Industry groups and associations have provided a mixed response to last night’s Federal Budget announcement with some stating the 2004/05 Budget will boost retirement savings while others argue it will not solve longer term structural issues.
CPA Australiasays the Government has missed an opportunity to initiate real reform on personal tax and superannuation.
“We would have preferred the Government introduce wide-scale reform of the personal tax system and encourage Australians to save more for their retirement,” CPA Australia chief executive, Greg Larsen says.
Taxpayers Australiais also critical of the Budget saying it fails the test of fairness and equity.
“This Budget is a blatant election Budget. It is aimed at swinging and marginal voters. It fails to deliver real personal tax reform and it provides no relief for taxpayers who earn less than $52,000 and do not have a family,” Taxpayers Australia national director Peter McDonald says.
Meanwhile both theInvestment and Financial Services Association(IFSA) and theAssociation of Superannuation Funds Australia(ASFA) believe the Budget will have a positive effect on retirement savings.
“This Budget, in addition to having good bottom line figures, will provide a major boost to long-term savings,” said IFSA chief executive Richard Gilbert says.
Gilbert is also supportive of the Government’s decision to further scale back the superannuation surcharge, labelling it a “very welcome measure”.
“The increased co-contribution amount from $1 to $1.50 is also a very significant outcome with major implications for improving the retirement savings prospects of working Australians,” Gilbert says.
ASFA chief executive Philippa Smith supports IFSA in stating that by broadening and increasing the super co-contribution to include middle income earners, the Budget provides a major lift to Australia’s savings and retirement future.
“Middle income earners have until now been the ‘forgotten’ group in superannuation. All our research has shown that people understand the importance of saving for retirement but expect Government to be in partnership with them. This is a significant step towards that joint effort,” Smith says.
ASFA also welcomes the further reduction of the super surcharge to 7.5 per cent by 2006/07.
“The surcharge is riddled with anomalies and inequities, and acts as a disincentive to saving for many. Its reduction helps to chip away at those inequities,” Smith says.
