Jane Hume has said the government has “no intention” of allowing a third early release of retirement savings but has accused Paul Keating of being “out of touch” and sneering at Australians for accessing their superannuation in the first two tranches.
The assistant minister for superannuation made the comments to Guardian Australia after former prime minister Keating accused the government of shifting the burden of economic stimulus on to young people and robbing them of retirement incomes.
Hume sought to downplay concerns the government is set to abandon the legislated increase in compulsory superannuation to 12%, but said it would be “irresponsible” to allow it to go ahead without “consideration of the tradeoff” in the form of lower wages.
Hume also encouraged employers to sign up to the amnesty scheme to repay superannuation before 7 September, warning there is no chance of an extension.
The superannuation early release program has already paid out $32bn from retirement savings and is set to top $42bn by December – with concerns raised by Keating and others that 590,000 accounts have been emptied to zero.
The scheme allowed people who self-assessed that they were in financial hardship due to Covid-19 to withdraw as much as $10,000 last financial year and again in 2020-21 before 31 December.
Hume questioned unofficial estimates that 590,000 young people are now without super, arguing that some may have drawn down on the balance of dormant duplicate accounts, while some 320,000 temporary visa holders drew down on savings they would have been “cleaned out … anyway when they leave the country”.
“This financial crisis has disproportionately affected young people and people in their early 20s are likely to have a small amount in super, so that would not be surprising.
“What is a surprise is the alarmist rhetoric that is being accompanied with release of unsubstantiated statistics.”
Hume rejected Keating’s charge that drawing down on super breaches preservation rules, labelling it “rubbish”.
“You’ve always been able to access your superannuation in times of financial distress … if you couldn’t pay your mortgage, if you’ve been on government payments … [or] on compassionate grounds.
“It demonstrates how out of touch [Keating] now is with the industry he supposedly created.
“[It’s] extraordinary that a man in a Zegna suit on a generous parliamentary pension can sneer at the decisions made by ordinary Australians who are facing some of the most challenging economic circumstances we’ve ever seen.”
Asked to respond to calls from Industry Superannuation Australia chair, Greg Combet, to rule out a third tranche of withdrawals, Hume said the economic situation is “extraordinarily fluid” but there is “no intention” to allow more withdrawals.
“It would be a very brave politician … that would rule in or rule out anything that would help people that find themselves in distress,” she said.
Hume defended Australians’ use of their super to pay bills, pay down debt and “build financial resilience”.
The Australian Taxation Office has launched a pilot program to track down workers it believes may have been ineligible, which could result in those without evidence of their hardship paying tax on withdrawals or even facing fines of up to $12,600 for misleading statements.
Hume said the “vast majority” of people who accessed their super met the criteria – with a downturn in hours worked or income of 20% – and had done so in good faith.
“You didn’t need to supply it but you needed to have supporting documentation,” she said. “Self-assessment is nothing new, we use it for tax returns, it is not an uncommon process when dealing with the ATO.”
Hume said the retirement incomes review, submitted to the prime minister and treasurer in late July, is a “comprehensive” document that lays the evidence base for future reforms but does not contain direct recommendations.
Hume noted the increase in compulsory super from 9.5% to 12% is already legislated – “to use Paul Keating’s language it’s L-A-W law” – and argued it would be “very difficult to unwind”.
“There is no plan to reduce the superannuation guarantee, or to not go ahead with the increases.”
But Hume said “many groups”, including the Reserve Bank, Australian Council of Social Services and Grattan Institute had stated there is a trade-off between super increases and wages.
Hume said it would be “irresponsible” not to consider this impact and the government “shouldn’t shy away from it”.
Hume said that when the deadline for the employer amnesty expires on 7 September “heavy penalties” will apply to unpaid super.
So far just 18,000 businesses have qualified for the amnesty since May by repaying unpaid super, prompting the ATO to write to 860,000 employers to remind them of the program.
Hume said businesses which “might not be in a position to pay it back” immediately due to Covid-19 should contact the ATO to organise a payment plan before the conclusion of the amnesty.
“It took two years to get through, there is no prospect of [the amnesty] being extended … there will not be another opportunity to come forward and make good without significant penalties.
“The message to business is: please do not miss this once-only opportunity to come forward.”