The Albanese government has vowed to safeguard the retirement savings of all Australians, as key crossbench MPs said it was time for a royal commission into the federal and state programs put in place during the COVID-19 pandemic.
Treasurer Jim Chalmers said the COVID-era superannuation withdrawal policy was a debacle that should not be repeated after The Age and The Sydney Morning Herald revealed research showing the scheme had left huge holes in the retirement incomes of 2.6 million Australians.
Treasurer Jim Chalmers says the government will ensure superannuation is protected from misuse.Credit:Alex Ellinghausen
This masthead reported on Thursday that the first major study of the $38 billion COVID-era superannuation early release program found five in six users withdrew as much as they could, with 75 per cent taking out the maximum $20,000.
Up to a quarter of applicants emptied their super accounts within days of the program’s start, with large spikes in expenditure on areas including gambling, takeaway food and furniture.
People who withdrew $20,000 have, in today’s dollars, reduced their superannuation nest egg by up to $120,000. Once inflation is taken into account, a person who retires in 30 years’ time will have suffered a reduction in their super of at least $250,000.
The government is seeking to legislate an objective for superannuation, tighten early access for those in financial distress while reducing the tax concessions on income earned on super accounts worth more than $3 million.
Chalmers said the research by academics Steven Hamilton, Geoffrey Liu and Tristram Sainsbury highlighted the dangers of using super for anything outside retirement income.
“The Albanese government is committed to protecting super and ensuring the system is fairer and more sustainable,” he said.
“Legislating an objective for super is all about giving peace of mind to Australian workers that we’ll do everything we can to safeguard their savings to deliver a dignified retirement.
“Early access to super in cases of genuine hardship is an important part of our system, but this research clearly shows that’s not what happened under the Coalition’s early access scheme.”
Last year, Prime Minister Anthony Albanese committed the government to a wide-ranging inquiry into the handling of COVID-19, including the various programs put in place to deal with the pandemic’s economic fallout. But he has yet to set a timeline.
Victorian teal independent Zoe Daniel said the findings of the report on the COVID-era super scheme confirmed the need for a major inquiry.
“The fact that so many people, most from lower incomes, now face the prospect of a poorer retirement, and that so much of their savings went straight into poker machines, is extremely disturbing,” she said.
“It adds more evidence, as if there were not enough already, that we urgently need an official, independent inquiry into management of the COVID pandemic so that the lessons learned will enable us to manage a future crisis more effectively and equitably.”
NSW teal independent Allegra Spender, whose seat of Wentworth covered an area that barely used the super withdrawal policy, said the government should hold a royal commission into the pandemic response.
“COVID-19 won’t be the last new virus we encounter, and there’s much we could learn from what Australia did well and where we fell short. A thorough non-partisan review would be valuable,” she said.
Spender also raised concerns about the increase in gambling linked to the withdrawals from superannuation.
“The most disturbing result from this analysis is the increase in gambling associated with the super withdrawals. It’s disastrous if people have sacrificed a sure return for a long shot on the pokies and online gambling,” she said.
“My community and I support in principle the government’s recent changes, but superannuation policy needs to be fair and stable. Once funds are in super, we should be very careful in changing the rules, both on when it’s appropriate to make withdrawals, and the taxation benefits that people are relying on for their retirement.”
A spokesperson for ACT independent senator David Pocock said he supported an “apolitical, multipartisan” inquiry into the COVID-19 response from all levels of government as there were lessons to be learned for future pandemics.
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