Uncertainty around the federal budget and superannuation could cost governments further down the track, as Australians may be hesitant about investing more money in their super, RSM Australia director, business advisory services, Brad Eppingstall has warned.
Eppingstall cautioned that a lack of clarity around tax reforms by both the current government and the Australian Labor Party (ALP) could slow both decision-making and growth.
He pointed to the ALP’s dividend imputation refund changes as an example of such uncertainty.
“People are thinking, well are there other alternative investments, what can I do to replace that income drop-off [from dividend refunds] if this does come in, so I think that people may even look at taking on their more high risk investments from that point of view to try and replace that income which may not work out depending on how successful those investments are.”
Eppingstall was concerned that “every time there’s rumours of change, a lot of people hold back on making decisions”.
“People go, well if I don’t know what these changes are, if I put money into super and I don’t know what the outcomes are going to be for the next five years, why would I put that money away.
“The future knock-on effect for the Government is … does that put more pressure on the social security system over time, as more people then qualify for the pension and need it.”
Eppingstall said that superannuation “was always about people being able to fund their own retirement”, which would then take pressure of the social security system.
If it’s getting difficult for people to get enough capital to fund their own retirement in the system though, then attempting to do so will “potentially not necessarily be worth it”.
Eppingstall also said that continuing to have a piecemeal approach to tax reform regarding superannuation would not lead to the broader change that he said the system now needed.
He acknowledged, however, that “the whole problem is probably bigger than what just the Federal Government can deal with”.