Budget 2023: Thumbs up from super but missed opportunities

Super funds and organisations have given a thumbs up to Treasurer’s Jim Chalmers’ federal budget but highlighted opportunities to improve the gender super gap were  missed. 

The budget had included measures such as the increase of the tax rate from 15 per cent to 30 per cent for those with over $3 million in their super balance and introduced payday super, both of which were previously flagged.

Industry Super Australia said 8.9 million Australians would now get their super paid more frequently thanks to the changes to move super payments from quarterly to on payday.

ISA chief executive, Bernie Dean, said: “This Budget delivers a big win for the three million mostly young and lower paid Australians unfairly deprived the super they’ve earned and will give them a better shot at building a good nest egg for retirement.

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“The government should be commended for listening and then taking the necessary steps to end the huge super rip off which was undermining the future economic security of too many young women and others on lower incomes.

“Aligning payment of super and wages is the right thing to do by workers, boosts government revenue, lifts investment returns and puts all employers on a level playing field.”

As part of the payday super measures, the budget had allocated $40 million to improve data matching capabilities by the Australian Taxation Office (ATO) and allow the ATO to build a new compliance system to identify instances of under or unpaid super. 

Rest chief executive, Vicki Doyle, said the introduction of payday super would help many of its part-time and casual members.

“The introduction of payday super is expected to directly benefit many of our members who work in low-income, part-time or casual jobs and receive their super contributions out of sync with their take home pay.”

Australian Institute of Superannuation Trustees (AIST) chief executive, Eva Scheerlinck, called on the businesses to start paying this straightaway rather than waiting until 2026.

They also welcomed the proposed sustainable finance agenda and the measures to increase support for social and affordable housing including increasing the liability cap of the National Housing and Finance Investment Corporation (NHFIC) by $2 billion.

“The commitment to a sustainable finance framework, including a sustainable finance taxonomy, sovereign green bonds and mandatory climate-related financial disclosure requirements will provide certainty for institutional investors like Rest,” Doyle said

“Having a framework in place will bring consistency, comparability and confidence to the finance sector and should help to stimulate investment and member-friendly product disclosures.”

“Superannuation funds are investing in NHFIC’s bond issuances and an increase in the Government-guaranteed liability cap will encourage further investment," said Glen McCrea, deputy chief executive of the Association of Superannuation Funds Australia (ASFA).
 
However, the budget omitted any updates to paying super on paid parental leave, the extension of the low-income super tax offset (LISTO) to those earning up to $45,000 or bringing the LISTO line with the Superannuation Guarantee.

These measures would have all helped to close the gender super gap, organisations said.  

AIST’s Scheerlinck said: “Parental leave remains the only paid leave without super, despite being introduced 11 years ago, and without the LISTO threshold being increased, there are thousands of low income workers who receive no tax break via super, which is a fundamental benefit of super.”

Deanne Stewart, chief executive of Aware Super, said: “Paying superannuation guarantee contributions on paid parental leave is overdue. Women still shoulder a disproportionate share of caring responsibilities in families and often take time out of the workforce to do so. This is one of the key reasons the gender super gap is so much bigger than the gender pay gap, and super on paid parental leave will help with this.

"Raising the low income super tax offset (LISTO) is another step we'd urge the Government to take, as is continuing efforts to make childcare affordable and accessible to maximise workforce participation.

"We'd dearly like to see this Government implement a comprehensive gender-equity strategy to support women right through their working years and into retirement, rather than the piecemeal approach governments have used historically.”