Treasurer Scott Morrison has fired another shot in the battle to pass the Coalition’s superannuation package, playing down the prospect of raising the proposed $500,000 cap on non-concessional contributions, or shifting the start date to Budget night instead of 2007.
Here’s what Morrison said on Ray Hadley’s 2GB Radio program yesterday:
“Ray, we can’t just keep saying that we’ll make a concession here or we’ll make a concession there and not make it up somewhere else. Because, if we keep going down that path, then our kids will have a bigger debt and they are going to have to pay for the fact that our generation didn’t live within its means. And if someone wants to put a million bucks after tax into their super so that they can pay 15% on it rather than their marginal tax rate, and they have already cleared the $1.6 million [tax free cap], then I find it pretty hard to look my kids in the eye and tell them they have got to saddle a higher debt because someone who had a very big income wanted to pay less tax”.
Well said, and goes hand-in-hand with Morrison’s testimony on 2GB earlier in the month. Pity he didn’t use similar reasoning about saddling our kids with debt to support reforms to property tax concessions, but this is a separate issue.
As I keep arguing, the proposed $500,000 cap cap on non-concessional contributions must not be lifted, and the start date must also be maintained at 2007.
“The only people that would benefit [from relaxing the cap] are people who would already on average have $2 million in their superannuation scheme, have already put $700,000 in after-tax contributions… they are on higher incomes and have higher balances and have already benefited significantly from the generous tax contribution and other concessions that exist for superannuation. And the argument they are making is ‘I want more’. I want to put more in so that I don’t have to pay as much tax as somebody else on those earnings”.
If the $500,000 cap on non-concessional contributions was applied to Budget night rather than 2007, or if it was lifted to $1 million, as demanded by some Coalition backbenchers, then many wealthy people would immediately contribute another $500,000 and accumulate an even larger superannuation balance. This would be unfair to younger generations who would lose out having to pay higher taxes to fund concessions for older generations.
The simple truth is that the wealthiest segments of the population, who also derive the biggest benefits from superannuation concessions, cannot be quarantined from bearing any pain. They too must play a role in Budget repair.
