Surpluses could help boost super

The federal government is considering increased superannuation contributions as a way to convert budget surpluses into private savings. Former Reserve Bank governor Bernie Fraser has called for tax cuts to be delivered as increased government superannuation contributions to minimise their impact on inflation. However Labor remains committed to the $31 billion worth of tax cuts that have already been promised, the first $7 billion of which will come into effect from July 1. In defending the position Prime Minister Kevin Rudd said that part of the reason for the cuts was to relieve some of the pressure that families are under, and that proceeding with the cuts could actually reduce the need for wage increases. Treasurer Wayne Swan has said that the government does not want to simply hand out tax cuts in future if there is a view that transferring surpluses to private savings would protect the funds from raids by future governments.

Source: The Australian Financial Review