Loon pond wins again: super addition

Will the real leader of the Coalition please stand up, from the AFR:

Government plans to limit lifetime non-concessional superannuation contributions to $500,000 are unravelling with Treasurer Scott Morrison now considering either lifting the limit to $750,000 or making the cap prospective.

The extra options have been put on the table in order to placate a restive Coalition backbench ahead of the resumption of Parliament on August 30.

The most contentious of the proposed $6 billion in superannuation concession crackdowns was the $550 million measure to cap at $500,000 the non-concessional contributions, which can be made over a lifetime. The cap was backdated to 2007, exposing the government to claims the measure was retrospective and a breach of tax principles. There were also complaints that trying to calculate contributions investors had made thus far would be difficult.

Gone is Treasurer Morrison’s spine from a few weeks ago:

“The only people that would benefit [from abandoning super reform] are people who would already on average have $2 million in their superannuation scheme, have already put $700,000 in after-tax contributions … and somehow the great fairness thing that has to be done here is let them put in $1.2m after tax. Now I don’t know too many people out there, Ray, who are sitting there with a bag of $500,00 which they want to put into their super fund… There about 42,000 of them in the country and that is less than 1% of the superannuants in this country. Now 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”…

“I’m saying that we should be getting rid of the Family Tax Benefit supplement payments … for people who earn a lot less than people who are able to put $500,000 after tax, after all their other superannuation contributions into their super account”…

“How can I look them in the eye and at the same time say: oh no, I’m going to protect this interest over here who’s sitting on half-a-million-bucks that they want load in and stuff more in and pay less tax on it?”…

“The tax arrangements for superannuation are extremely generous.. Now the simple truth is that those sorts of concessions can no longer be afforded… And if I am going to make changes… to pensions, to family tax benefits, then frankly we need to ensure that these savings and these revenue measures are felt evenly across the population”.

And instead, loon ponders everywhere can cheer, as Leith noted recently:

Do these super whingers honestly wish to maintain a superannuation system that is so generous to highest 10% of income earners that they receive more generous taxpayer support in retirement than the other 90% (see below chart)?

If the $500,000 cap on non-concessional contributions was applied to Budget night rather than 2007, as demanded by these whingers, then many wealthy people would immediately contribute another $500,000 and accumulate an even larger superannuation balance, which would be unfair to younger generations on the wrong side of the drawbridge and would lose out having paid higher taxes to fund benefits for older generations.

The simple truth of the matter 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.

Or not.