Speaking at The AFR Super and Wealth Summit, Financial Services Minister Stephen Jones said Labor plans to tackle tax concessions once an objective of the superannuation system has been put into legislation.
Promising to consult widely, Mr Jones said that with an objective that is settled, “we can then talk sensibly about taxation issues”.
People with millions of dollars in their superannuation are receiving tax concessions that ultimately have a “real cost to the budget”, the Minister said.
“The concessional taxation of superannuation is a lightning rod for discussion. When I see the size of some fund balances, I’m not surprised,” Mr Jones said.
“For example, we have 32 self-managed super funds with more than $100 million in assets. The largest self-managed super fund has over $400 million in assets.”
“If the objective of superannuation is to provide a tax preferred means for estate planning, then you could say it’s done its job pretty well. Don’t get me wrong, the government celebrates success but the concessional taxation of funds like these has a real cost to the budget,” Mr Jones continued.
Citing Mercer, the Minister said the tax concessions on a single $10 million self-managed super fund could support 3.1 full-aged pensions.
At the time, Mercer also found that tax concessions offered to SMSFs with balances exceeding $10 million could fund 240,000 full age pensions each year.
“The conversation has already begun,” Mr Jones said.
“Those who support the status quo will need to demonstrate how concessional tax arrangements for high balance super funds meet the common objective we’ve all agreed on. Those who argue for change will need to show that that approach meets the objective.”
Enshrining an objective in law
On Labor’s resolve to legislate an objective of super, Mr Jones said: “We can’t put the cart before the horse”.
“There is no other foundational public policy that has existed for 30 years without a clear and shared understanding of what its objective is, but here we are.”
Mr Jones noted that the lack of a national agreement around superannuation limits policy debate.
“There are many opinions about how the super system can be improved and many of these opinions are well meaning. But can we have a conversation about the directions if we don’t know what the destination is? This is why we’ve announced a conversation, the need to legislate an objective for superannuation. With a clear objective, we can be focused and have a meaningful conversation,” the Minister said.
“With an agreed destination enshrined by parliament, we can embark on the journey to a more prosperous retirement,” he concluded.
