Yesterday’s National Reform Summit turned-up the heat on Tony Abbott to ditch his “captain’s call” to never increase taxes on superannuation.
When asked to be specific about tax or spending measures that could help boost growth, former Treasury Secretary, Dr Martin Parkinson, replied that the most obvious way that the tax system held growth back was the manner in which it skewed tax concessions to the top end of the income distribution.
“It’s not a retirement incomes policy, it’s a wealth accumulation policy. That doesn’t make sense to me. It’s an obvious area we should be looking at”.
Dr Parkinson was joined by a veritable conga line of participants calling for superannuation reform.
The Business Council of Australia, Councils on the Ageing Australia, and the Australian Council of Trade Unions called for an “independent and holistic” review of the superannuation system, which takes into account its cost and its shortcomings for women and low-paid workers, and “develop[s] a package of reforms” that strike an appropriate balance on delivering adequate retirement incomes for all Australians in a fiscally sustainable manner.
Meanwhile, the chief executive of Industry Super Australia, David Whiteley, admitted that superannuation concessions are unfair, with some 3.5 million low-income workers paying the same amount of tax on their super as they were paying on their wages. By contrast, the top 1% of income earners are receiving large incentives to save via super.
Blind Freddy can see that the superannuation system is unfair and in desperate need of reform. Concessions on contributions/earnings overwhelmingly benefit higher paid workers:
Accordingly, the amount of concessions received overwhelmingly flows to higher income earners:
Meanwhile, superannuation concessions are costing the Budget a fortune in lost revenue, and are projected to grow by a whopping 10.8% per annum between 2014-15 and 2017-18 to some $49 billion.
Almost everyone has called for reform and yet “tin ear” Tony continues to rule-out changes. And because of this, the Coalition finds itself against the wall with a fiscally unsustainable superannuation policy that will severely damage its economic/Budget credentials for as long as it remains in office.
