The Assistant Minister for Superannuation, Financial Services and Financial Technology, Senator Jane Hume last night hinted at the possibility of another round of COVID-19 early super access on ABC's Q&A.
"The vast majority of the correspondence I have to my office is actually asking for a third tranche of superannuation to be made available," Senator Hume said, after commenting on the success of the scheme.
Senator Hume also defended the success of the scheme, denying that the government has shifted its responsibility to provide stimulus onto people by forcing them to dip into their superannuation savings.
Need somewhere to store cash and earn interest? The table below features savings accounts with some of the highest non-introductory and introductory interest rates on the market.
- Increase your balance by $200 each month to earn the maximum interest
- No account keeping fees
- No minimum balance
- Interest paid monthly
The current second round of super withdrawals, initially introduced in March to help people cope with financial distress from the pandemic, ends at the conclusion of this calendar year.
A third tranche would be expected to start from January 1, and could potentially be announced as early as tonight's Federal Budget, although nothing is set in stone yet.
The Federal Opposition is expected to also oppose any possible further extension of the scheme, with Shadow Treasurer Jim Chalmers challenging Senator Hume's assertions on Q&A last night.
"Some people have no choice, Jane. They have had to turn to their superannuation in desperation," he said.
"The Minister for Superannuation spoke about early access as if it is something she's proud of, it is something that the Minister for Superannuation should be ashamed of, the fact that so much damage has been done to people's retirement incomes."
How can the Government better support migrants stuck in Australia who are struggling financially? #QandA pic.twitter.com/wjZt8kvON8
— QandA (@QandA) October 5, 2020
But with the possibility of another super withdrawal round looming over Australians' heads, new research shows the majority of Australians don't want it.
A UMR poll revealed 70% of Australians want the early release scheme to come to an end as the economy enters the recovery stage, and Industry Super Australia (ISA), commenting on the research, said it would not support a third round due to the "poor targeting and the huge long-term costs of the scheme".
ISA initially supported the scheme as a temporary measure to provide emergency funds to Australians, but has since changed its tune, saying many in Canberra have now come to view the scheme as a form of economic stimulus.
"With JobKeeper scaling back and JobSeeker’s future rate uncertain opening up super again would signal the government wants Australians to raid their retirement savings to substitute income support," an ISA report said.
"...with the economy beginning its march to recovery and the health crisis improving it is time to return super’s policy setting to its normal rules that the money is preserved until retirement.
"The existing hardship provisions are a more appropriate mechanism to get funds to members who had fallen on hard times."
ISA chief executive Bernie Dean meanwhile said the long-term cost of the scheme is now too great, and it must come to an end come December 31.
“Extending the raid on super will slug young Australians with a great big new tax to pay for a bloated future pension, drag down investment returns and will shove more Australians towards poverty in retirement," Mr Dean said.
“Workers should no longer be asked to sacrifice their future to prop up the economy now, there are other levers the government can pull to stimulate spending and get funds to people who need it.”
Early super withdrawal: The numbers so far
The latest figures from the Australian Prudential Regulation Authority (APRA) released today show the total amount withdrawn from super funds across the country reached $33.8 billion by 27 September.
There have now been 4.5 million total applications after factoring in repeat applicants.
Over the week to 27 September, 36,000 applications were received by funds of which 22,000 were initial applications and 14,000 were repeat applications.
The total value of payments made during the week was $267 million, indicating once again the scheme's popularity is slowing down after withdrawals peaked as high as $6.2 billion in the week to 12 July.
The scheme has continually come under heavy fire for a number of reasons in the last few months.
One report found four in 10 Aussies who withdrew super early experienced no drop in income, while another found 64% of the additional spending was on discretionary items such as clothing, furniture, restaurants, alcohol and gambling.
Although to its credit, 14% of the money was used to repay personal debts, especially credit card debts which fell massively over the pandemic months.
More criticisms of the scheme came from the fact that 395,000 people under the age of 35 had completely eroded their super balance to $0 by July.
More recently, it was revealed 50% either underestimated or didn’t estimate the impact of the withdrawal on their superannuation balance at retirement.
As of the end of the June quarter, super contributions were negative overall for the first time since super was introduced.
Harry O'Sullivan
Denise Raward
Harrison Astbury
