The Rudd Government’s second Budget could have been much tougher than it ultimately proved to be. In what has become a tradition, the Government ensured that all the bad news was leaked ahead of time, leaving some good news to be announced on Budget night.
But if the Government believes its tinkering with the superannuation system will ultimately be well received by either voters or the financial services community, it will be sadly mistaken.
The tinkering with superannuation contained in the Budget may, as is being claimed, serve to push around $4 billion back into Government coffers, but it has also done something else — created further uncertainty about superannuation as an investment option.
While superannuation has grown to be the most popular investment option in Australia and, indeed, a factor that has underpinned this nation’s ability to withstand the worst of the global financial crisis, this has not been fully reflected in public confidence.
Years of tinkering by governments and a tendency by politicians to regard superannuation as something of a revenue milch cow has served to make Australians cautious about superannuation and the rules that govern the regime.
It had been hoped that after the Howard Government’s ‘Better Super’ initiatives and the seeming bi-partisan support for making superannuation a focal point of Australia’s retirement incomes policy, the days of super tinkering might be over. Sadly, the 2009-10 Federal Budget suggests this is simply not the case.
In the greater scheme of things, the changes announced in the Budget are not unduly significant and ought to be understandable in the context of a Government battling to deal with a deep recession and burgeoning deficit. As well, there is the Government undertaking that some of the changes are temporary.
However, the net result of the Budget has been to remind Australians that superannuation remains an uncertain environment and that those aged in their 50s ought not plan too far ahead lest they are burned by policy changes.
It is in these circumstances that the Government owes it to the electorate and the superannuation industry to use the final report of the Henry Review of taxation to create some genuine certainty on superannuation. The time for fiddling has passed.
— Mike Taylor
