MRRT green light paves way for SG rise

The Government has announced its new resources tax regime, accepting recommendations to implement the Mineral Resource Rent Tax, which financial services minister Bill Shorten (pictured) said will go towards building the nation’s superannuation savings.

The Government yesterday announced it had accepted all 94 recommendations of the policy transition group regarding new resource taxation arrangements that were formed with the assistance of the mining industry, and they would also be establishing a Resource Tax Implementation Group.

“The revenue from the Mining Rent Resource Tax (MRRT) will help offset the loss of taxation revenue from increasing incentives to save through superannuation,” Shorten said.

The Government’s superannuation reforms would add $550 billion to the nation’s superannuation savings by 2036, when Australia’s total superannuation pool would grow to an estimated $6.2 trillion, which means an extra $108,000 in super savings at retirement for a 30-year-old worker earning $65,000 today, Shorten said.

The reforms include increasing the superannuation guarantee (SG) to 12 per cent from 1 July 2013, increasing the SG age limit from 70 to 75, and providing a Government contribution of up to $500 per year on behalf of low-income earners ensuring those earning up to $37,000 effectively pay no tax on SG contributions, Shorten stated.

The announcement was welcomed by the Association of Superannuation Funds of Australia (ASFA), which said the last barrier to legislating an increase in the SG had now been removed.

ASFA chief executive Pauline Vamos pointed to Organisation for Economic Co-operation and Development (OECD) research that showed Australia is forecast to deliver retirement incomes that are well below OECD averages.

“This OECD research strongly reinforces the widespread view that the current rate of superannuation savings is not sufficient to fund the standard of living in retirement that Australians want and need,” Vamos said.

“Australia has in place the framework for a world-class retirement income system but higher contributions are required in order to deliver adequacy of retirement incomes,” she said.