The Australian Greens’ proposed changes to Australia’s superannuation system contain outdated information and a focus that is too narrow, representatives of the superannuation industry have said.
“Our first concern is that the policy that they are advocating is based on statistics that they placed in their release that are actually wrong and out of date,” Association of Superannuation Funds of Australia (ASFA) chief executive Pauline Vamos said.
“The $30 billion a year in tax concessions on super, we think it’s about half that. Almost half of the tax concessions go to the top 12 per cent of income earners – that is outdated, we keep telling them.”
The data is based on material that was assessed when then treasurer Peter Costello allowed Australians a million-dollar contribution, so, in her view, it is heavily skewed.
“Our concern is that they have looked at it from a superannuation contribution point of view; they have not looked at it from a whole-of-life [point of view],” she said.
“This is about retirement incomes policy. You either go on the pension or you full self-fund or you do a combination of both and we’ve got to look at that, and that’s why you’ve got to look at the policy in that way.”
She said ASFA had also assessed what the Henry tax review did, with the outcome being that it would be very complicated to implement because a lot of people were not aware of their marginal tax rate until after they put in their tax return.
“Now beside investment returns, one of the biggest reasons why people are not confident in their super is because of the constant changes,” she said.
“This is dramatic change. Even if it was looked at, it should [look] at what is fair for people in 20 years’ time who are entering the system.
“People in the system now don’t want any more changes and they certainly don’t want to pay for it.”
Australian Institute of Superannuation Trustees chief executive Fiona Reynolds said the Greens’ proposal came at a time when the industry had a lot on its plate.
“I’m concerned about changing the whole taxation system for superannuation when we are in the middle of a whole lot of changes … [the] Stronger Super review, FOFA (Future of Financial Advice), we’ve got another review, we’ve got the Productivity Commission coming up, we’ve got the roundtable review coming up,” Reynolds said.
“The industry has got a lot on its plate without turning this on its head at the current time.”
However, as superannuation was the only investment people were being asked to lock away their savings for until they turned 60, tax changes needed to be addressed, she said.
“So therefore I think it should have some different taxation arrangements than other investments,” she said.
“Having said that, I do think there has been inequities in the system that needed to be addressed – that the taxation arrangements do favour high-income earners.”
Australia’s superannuation industry had been working to have the inequities addressed, she said.
“I think the government has taken a number of steps to address the inequities – they’ve put the caps on, new caps coming in, $25,000 for under 50s and the proposed cap of $50,000 for those earning under $500,000,” she said.
“The government has also proposed a low-income rebate so that anyone on the 15 per cent tax rate would get their contribution tax refunded. I think those measures along with the co-contribution scheme do go somewhere to address inequities.”
Yesterday, Greens leader Bob Brown released a superannuation policy paper directed at the upcoming Superannuation Roundtable.
In its paper, “Fairer Superannuation Tax Concessions”, the Greens address the party’s views on compulsory superannuation payments, and urge those responsible for deciding the fate of Australia’s superannuation system to consider fairness and effectiveness when discussing tax changes.
As part of the paper, the Greens propose all superannuation contributions should be taxed at the individual’s marginal rate minus 15 percentage points.
The Greens also propose the reform of taxation arrangements to be included in any debate about raising the superannuation guarantee to 12 per cent.
