Noose tightens around Australia’s retirement system

By Leith van Onselen

Australia is finally moving towards political consensus around the need to address Australia’s soaring Aged Pension and superannuation concession costs, with all major parties – the Coalition, Labor and the Greens – backing a review and flagging their support for tighter eligibility rules.

Over the long weekend, Assistant Treasurer, Josh Frydenberg, claimed that the Government was considering a broad review of the retirement system that would examine whether eligibility requirements for the Aged Pension should be tightened, along with the extent to which superannuation concessions should be granted to the wealthy. From The Australian:

“I do not want to pre-empt any announcements about either this review or indeed our policy positions, but we are conscious something needs to be done in this area to ensure sustainability of the budget over time”…

He said it was flawed to look at one aspect of the retirement system in isolation, but acknowledged the government was happy to examine the gamut of super­annuation tax concessions…

“You have to look at the ­broader system and how the superannuation system impacts upon the pension and is affected by the tax system,” he said. “Cert­ainly, we are very attracted to this idea”.

Following Frydenberg’s announcement, The Greens lent their support to a review of the Aged Pension assets test and superannuation tax concessions:

“The Australian Greens have long supported Council on the Ageing’s (COTA) call for a sensible broad review of retirement income instead of fragmentary changes to the pension proposed by the Government,” Senator Siewert said…

“This review should be done comprehensively and must include looking as the assets test and changes to super concessions. Concessions to the wealthy come at the expense of fair pensions to the vulnerable.”

Meanwhile, Labor last week offered the Government a bipartisan approach in support of a crackdown on the superannuation incomes of the rich, calling for a “national conversation” on the issue:

“The Labor Party believes the taxation treatment of superannuation is unfair and needs to be fixed”…

“I pointed out that this could be a matter of some bipartisanship if the government chose to agree as part of this so-called national conversation”…

Clearly, the days of giving wealthy older Australians a free Budget ride are numbered, which is great news.

As I have argued frequently and often over the past two years, the Budget cannot be returned to a sustainable position without addressing two of the biggest and fastest growing areas of Budgetary expenditure: the Aged Pension and superannuation concessions.

Better to begin the reform process now rather than waiting for the army of retirees to bulge, creating a stronger vested interest against reform.

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