Association of Superannuation Funds executive director David Stevens welcomed plans to support workplace superannuation, while his counterpart Vance Arkinstall of the Investment Savings and Insurance Association was tepid on that suggestion (small step in the right direction) but more critical on other issues.
"The Budget's lack of commitment to encourage increased personal savings levels is a disappointment," Arksintall says.
He major criticism was that the Government has ruled out upfront tax incentives.
Arkinstall says this "flies in the face of the approach taken in virtually all developed western nations."
The view expressed by the ISI is that nothing less than tax incentives will kick-start savings.
In the Budget Finance Minister Michael Cullen reiterated his commitment to supporting workplace super and extending the tax advantage currently enjoyed by people earning more than $60,000 to every worker.
His two options are to either reduce the employer specified superannuation contribution withholding tax for those earning less than $38,000, or to 'cascade' the current 6 cent tax concession enjoyed by those earning more than $60,000 to individual's on lower marginal tax rates.
Stevens welcomed the moves saying Michael Cullen is the first minister for a long-time who has been prepared to put his money where his mouth is on workplace super issues.
While people may not agree with all the details of the changes, the industry should be supportive of the Government's plans.
"Let's get behind him and say hooray," Stevens says.
Stevens says his preference would be to have a tax break on savings while they were invested, however he accepts that's not going to happen.
"Let's not be mean around the edges with a minister who understands and want to do something," Stevens says.
Arkinstall's views is that because the changes won't come into effect until April 1, 2004 it was a case of describing "what might happen."
One of the outcomes of Cullen's announcements was that the government ends the situation where people on tax rates of less then 33% are being over-taxed. This is issue the industry grappled with for years but failed to find an answer to.
Arkinstall says that the number of individuals who benefit will be low.
One of the disappointments in the Budget is that funding to the Retirement Commission remained around the same levels as last year, where its budget was cut.
Also, Cullen appears to have slowed down on his plans to introduce the Risk Fee Rate of Returns tax method for international investments.
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