Although economically a responsible Australian federal budget, particularly around investment in infrastructure, workforce skills development to increase participation and create capacity, and in terms of the Government’s goal to return to surplus by 2012/2013, there will certainly be winners and losers in what can be described as a bits and pieces budget, according to Mercer.
David Anderson, Managing Director & Market Leader for Mercer in Australia and New Zealand said it was not surprising there were no major initiatives in relation to superannuation given the significant reforms being considered by Treasury and the Government. However, the technical adjustments announced by-and-large may have merit but also serve to undermine confidence in the system.
“Annual tinkering with the thresholds within the super system for example does not help to build sustainable confidence in our system by the millions of Australians that will rely on their super savings to live in retirement.
“We understand the need for fiscal tightening but we are disappointed that the Budget has led to the continued freeze of the superannuation co-contribution limit of $1,000 without indexation of this or the additional $25,000 of concessional contribution available to people over 50. This continual tinkering adds to complexity of the system, weakening consumer confidence and retirement readiness,” said Mr Anderson.
“We welcome increased transparency around the task ahead of our nation to address the need for increased investment in productive infrastructure which will certainly help encourage superannuation funds to invest. We would ideally now like to see additional measures to attract further private sector participation and funding.
“In terms of the nation’s workforce, Mercer welcomes the initiatives to improve skills across the board and to plug the specific gaps created by the resources boom. Along with the announcement to increase the intake of skilled migrant labour, the announced training and development initiatives should increase productivity and capacity over time. The changes to the FBT treatment of packaged motor vehicles is a sensible simplification,” said Mr Anderson.
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