Saving more through superannuation would reduce Australia’s reliance on international investment, lower the current account deficit and ultimately provide a cheaper and more stable pool of funds for businesses to draw on. Greater saving through superannuation also defers consumption from today to the future, which reduces demand and assists in controlling inflation. So whether investing in productive capacity or just your own home, the outcome is that the price of credit is lower – that is, interest rates are lower. The Government’s announcement that those earning under $37,000 a year will pay no tax on Superannuation Guarantee contributions will also assist lowincome earners in retirement and further add to Australia’s savings. Increasing compulsory superannuation contributions is a tough decision as it takes some short-term pain for some very longrun benefits – benefits that will not be seen by this Government. While increasing compulsory superannuation contributions will hit the Commonwealth Budget in the short-term as superannuation contributions receive a tax concession, the benefits will be seen in the long run. Over the next 40 years as a result of higher contributions, more people will be self-funded retirees, which reduces the draw on the Age Pension. At the same time, when the next financial crisis hits the world’s financial markets, Australia will be in an even stronger position.

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