Scott Morrison's protection racket for super tax havens

19 February 2016

Scott Morrison confirmed last night in a speech to the SMSF Association Conference that the Government had no plans to fix the major skewing of super tax concessions as they apply to the retirement phase.

In another embarrassing display, the Finance Minister on AM Agenda, clearly had no idea about the Treasurer’s latest position, suggesting that these issues were still being reviewed.

The Treasurer needs to get on with the job and announce a policy to deal with the uncertainty his incompetence is creating in superannuation.

Currently, there is no superannuation earnings tax on super balances once they reach the retirement phase, and this is allowing high wealth earners to benefit at the expense of low and middle income Australians.

According to the Association of Superannuation Funds Australia (ASFA), the current system has seen 475 Australians accumulating super balances of greater than $10 million in retirement phase, meaning their average income stream of $1.5 million per year is tax free.

Australians know that a system of super tax concessions where 40 per cent of concessions accrue to the top 10 per cent of income earners is neither fair or sustainable.

How can the Liberal Party continue to attack the Age Pension, but leave in place tax concessions that disproportionately benefit high income earners?

The 2015 Tax Expenditures Statement shows that superannuation tax concessions – both contributions and earnings – are amongst the largest Commonwealth tax expenditures and are expected to deliver a $37 billion annual cost to the budget within four years.

Concessions on superannuation earnings are expected to grow by 33 per cent over the next four years compared to just 14 per cent for the age pension over the same period.

Scott Morrison’s answer to this revenue leakage and skewing of tax concessions is simply to ignore it.

If the Government wants to begin talking about super tax concessions in the context of ‘fairness and sustainability’ then it needs to be consistent in applying to that what is occurring with the contributions and the retirement phases.

Malcolm Turnbull and Scott Morrison continue to take their marching orders on tax policy from the latest whims of the backbench including supporters of former Prime Minister Tony Abbott.

Labor’s talk on super tax concessions is consistent with its policy; we’ve outlined $14 billion in savings from tightening the concessions on super contributions and earnings applicable to higher income earners and balances.