Budget failed on super gender gap and support for retirees: advocates
The government’s decision to ignore calls to extend superannuation payments to those on paid parental leave will likely widen the super gender gap, industry lobby groups have warned.
And helping retirees will only help in the short term.
“Mums continue to pay a high future financial price for having a baby, with the super gender gap increasing by 5% since 2013 for women in their early thirties,” Industry Super Australia said in a statement after the release of the report. budget on Tuesday evening.
“This budget was another missed opportunity to close the super gender gap and it is disappointing that the government has not made a modest investment in the financial future of millions of mums and paid for super parental leave,” said said ISA CEO Bernie Dean.
Changes to the paid parental leave scheme have also been criticized in some quarters. Under the previous system, women were entitled to 18 weeks of paid parental leave after the birth of a child, while male partners could take two more.
This has been changed to allow the full 20 weeks to be shared between the two partners. But independent economist Nicki Hutley said the change was mostly “negative”.
“Few women want to take just 10 weeks, and allowing the full 20 weeks to be shared has allowed men to take less time. I would describe it as a facade,” Ms Hutley said.
Indeed, the new system, unlike its predecessor, does not require men to take paid parental leave and would allow a woman to benefit from the full 20-week allowance and a man from take none.
More parental leave needed
Ms Hutley said the Grattan Institute had come up with a more suitable system.
This proposal would see the two partners get six weeks each, plus 12 weeks of paid parental leave to share between them. If both partners took their full six weeks, they would receive an additional two weeks between them, so the total paid parental leave available would be 26 weeks.
But the decision in the budget to give single parents the full 20 weeks of paid parental leave was seen as a positive step by most commentators.
The Australian Social Services Council welcomed the decision, with chief executive Cassandra Goldie describing it as “long overdue”, according to Guardian Australia.
Ms Hutley also questioned whether Treasurer Josh Frydenberg was right to inject billions of dollars of stimulus into the economy given that households had saved an additional $250 billion during the pandemic.
“If so, why do they need to give people more money?” She says.
But Council on the Aging Australia CEO Ian Yates took a different view.
Yates said giving $250 in cash to around 6 million welfare recipients would help retirees cope with the rising cost of living.
He noted that the government’s indexation system had just ‘gave single pensioners a raise of about $20 a fortnight [and couples $15]”.
But these automatic pension increases were only paid out in arrears, meaning they were granted only after pensioners had already endured rising prices for six months.
The $250 payment is different in this respect, he said. To be paid to eligible welfare recipients beginning April 28, the $250 payment “is forward-looking, so it will cover inflation at the current rate for the next six months,” Yates said.
But Paul Versteege, policy director of the Combined Pensioners and Superannuants Association, said if inflation rose over the next half year, welfare recipients would struggle to keep up.
While the $250 payments were widely welcomed as a helpful boost for low-income households, the budget failed to address many other issues that are straining the pocketbooks of retirees, especially those on low incomes.
Mr Yates said ‘nothing has been done for pensioners in the private rental market‘ – with no rent relief announced.
And there have been no changes to the pension income test, which reduces the financial incentive for recently retired Australians to re-enter the workforce.
Under the pension income test, retirees who work more than one day a week have their pension reduced and become subject to income tax.
According to this system, “you lose 50 cents on the dollar if you work [for more than one day] on the pension,” said Ian Henschke, chief solicitor of National Seniors Australia.
Mr Yates said temporarily removing the test or reducing it somewhat would be a good idea as it would help businesses overcome pandemic-induced labor shortages.
Removal of the income test
Henschke said ‘it would cost the government nothing because pensions would be subject to income tax if people worked [and pushed their incomes above the tax-free threshold]”.
Such a system is already in place in New Zealand.
“In Australia, only 2.9% of people on old-age pensions work, while in New Zealand it’s 24.8%,” Mr Henschke said.
“We could run it on trial for three or four years.”
If 500,000 retirees chose to work three days a week and pay $10,000 in income tax, that would net the government about $5 billion in revenue each year, Henschke said.
The new daily is owned by Industry Super Holdings