Per Capita: RBA could offer low-cost savings accounts

Mozo

Tuesday 21 September 2010

The new Gillard government must take significant steps to meet the huge shortfall in Australian personal savings, the progressive think-tank Per Capita has said.

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In a memo to the prime minister, which has been published in edited form by the Australian, David Hetherington and Tim Soutphommasane of Per Capita noted that while the minority government will be preoccupied with survival, it must also tackle "the long-term policy challenges facing the country".

For example, they claimed that Australia's strong economic performance is masking serious vulnerabilities, with the country's overvalued property market compounded by low levels of household saving.

"Australia's household savings rate has dropped markedly in the past 30 years," they observed. "This leaves households without any buffer to deal with another global slowdown, which remains a possibility."

The pair claimed that the Cooper superannuation proposal of providing low-cost default accounts for all workers was one positive solution to the issue of retirement savings.

They also suggested that workers would have more options when they come to compare savings accounts if the Reserve Bank offered low-cost accounts on a similar basis.

According to the latest Mercer Superannuation Sentiment Index, more than half of working Australians still do not trust their super funds.

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