Caught out by shifting super

AS PREDICTED, the government has changed the rules on contributions to superannuation in ways that have little to do with retirement incomes policy, and much to do with increasing the tax take to ensure it achieved its budget surplus. The result hurts a generation of Australians who would like to save for retirement but are hampered by new caps on the amount they can save in a year. Short-term considerations, in other words, have been allowed to thwart the long-term objective of a fully funded ...

AS PREDICTED, the government has changed the rules on contributions to superannuation in ways that have little to do with retirement incomes policy, and much to do with increasing the tax take to ensure it achieved its budget surplus. The result hurts a generation of Australians who would like to save for retirement but are hampered by new caps on the amount they can save in a year. Short-term considerations, in other words, have been allowed to thwart the long-term objective of a fully funded retirement scheme.

AS PREDICTED, the government has changed the rules on contributions to superannuation in ways that have little to do with retirement incomes policy, and much to do with increasing the tax take to ensure it achieved its budget surplus. The result hurts a generation of Australians who would like to save for retirement but are hampered by new caps on the amount they can save in a year. Short-term considerations, in other words, have been allowed to thwart the long-term objective of a fully funded retirement scheme.

There was always going to be a transitional group of retirees who were in mid-career when compulsory superannuation was introduced in 1992, and who would reach retirement age with too small a superannuation balance. That group is approaching retirement now. Many have brought up children and seen them leave home they have paid off their mortgage. As they contemplate their future, many will realise they do not have enough savings to support themselves. They would like to direct any spare income, which previously would have been spent on children or the mortgage, into retirement savings. But the budget has cut back the amount they can put into superannuation to only $25,000 a year. Even if they have 10 years of work left - and most will have fewer than that - they will be able to save $250,000 extra in superannuation from now until retirement, not a lot for what will be many years of retired life.

The measure has been introduced to make it more difficult for the wealthy to avoid tax through the superannuation system. The 15 per cent tax on super earnings is of more benefit to someone in the top tax bracket than those paying lower marginal tax rates. The objective is understandable but the collateral damage will be too great.

The experience of the transitional group will be important for the future of superannuation: if many find the system has locked them in poverty, the scheme will be discredited. The budget's short-term changes have put the future of a necessary long-term scheme in jeopardy.

Too heavy on the acceleratorPOLICE and the O'Farrell government are cracking down hard on trucks that flout speed limits. It is overdue. Since January, when Patricia, Donald and Calvyn Logan died on the Hume Highway after colliding with a B-double which is alleged to have had its speed limiter disabled, more than 1000 prosecutions have been launched against directors and senior executives of trucking companies. The investigation has found evidence - so far untested - that some trucking companies may have either encouraged drivers to speed or have turned a blind eye to it. The suggestion that speed limiters have been disabled will outrage - though not surprise - drivers who have experienced the traffic on NSW highways and expressways, particularly the Hume, Pacific and New England highways. But the nature of the crackdown raises some important issues about the levels of responsibility involved. As we have reported, it extends not only to individual drivers and the management of the companies that employ them or contract work to them, but also to the trucking companies' clients.

Any driver shown to have tampered with a speed limiter will earn the anger of other motorists. But the pressure for speed is a commercial imperative: clients want fast deliveries, and trucking companies win contracts by providing them. Safe driving is a casualty of ordinary business competition. How far then does the responsibility for any infringements of the rules extend?

Clearly, the management of a trucking company which encourages or even requires drivers to flout the law is culpable - guilty of possibly a worse crime than the individual driver who carries out their orders in order to keep their job or ensure their contract is renewed. But does responsibility extend to the client? Clients sending individual consignments would bear no responsibility for the way their agent - the trucking company and its employees or subcontractors - operate, because they would have no control over it. But large conglomerates striking long-term contracts with transport companies are a different matter. They are in a position analogous to big computer companies or clothing brands contracting out their manufacturing to developing-world suppliers, whose labour practices may not fit First World expectations. Are they responsible for their agents' actions? In law, it may be hard to prove, but morally, they certainly are.

No contract that requires illegal conduct should be enforceable. But contracts are only legal instruments they do not define a business relationship. It is easy to imagine a large company pressing carriers for delivery times that are difficult to achieve legally - or pushing them over the limit when a contract is up for renewal. That is the allegation made repeatedly by the Transport Workers' Union since the crackdown began. Given the size of the crackdown, this story has a long way to go. One way to reduce the pressure on drivers and trucking companies to speed would be to name the companies that insist on impossible delivery schedules.

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