This year’s federal budget represents the soft start for the government’s election campaign due to the lack of larger revenue-raising measures and many of the superannuation changes not being scheduled to begin until mid-2022, a technical expert has said.
BT head of financial literacy and advocacy Bryan Ashenden said the long time frames given for the superannuation changes, most of which are due to start on 1 July 2022 – if passed through parliament by that date – “clearly reflected that this is a pre-election budget”.
“An election is due within the course of the next 12 months and it will happen before the second Tuesday in May of 2022, that is, before the next scheduled federal budget. So, much of what we’re seeing here is almost on the basis of the start of the soft launch of an election campaign from the government,” Ashenden said in a webinar today.
He said the changes to the superannuation environment, which include an extension of the downsizer contribution scheme, the removal of the work test for people aged 67 to 74, an amnesty to allow people to exit legacy pensions and relaxing residency requirements for SMSFs, did not contain any downside for the sector.
“We don’t see any big negative issues or the big tightening or raising of revenue by the government. Rather, it is about the government opening up and providing more opportunities to people. That is the sort of thing that we often see in the last budget before an election,” he said.
He also pointed out the government made no announcement, and no changes, regarding an increase in the superannuation guarantee (SG) rate, despite speculation it would do so during the budget.
“The first thing that we did see come up around superannuation in the budget was actually a non-announcement by the government in respect of what they are planning to do with SG rates,” he said.
“There had been speculation before the budget as to whether they might freeze it at 9.5 per cent or allow it to go to 10 per cent and stop it, or continue on to 12 per cent.
“There was no announcement at all, which implies it will be increasing to 10 per cent from the 1st of July this year and then continuing at 50 basis points increments per annum until we get to 1 July 2025 and we have a 12 per cent SG rate.”
He said the long time scale for the changes to become law was also a reminder that all of the changes were only announcements and will still have to pass through the legislative processes of parliament.
“It may require some negotiation because while the government does hold a majority in the House of Representatives, it doesn’t hold a majority in its own right in the Senate, and so depending on the sensitivity of some measures, there is negotiation and that can result in a change,” he said.
“As is always the case, the final versions of the measures may ultimately differ from the announcements that we have heard to this point in time.”
