blame his sector. He pointed out the mining boom at its peak had lifted wages by 6 per cent, and hence, increased superannuation and reduced unemployment."
