Budget highlights for working families

Analysis provided by Industry Super Australia.

Last week’s federal budget was the first for the Labor government in almost a decade and was designed to maintain trust in the new government by delivering on election promises and starting the job of fiscal repair. Here’re the highlights for working families including how it affects your superannuation. 

In his speech, Treasurer Chalmers explained that the Australian economy is currently performing well, but the long-term outlook is gloomier with rising inflation, costs of living – exacerbated by current floods in Eastern Australia – and higher interest rates, all set against a backdrop of fears of a global economic recession.

Unsurprisingly cost-of-living relief measures (including a freeze on deeming rates, expanded access to the Seniors Healthcare Card, and increased subsidies for prescription medication) featured strongly, as did initiatives to enhance national productivity and workforce participation through significant spending across infrastructure, TAFE, and childcare. 

In terms of superannuation – minimal announcements were made, with the biggest being the announcement of a scheme to encourage investment by superannuation funds and other institutional investors in social and affordable housing.  

The Housing Accord as it’s called, is between the nation’s biggest superannuation funds, the federal, state and local governments, builders and the community housing sector could finally unlock affordable and social housing as an asset class that will deliver stable long-term investment returns to millions of Australian workers. The federal government’s commitment to build 40,000 social and affordable homes will also help alleviate housing supply pressures and could be life-changing for thousands of families. 

Also worth noting in terms of superannuation:

• The legislated increase in the SG to 12% by 2025 has been maintained, leaving workers with thousands more to look forward to in their retirement. See how much you’ll benefit here.

• The age of eligibility for downsizer super contributions has been lowered to 55 years. The downsizer contribution allows people to make a one-off post-tax contribution of up to $300,000 per person from the proceeds of selling their home. This measure is, potentially, another way of increasing housing supply by freeing up housing stock for younger families.

And while the announcement to extend paid parental leave from 18 weeks to 26 weeks is great news for families, it is disappointing the government did not include paying super on its expanded scheme. Women retire with about a third less super than men and paying super on parental leave is a concrete step towards bridging that gap which would give a mother of two at least $14,000 more at retirement.

And unfortunately, the government also did not take the necessary action to fix the on average $4.7 billion a year unpaid super scourge impacting 2.8 million people – by mandating super is paid with wages.