It seems Tony Abbott’s paid parental leave (PPL) policy has no friends, with the superannuation industry now slamming the scheme for its adverse impact on retirement incomes.
Under the Coalition’s policies, the overall company tax rate is to be cut from 30% to 28.5%. So with the 1.5% PPL levy on the largest 3,000 firms, larger firms would be about as taxed as they were before, whereas smaller firms would receive a tax cut.
The superannuation industry is concerned on two accounts. First, lower overall company taxes means less imputation credits for shareholders. Second and more importantly, franking credits won’t be allowed on the PPL levy, meaning that effective tax rates on larger companies will remain unchanged, but available franking credits will be reduced.
The Association of Superannuation Funds of Australia seems especially angry about the changes:
“Policy in this area cannot be done on the run,” the association’s chief executive Pauline Vamos said.
“We understand there is an election campaign on. But there needs to be a broader conversation.
“This is not something we’ve seen before.”
Ms Vamos said the benefits of the policy in raising the retirement income of women must be balanced against the broader cost of the policy on retirees.
Predictably, the Government is also seizing on the issue, claiming that it is unfair that shareholders should have to pick-up the tab for the PPL:
Kevin Rudd said changing franking arrangements would have significant consequences.
“It’s going to hit superannuation big time,” the Prime Minister said while campaigning in the Labor-held seat of Petrie in Queensland.
Treasurer Chris Bowen said all Australian shareholders and every single worker with a superannuation account would be hit.
“This is Tony Abbott’s giant raid on Australian investors to pay for his unravelling signature policy,” he said in Melbourne. “Why should a retiree who has been saving and working all their life, pay for Tony Abbott’s paid parental leave scheme through a tax on their savings?”
I must admit that it’s kind of amusing seeing the large and powerful superannuation industry – an industry born from Government-mandated savings – now turning on its master and creator.
