Super industry welcomes ‘positive steps’ in 2024 federal budget

15 May 2024
| By Rhea Nath |
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The 2024 federal budget, delivered by Treasurer Jim Chalmers on Tuesday evening, included a number of noteworthy measures on the superannuation front, including support for institutional investment in the energy transition. 

ASFA described the government’s Future Made in Australia plan and its goal of attracting investment capital to key industries including renewable energy as a “win-win” for the superannuation industry.

The 2024–25 budget included $22.7 billion over the next decade with a focus on new industries including renewable hydrogen, critical minerals processing, green metals, low-carbon liquid fuels, and cleaner energy manufacturing.

“Patient superannuation capital investment in vital infrastructure of the future is a win-win opportunity for super fund members and for Australia as a whole,” ASFA chief executive Mary Delahunty said.

Rest also voiced its support for the policy, saying that further commitments in relation to the Net Zero Economy Authority and the development of sustainable finance markets in the Future Made in Australia policy would assist institutional investors, like super funds, to identify a long-term pipeline of good-quality investments.

“We represent 1 million young Australians under the age of 30 who will retire in a post-2050 world,” the CEO of the $85 billion fund, Vicki Doyle, said.

“We strongly support efforts to create long-term investment opportunities that enhance our members’ financial interests and also help contribute to the quality of the world our members retire into.”

The $82 billion fund HESTA also welcomed the budget’s focus on supporting Australia’s energy transition.

“We need to accelerate the transition to clean energy and away from fossil fuels, as this can help mitigate climate change-related risks to our members’ retirement savings, and create new investment opportunities,” HESTA CEO Debby Blakey said.

“The nationwide exploration of future-facing commodities, so vital for the energy transition, is a crucial step towards scaling up mining operations, strengthening supply chains, and helping Australia meet its net zero carbon emissions target.”

Super on parental leave 

For Australians broadly, one of the most notable budget announcements was the $1.1 billion earmarked towards paying super on the government-funded Paid Parental Leave scheme from 1 July 2025.

The Super Members Council (SMC) said this “landmark reform” will boost the savings of a mother of two by about $14,500 by retirement, with 180,000 Australian families set to benefit each year.

“The historic announcement to pay super on parental leave takes Australia another major stride closer to ending the financial motherhood penalty many women face when they have children,” SMC CEO Misha Schubert said.

“It’s a watershed reform that will powerfully strengthen retirement savings for Australian mums and help to narrow the gender gap at retirement.”

While also celebrating the announcement, the Association of Superannuation Funds of Australia’s (ASFA) projections are somewhat more tamed than the SMC’s. Namely, ASFA predicts that paying super on Paid Parental Leave, alongside the legislated increases in the superannuation guarantee and duration of Paid Parental Leave to 26 weeks, will lead to an increase in balances at retirement of around $5,100.

For a woman who received Paid Parental Leave at age 28 for a first child and at age 30 for a second child, the increase in superannuation balance would be at least $10,700 in today’s dollars.

“Future generations of Australian women stand to add thousands to their super balances thanks to this change in policy.  This is a crucial and long-overdue step in improving their financial security in retirement,” ASFA’s Delahunty said.

In the latest budget, ASFA observed numerous additional funding to recover unpaid super and protect members against the risk of fraud, including:

  • Increases to the Productivity, Education and Training Fund to support workplaces to implement policy changes such as the introduction of payday superannuation.

  • Changes to the Fair Entitlements Guarantee Recovery Program to pursue unpaid superannuation entitlements owed by employers in liquidation or bankruptcy from 1 July 2024.

  • Strengthening the ATO’s ability to detect, prevent, and mitigate fraud against the tax and superannuation systems.

Other measures 

The budget also included support for small-business cash flow ahead of payday super commencing from 1 July 2026, with $25 million earmarked to support payment times reporting regulation and $290 million in cash flow support. 

Moreover, over four years from 2024–25, the government will provide $60 million to increase the Productivity, Education and Training Fund to support practical activities by employer and worker representatives to boost workplace productivity and engage in tripartite co-operation. This will also support workplaces to implement policy changes such as the introduction of payday superannuation.

SMC said it is estimated that 2.8 million working people in Australia are underpaid a total of $4.7 billion of super per year. 

“Unpaid super costs workers $1,700 a year on average – and our modelling shows payday super reforms could add up to $36,000 to the retirement balances of the lowest 20 per cent of wage earners,” SMC’s Schubert said.

Moreover, the government announced it will recalibrate the Fair Entitlements Guarantee Recovery Program to pursue unpaid superannuation entitlements owed by employers in liquidation or bankruptcy from 1 July 2024.

It will also be providing $187 million over four years to the ATO to strengthen its ability to detect, prevent, and mitigate fraud against the tax and superannuation systems.

What the budget missed 

Looking at cost-of-living relief, HESTA said the budget was “good news for women”, with measures to improve their retirement outcomes, increase wages in female-dominated industries like aged care and childcare, and ease cost-of-living pressures.

“Many of our members are typically lower paid and facing increased pressure on household budgets as the cost of basic necessities has increased,” Blakey said.

Moreover, for members still working, the stage 3 tax cuts, due also to come into effect on 1 July, will ease the pressure on household budgets, she said.

However, Blakey said that the tax changes further highlight the need for the more equitable targeting of superannuation tax concessions to help boost retirement savings for women and lower-income earners.

She pointed to the “non-inflationary” measure of increasing the maximum income eligibility for the Low-Income Super Tax Offset (LISTO) from $37,000 per annum to the top of the second income tax threshold and aligning the offset with the super guarantee.

“It’s unfair low-income earners, many of whom are women, continue to pay more tax on their super contributions than their wages. That’s why we want to see the LISTO updated to reflect current tax and super settings,” Blakey said.

“Reform to pay super on paid parental leave was a fantastic step forward for women’s financial security in retirement, but there’s still work to do to close the gender super gap and create a fairer super system for everyone.”

Rest CEO Doyle said the fund would continue to advocate its other recommended reforms, including updates to the LISTO, and extending super eligibility to all under-18 workers.

“We know that 77 per cent of Australians think it’s unfair that under-18s aren’t eligible for super unless they work 30 hours or more per week, and 82 per cent agree with changing this rule. It would allow every young Australian to engage with and benefit from our super system from the very first dollar they earn,” she said.

Moreover, other timely measures on the superannuation front, including the $3 million super cap, and changes to non-arm’s length expenditure, weren’t mentioned. 

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