HESTA welcomes the Budget potentially providing significant cost of living relief to women and lower income earners, funding for a much needed 15% pay rise for aged care workers and measures to encourage green investment. While the Budget had a range of measures that could assist our members, we believe there needs to be an urgent stance to address long-standing super inequities that are seeing women miss out on billions in retirement savings.
Gender super gap crippling
Independent modelling HESTA commissioned earlier in the year shows women had missed out on over $2.8bn in super savings at retirement from taking time out of the workforce to have children, since the Government’s Parental Leave Pay scheme was introduced in 2011.
The decision to further delay paying super on the Commonwealth Parental Leave Pay scheme means women would continue to forgo thousands of dollars in superannuation. Modelling shows a delay for one year until 1 July 2024 would reduce the retirement savings of a typical HESTA member who has a child in the financial year 2024 by more than $6,000.
A further delay until 1 July 2025 would cost a HESTA member with two young children more than $12,700 in retirement savings. While the Federal Budget has much needed cost of living relief, funding for a 15% pay rise for aged care workers and funding for the climate transition, more is needed to address the long-standing gender-blind spot in our super system.
Payday super and tax concession cuts, a plus
While they wait for key equity reforms, women and low-income earners will still benefit from the pre-budget announcement that compulsory Super Guarantee contributions will be paid to super accounts at the same time as wages. Paying super with wages will help millions of working Aussie as it’s easier to see their super contributions and can mean this money goes into their accounts earlier, starts getting invested and helps grow their retirement savings.
We commend the Government on this important reform. we also welcome the govt’s cut back on super tax concessions for earnings on account balances over $3 million. But these savings should be directed towards helping deliver a fairer and more equitable super system.
HESTA also calls for extending eligibility for the Low Income Super Tax Offset (LISTO) to those earning up to the top of the second tax bracket ($45,000) and bringing the offset in line with the Superannuation Guarantee (currently 10.5%). The Federal Budget funding to support the low carbon transition and facilitate institutional capital are also warmly welcomed, with HESTA seeking to invest 10% of its portfolio in climate solutions by 2030.
Govt stance on sustainability and housing, also positives
HESTA is pleased to see the govt funding for the National Net Zero Transition Authority, which will play a key role in maximising new energy opportunities and supporting economic diversification to deliver the transition. Other budget measures helping Australia’s economy transition to a low carbon future include funding for the Govt’s sustainable finance agenda.
The development of the Federal Government’s sustainable finance agenda will assist investors manage climate risk in their portfolios, with the taxonomy providing a clear framework to invest in new green opportunities and help high-emitting sectors transition.
When it comes to investing in the transition, investors want haste without waste. Therefore, a taxonomy will give them greater certainty and confidence to commit capital over the long-timeframes typically required for energy transition investments. Budget measures aimed at addressing the housing crisis are good. HESTA is looking invest more in solutions that could earn good returns for members by addressing shortages in affordable and social housing.
Debby Blakey is the Chief Executive Officer of HESTA.
