Superannuation funds dive $14.5 billion as a result of Kevin Rudd's great big new resource tax

May 6, 2010

Australian workers and retirees have lost more than $14.5 billion from their superannuation funds since news first broke about the Rudd Government’s big new tax on the resources sector, Shadow Minister for Superannuation Luke Hartsuyker said today.

“Once again Kevin Rudd has not thought through the detail of a policy and Australians are paying the price,” Mr Hartsuyker said.  “Since the 40 per cent super tax on mining companies first appeared in the media on April 13, the metals and mining index has dropped by 13.2 percent.   With around 9.3 per cent of all superannuation assets invested in the mining sector, a one percent fall in the value of the mining index equates to a $1.1 billion loss in superannuation.

“The value of superannuation funds for mums and dads right around the country has therefore dropped by $14.5 billion. Since Kevin Rudd confirmed the tax last Sunday the value of superannuation funds has slumped by almost $6 billion.  This is just the first instalment of Kevin Rudd’s great big new tax. Superannuation funds will again be hit when mining company dividends are slashed because of a decrease in profits as result of the tax slug.”

Mr Hartsuyker said the slump in the mining index will reverberate through the broader economy.  “Businesses which are associated with the mining sector will also be hit as projects are shelved and investment flows off shore. This will again have an impact on returns to superannuation funds.   In the end Kevin Rudd’s big new tax will flow through to the retirement savings of every Australian with a superannuation fund. Mr Rudd’s super tax on profits is nothing more than a tax on superannuation.

“Kevin Rudd’s views on this are simply empty rhetoric. As investors withdraw their funds from the Australian market, the Prime Minister has his head stuck in the sand about the real impact his policy will have on all Australians.   He is intent on killing the goose that laid the golden egg. Mr Rudd argues, without proof, that his superannuation reforms will add $100billion to superannuation savings. This will be worth nothing if share prices keep falling and dividends are cut in the resources sector.

“This Government has no credibility on superannuation. Labor promised not to increase the Superannuation Guarantee. They cut the co-contribution rates and removed incentives for low-income earners to save. Last weekend’s announcement that the concessional cap for Australians 50 and over would be left at $50,000 is merely a backflip on their 2009 Budget decision, where they said they would reduce the cap to $25,000 in 2012.“

 

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