3 September 2014
Shane Wright
The West Australian
The resources sector believes there will be a surge in jobs and investment after the mining tax was finally killed by Federal Parliament yesterday.
But the superannuation industry is already warning the deal struck between the Government and the Palmer United Party to axe the tax will end up costing almost nine million Australian workers hundreds of billions in superannuation.
Created through a deal between former prime minister Julia Gillard and the nation’s three biggest resources companies, the mining tax had failed to generate anywhere near the revenue forecast by Treasury.
This year it was forecast to raise just $131 million.
Along with the carbon tax, the abolition of the mining tax was one of Tony Abbott’s key election promises.
The Prime Minister said the mining tax had dragged down the Australian economy and the mining sector for too long.
“We have seen the back of the mining tax – possibly the most foolish tax in the history of our country – a tax that destroyed jobs, a tax that damaged investment, a tax which cost money and a tax which did not raise any revenue,” he said.
Association of Mining and Exploration Companies chief executive Simon Bennison said the abolition of the tax would produce tangible economic benefits.
“This will improve investor confidence and create more jobs for Australians,” he said.
Australian Mines and Metals Association chief executive Steve Knott said with more than $200 billion of investment still in the pipeline, ending the tax would remove a problem.
“It does get us back on a level playing field and better supports Australian enterprises to pursue efficiencies, innovate and compete in a highly globalised marketplace,” he said.
Axing the tax was only achieved after an agreement with PUP, which will cost the Budget $6.6 billion over the next four years.
The biggest change was a delay in the increase in the superannuation guarantee levy that was due to reach 12 per cent by mid-2019. Now it will not reach that level until mid-2025.
Ahead of the election, Mr Abbott pledged there would be no “adverse changes” to superannuation in his Government’s first term.
Rejecting claims he had broken that promise, Mr Abbott said there would now be “more money in workers’ pockets”.
However, the superannuation sector estimated that for people on average earnings, the cost to ultimate retirement earnings could be up to $100,000. By 2025, total national savings will be $128 billion lower.
Association of Superannuation Funds chief executive Pauline Vamos said more people would now have less to retire on.
“The reality is at the present SG rate of 9.5 per cent, most people will not build up enough super to provide them with adequate financial security when they finish working,” she said. PUP leader Clive Palmer said his party had struck a deal that helped ordinary people.
As part of the deal, the Schoolkids Bonus will be means tested and restricted to families earning less than $100,000 a year. The Government is also committed to eventually axing the bonus, which flows to 1.1 million families.
The low-income superannuation contribution, which the Government also wants to end, has been retained until mid-2017.
It benefits 3.6 million low-income earners, of which two-thirds are women.
PUP also retained the income support bonus which goes to very low-income earners, although it too is slated to end after the next Federal election.
Courtesy of The West Australian