SMSFA highlights overemphasis on super tax concessions ahead of Intergenerational Report release
Amid the impending release of the government's latest Intergenerational Report, SMSFA CEO Peter Burgess says future funding of government services has been unduly fixated on the cost of super tax concessions for too long.
“Discussion has been had without proper consideration of the long-term benefits of the superannuation system, namely lower reliance on government pensions,” Mr Burgess said.
Even before it has been released, the IGR has painted a gloomy picture for the ageing population of Australia and has sparked debate about how the government proposes to fund services.
Discussion about super tax settings, ring-fencing superannuation for future aged care services, and other tax reform measures have been circulating for months and the latest report suggests that these will become even more crucial in the government’s forward planning.
The IGR projects outlooks for the economy and the government’s budget over the next 40 years and examines the long-term sustainability of current policies and how demographic, technological and other structural trends may affect the economy and the budget.
The IGR is supposed to be released every five years to provide long-term estimates of structural budget pressures.
The last IGR was released by the then treasurer Josh Frydenberg only two years ago, in which he concluded Australia will be mired in debt and deficit for at least the next 40 years unless it boosts skilled migration, workforce participation and productivity, and embarks on budget repair.
Treasurer Jim Chalmers then commissioned another report to help provide a basis for reform, productivity-enhancing and revenue measures to try and maintain budget sustainability.
According to this latest 2023 IGR, health, aged care, NDIS, defence and interest payments on debt will account for half of Commonwealth spending in 40 years’ time.
Those areas currently account for one-third of total spend, but the excerpt revealed that by 2062–63, spend on those five categories was expected to rise by about $140 billion or 5.6 per cent of the current GDP.
This week Dr Chalmers has ruled out any changes to the GST but is eyeing off tax reform in the areas of multinationals, high-balance superannuation, and offshore petroleum production.
The government is also working on changes to aged care funding that will be announced at the end of the year, which are likely to involve greater means testing and a more pronounced shift towards user pays.
Nationals leader David Littleproud said a “mature conversation” about tax reform was needed.
“It’s important we look at what that tax mix looks like, what our economy will look like in 30 to 40 years ... and I think that’s about making sure it’s equitable,” he told ABC Radio.
“We do need political leadership from all sides to have that mature conversation, knowing the burdens that are coming on the NDIS, Medicare and making sure we can provide that safety net.”
Health Services Union national president Gerard Hayes said guaranteeing the long-term sustainability of the aged care system would be best done by a Medicare-style levy.
“We need a strong baseline of care for people who have earned low and modest incomes,” Mr Hayes said. “Otherwise, we will widen the gap between the haves and have-nots.”
An aged care task force is already looking at the sector’s financial sustainability and ensuring older Australians have access to safe and dignified care.
Mr Burgess said if there is discussion about the super tax settings, the SMSFA hopes to see a fair and reasoned discussion about the cost of the super tax concessions which appropriately factors in the reduced cost of funding the public pension.
