SMSF Owners’ Alliance director of research Malcolm Clyde said the debate around superannuation reform is based on two very different views of the objectives of reform and this is clouding and confusing the discussion.
“One view is that there should be equal opportunity within society, with the progressive income tax structure and social security system being the drivers of redistribution to assist those who are truly vulnerable and unable to survive without such assistance,” said Mr Clyde.
“The other view is that the proceeds of one’s efforts should be distributed based on need using all possible means available to the government.”
Mr Hyde said the latter results in a “wilting economy with initiative and enterprise stifled”.
“Enthusiasm to strive fades if people perceive that their rewards for effort are redistributed unreasonably to others just because they have less,” said Mr Clyde.
He criticised the conclusions of the Grattan Institute report, stating they did not flow from the analysis and, at some points, actually contradicted the analysis.
“Presumably a super system will only be fair in the Grattan Institute’s eyes when everyone has the same result regardless of the effort they have made to work harder, forgo consumption and save,” he said.
Mr Clyde also criticised an assertion in the report that it “is unreasonable to expect the superannuation system alone to fund a comfortable living standard in retirement” and another conclusion that government funds may have more impact if they simply contribute to increasing the full age pension or rental assistance for pensioners.
“[This statement] appears to illustrate a lack of understanding of the cost-trade-offs between age pensions and tax concessions,” he said.
“The government has to provide 100 per cent of age pension funding but over 90 per cent of superannuation pensions are funded by an individual’s savings and earnings thereon, with the tax concessions just providing the incentive.”
Read more:
Limited licence threatens to ‘strangle’ accounting work
First phase of SMSF offering launched for BT Panorama
