SMEs need early super, says senator

He reported that he had been asked by a number of people working across small and medium enterprises (SMEs) why the government hadn’t again repeated its emergency COVID measure, of allowing early withdrawals from superannuation savings.

“It’s all well and good for people who work in the public sector or for big businesses to be immune from the crisis, but it’s the people who are in personal care sectors that are most affected,” Mr Bragg told the Senate.

“These are the travel agents, barbers and hairdressers, beauticians – the list goes on. One of the questions that comes up regularly in conversations I have with people who are working in these affected small-business sectors is: why can’t they get access to their super like they could last year?”

The early super scheme in 2020 allowed individuals in financial hardship to drain up to $20,000 from their retirement savings.

Candidates were able to withdraw up to $10,000 in the first tranche between April and June, before they could apply to access another amount up to $10,000 between July and December.

Data from the Australian Bureau of Statistics showed the average amount withdrawn by people who had accessed the scheme twice was $16,377.

The ABS also found that recipients had primarily used their early super to make mortgage or rent payments (for 31 per cent of people) as well as household bills (29 per cent).

“I think it is quite mean and nasty that we would deny people access to their own money above and beyond disaster support payments,” Mr Bragg said.

The senator has pushed for a permanent early release scheme, allowing more people to access their savings for reasons other than the current allowances, which mostly relate to medical conditions or severe financial hardship.

Currently, the reasons that people may be able to tap into their retirement savings include medical treatments, costs associated with terminal illness, funeral and burial expenses for a dependent, being unable to work or severe financial hardship.

But if the government is reluctant to make the measure permanent, Mr Bragg proposed an exception for small businesses.

“I think that, in the absence of the government wanting to put in place a permanent scheme, it is appropriate that trustees look upon the cases raised by small-business people in particular and grant them access to their own money – because it is, after all, their own money,” Mr Bragg said.

“If they are going to grant people access to their own money for IVF and lap-band surgery, and if small businesses are at risk of never recovering from the lockdowns, then they should be granted access to their super.”

However, the next morning, the government expanded its SME Loan Recovery Scheme, allowing more businesses to tap into the support measure in light of the lockdowns.

SMEs who have been affected by the pandemic, with a turnover of less than $250 million, will be able to access loans of up to $5 million over a term ranging up to 10 years.

Lenders, including the big four banks, welcomed the move.

The government has also created support packages specific to regions, with the most recent targeting regional Victoria and SMEs in Western Australia.

Mr Bragg has been a vocal critic of the superannuation industry, having pushed for multiple changes, including using Australia’s sovereign wealth fund, the Future Fund, as a default super fund.

Previously, he backed a notion from Liberal MP Tim Wilson to extend the early super release scheme to housing deposits, in order to help first home buyers enter the property market.

However, Financial Services and Superannuation Minister Jane Hume has rejected that such a measure could come to fruition.

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