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Abbott: Cheaper electricity, no pension tax and faster broadband for retirees

by Pamela Koh | 17 May 2013

Retirees can expect a reduction in electricity and gas costs for households, no increase in taxes to pension benefits as well as faster broadband under a Coalition government.

Opposition Leader Tony Abbott’s Budget reply speech on Thursday night detailed a plan to keep the current income tax threshold and the current fortnightly rates for pension and benefits unchanged, even as he scraps the carbon tax.

Household budgets will see an additional $600 a year in savings, as Mr Abbott promises cheaper electricity and gas prices.

In addition, Mr Abbott also pledged to deliver all of Labor’s tax cuts, household compensation payments and pension increases.

"We understand the need for the government to get the budget back into surplus and we support that objective. However, we think superannuation is a matter of national importance and we would like to see superannuation removed from the political and budgeting process, because it’s the primary vehicle to ensure that people are able to save for a big part of their retirement,” Mark Rantall, CEO of the Financial Planning Association. 

However, the retirement savings of 8.4 million working Australians will take a hit under an incoming Coalition government.

Mr Abbott will look to delay handing workers a three percent superannuation boost by an additional two years.

What would originally deliver an extra $108,000 in retirement savings to an average 30-year-old Australian on an average wage will be reduced by an Abbott government if it wins the September election. 

“The concern with superannuation, particularly as it relates to retirees is making sure the goal posts aren’t shifted when people are in the planning phase,” Mark Rantall, CEO of the Financial Planning Association said.

“When the legislation and the rules change, it does two things: it has a negative impact on the confidence of the superannuation system and it makes it difficult for retirees to plan for their retirement. Which is long term planning utilizing the rules and regulations that are there in the current day,” Mr Rantall said.

Due to kick off in July, the current plan of a 0.25 per cent super guarantee hike to 9.25 per cent, gradually rising to 12 per cent by 2019, will be put on the backburner by a Coalition government.

This move alone is thought to be able to produce savings of about $1.1 billion by 2016.

Patrick Canion, President of the Western Australia Club of the Financial Planning Association is positive on the Budget response by the Coalition.

“Prior to the budget, the Coalition was very specific and clear that if they were in government, there won’t be any unexpected negative changes to super. The fact that Tony Abott has said that he would keep that in check is a real positive for everyone,” Mr Canion said.