Surcharge roll back tipped for Budget

A winding back of the superannuation surcharge has emerged as the most likely financial services initiative to be included in the Federal Budget to be handed down by Treasurer, Peter Costello, this evening.

The move has been supported by the Minister for Finance, Senator Nick Minchin, and has been included in the pre-Budget wish-lists of both the Investment and Financial Services Association (IFSA) and the Association of Superannuation Funds of Australia (ASFA).

Discussing superannuation issues likely to be included in the Budget, ASFA’s director of policy and research, Dr Michaela Anderson, last week said it was reasonable to speculate that the 2005 Budget provided a good opportunity to further reduce or even abolish the hugely unpopular super surcharge.

“The surcharge has a severe and inequitable impact on the superannuation savings of many Australians,” she said. “The government is well placed to do something about it this year, given the strength of Commonwealth finances, and the fact that after July 1, 2005 the Government will almost certainly be able to get such a measure through the Senate.”

Anderson said ASFA had also been lobbying for an extension of the superannuation co-contribution regime further up the salary scale.

The chief executive of the IFSA, Richard Gilbert, has previously said that removal of the surcharge would go a long way towards eliminating some of the complexity which continues to surround Australia’s superannuation regime.

He said that there might also be scope for a broadening and deepening of the superannuation co-contribution arrangements.