Super industry flexes its muscle at expense of ordinary people: ACOSS

The Australian Council of Social Service has supported changes announced today to reform the superannuation tax concession system, but expressed major disappointment that it does not go anywhere near making the system fair and sustainable into the future.

“Whilst we obviously welcome these improvements, the reality is the changes announced today by the federal Government amount to a mere tinkering at the edges of a system that is grossly skewed in favour of people on the highest incomes,” said ACOSS CEO Dr Cassandra Goldie.

“Capping tax exemptions on superannuation earnings supporting pensions and annuities at $100,000 will only affect people with super assets of more than $2 million. They will still only pay a rate of 15 per cent tax on their super savings, making savings of just $350 million over the next four years.

“This is a drop in the ocean of unfair super tax arrangements that are expected to be valued at $44.8 billion by 2014-15. It is less than half the money the Government took away from single parents in the last Budget, who are likely to have little hope of securing adequate retirement savings.

“We agree with the Treasurer asking, ‘Why should someone who has millions of dollars in a superannuation account pay no tax on their earnings’. But why are they able to pay 15 per cent tax while someone on $80,000 a year pays a marginal tax rate of 37 cents in the dollar on every additional dollar they earn?

“Why should we continue to allow people on the highest incomes to park more and more of their earnings in super accounts at discounted marginal tax rates?

“We need deep reform to make our superannuation system work for everyone, not simply continue the merry go round of changes at the margins. Progressive tax reform is not a new idea. The Henry Tax Panel called for reform four years ago.

“This cannot be put on the policy never-never for fear of a predictable backlash from vested interest groups. The fact is real reform requires a redistribution of breaks to people who need them most – low and middle income earners.

“We congratulate the Government on the proposal for a Council of Superannuation Custodians. Whom it represents will be the most critical factor in its success. We need to make sure the voices and interests of low and middle income people are at the centre of these policy debates. Sadly over the last weeks, once again, those voices have been drowned out by those who are well-resourced.

“ACOSS has long argued for major reforms that would shut down obvious super tax loopholes, and boost the savings of people on low and middle incomes, rather than those who are already secure.

“Under our revenue neutral proposals, based on the Henry proposals, the tax concession system would be turned right side up and ensure our retirement savings system supports the great majority of people trying to secure their post work futures, as well as reduce the overall reliance on the Aged Pension which at the present course is unsustainable. We made these proposals during the 2011 Tax Forum and have consistently urged their adoption throughout the debate since then,” Dr Goldie said.

Media contact: Fernando de Freitas 0419 626 155

Find out more about the ACOSS Superannuation proposals