Workers will miss out on an increase in their super payments under a new deal finalised between the government and the Palmer United Party to axe the mining tax.
Small businesses are also set to lose out on key measures including the loss carry-back provisions and reduction in the instant asset write-off, both of which were linked to the mining tax.
The deal, passed by the Senate, will allow the government to keep its election promise to repeal the mining tax, although it has compromised on pledges to scrap a number of measures that were linked to the impost.
The deal’s key feature is a delay to the phased increase in the superannuation guarantee, a feature that triggered strong condemnation from unions and the Labor Party.
The change also comes despite the Prime Minister saying before the election that he would not adversely tamper with the nation’s superannuation system.
Under the deal, the super guarantee will now remain frozen at 9.5 per cent of wages until July 1 2021 when it will increase by 0.5 per cent each year until reaching 12 per cent in the year starting from July 2025.
The original target was to hit 12 per cent in the year starting from July 2019, but the Coalition proposed to delay this until 2022. The new deal will further delay the target another three years, with the Council of Small Business of Australia welcoming the extra time.
COSBOA chief executive Peter Strong told Dynamic Business the change would give small business owners more time to adapt and allow the economy to improve before the increase took effect.
“It’s an extra cost and there’s a lot of red tape,” he said. “The economy should be on the up and growing before super goes up.”
Mr Strong again pushed for the administering of super payments to be handed to a government agency like the tax office in a bid to ease the pressure on small business owners.
Mr Strong also welcomed new powers handed to Treasurer Joe Hockey allowing him to further change the timetable for the super increase via regulation.
Labor’s Senate Leader Penny Wong slammed the “dirty deal” and criticised the crossbenchers for agreeing to it.
To garner the support of PUP, the Coalition agreed to keep the Schoolkids Bonus until the end of 2016 for those on incomes of $100,000 and retain the low-income superannuation contribution until July 2017. (The low-income superannuation contribution provides up to $500 a year for the retirement savings of those earning less than $37,000).
The compromises will cost $6.5bn, reducing the total savings from the mining tax repeal from $16.5bn to only $10bn over the next four year years.
