One of the original architects of Australia’s compulsory superannuation system, Michael Keating, who was Secretary of the Department of Prime Minister and Cabinet under the Hawke/Keating Government, has joined the conga-line of experts calling for superannuation reform. From The Canberra Times:
Mr Keating…admitted it was a mistake not to define the purpose of super when it was introduced in 1992, and doing this now would lead to more predictable policy.
…”With a number of important issues identified that need addressing, the time is right for a much more holistic approach to reform”…
The absence of an enshrined purpose for superannuation – to provide retirement income to substitute or supplement the age pension, as distinct from enabling wealth creation – has been fingered as a cause for shambolic policymaking over the past decade.
It has also resulted in the super system being under-prepared for the shift from accumulation to providing reliable and predictable streams of retirement income to members.
Tony Abbott’s captain’s call that the Coalition would not reform superannuation is looking increasingly ridiculous.
Almost daily now, a new authority comes out of the woodwork urging reform. And yet, the Coalition remains hamstrung by its leader’s tactical decision to take an opposing view to Labor on super in a bid to win the grey vote.
As I keep saying, the biggest losers from the Coalition’s superannuation largesse are ordinary taxpayers, who now face ever-rising tax bills as fiscal drag (aka bracket creep) pulls them into higher tax brackets, raising their average tax rates. Of course, lower income earners are also punished the most through bracket creep.
But instead of undertaking genuine tax reform – by unwinding superannuation, negative gearing, and capital gains tax concessions in exchange for lower income taxes – the Coalition has chosen to maintain the status quo, continuing the “age of entitlement” for its wealthy constituents, who benefit the most from these concessions.
Genuine budgetary reform is not possible as long as the Coalition refuses to address Australia’s gigantic tax concessions, which are bleeding the Budget dry.
