The government has another fight of its own making on its hands after the decision to freeze super payments to workers at 9.5% has united former foes against it.
The AFR reports this morning that RBA Board member and former Australian Industry Group CEO Heather Ridout has joined former Prime Minister Paul Keating in criticising the deal.
Ridout told the AFR that while she agreed with the repeal of the mining tax and a short term freeze of super contributions at 9.5% as the government argued pre-election the new plan to freeze super at 9.5% until 2021 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 adding that the supperannuation system is “fundamentally inequitable to those on low incomes”.
It is a theme echoed by Keating who said:
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.
If Tony Abbott’s argument about the value of cash today had substance, there would be no savings. No savings in savings banks and no savings in superannuation.
The government’s connivance with PUP [Palmer United Party] to spike superannuation at 9.5 per cent has little to do with the budget balance this year, or in the early out years, and everything to do with cheap ideology.
They omit to say that superannuation savings represent deferred consumption, not lost consumption. More than that, their superannuation contributions become compound savings.
It is an interesting point and one that goes to the core of super.
Equally though constant changes to the system does exactly what Ridout suggests and undermines the Australian populations faith in where their savings will lie and how they will access them in retirement.
That’s the real damage of this move by the Government – confidence in the system.
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