You’d think the mining tax was all about billionaires
The massive sums and the wealthy characters in the bitter debate over the mining profits tax have swamped discussion of a plan to help the lowest paid Australians. This measure would address the painful worry of hundreds of thousands of working women that they will not be able to save money for retirement.
It is a move designed to avoid the unhappy destiny of many unskilled women - there are just over two million in the workforce - who at the end of their working lives face a struggle to survive.
It has bipartisan support to the extent that if the Government proceeds with it the Coalition, should it win government, would not wind it back. But it is rarely mentioned because the debate is anchored in the fate of billions of dollars, not in the futures of millions of the low paid.
The plan will depend on the Mineral Resources Rental Tax (MRRT) producing the necessary revenue.
There are about 3.6 million low income earners who under the MRRT funding package stand to get extra superannuation contributions which over four years would be worth around $1.6 billion. And of those workers, 2.1 million are low-income women who usually have great difficulty saving for life after work.
The Government wants to use the MRRT revenue to help push the superannuation guarantee levy from nine to 12 per cent of wages in stages starting July 2013 and ending in 2019-20. There is still considerable debate over how that would proceed, and whether workers would have to take a cut in wage rises in exchange for extra super.
But there is a barely discussed second super element to the package.
The package also would pay for superannuation tax breaks previously denied to those earning less than around $40,000 a year. They would be entitled to the 15 per cent super tax rebate enjoyed by higher income earners. The rebate would be lodged directly into their superannuation accounts.
“Currently, people earning up to $37,000 a year do not receive any tax benefit from their superannuation contributions because their income tax rate is already at or below 15 per cent,” said Pauline Vamos, chief executive of the Association of Superannuation Funds of Australia.
“Under the rebate, this 15 per cent tax on contributions will be redirected into the super accounts of lower income earners assisting them to build their savings quicker and earlier, with the balance gaining the full benefits of compound interest.”
The first batch of rebates would go to about 1.1 million workers in NSW; 910,000 in Victoria; 800,000 in Queensland; 260,000 on South Australia; 360,000 in Western Australia; 90,000 in Tasmania; 30,000 in the NT and 50,000 in the ACT.
The 3.6 million workers affected are roughly a third of the workforce and 2.1 million of the beneficiaries will be women.
The move to a 12 per cent guaranteed superannuation contribution from employers, much of which is expected to be off-set in wage claims, will increase superannuation savings of some workers by as much as 25 per cent in some cases, according to Government analysis.
The savings of a plumber would go up 22.7 per cent; a teacher by 13.3 per cent; a receptionist by 24.2 per cent; and a hairdresser by 24.6 per cent.
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