'Re-think' links between super, tax and welfare: Treasury
Secretary to the Treasury John Fraser has called for a “fundamental rethink” of the interaction between superannuation, tax and the welfare system.
Mr Fraser said that in the 25 years since the introduction of compulsory superannuation, it was evident he and the wider industry had made some mistakes along the way, Fairfax media reported.
"We are not smart enough in Treasury – we are pretty smart, but we are not smart enough – to model third, fourth and fifth rounds of reactions to policy measures," he said.
"I think the time has come 25 years or so after those big reforms to have a more fundamental rethink about the interaction between superannuation and tax and the whole welfare system.”
Mr Fraser said questions concerning taxation and the super system are difficult to debate, but the “Intergenerational Report is another reminder that they are not going to go away”.
These comments follow an acknowledgement by Treasury's executive director of revenue group, Rob Heffron, earlier in the year that Treasury’s tax expenditure statement is “not a policy message”.
Mr Heffron said it is only meant to be a measure of the amount of money “potentially” foregone.
“Some have suggested simply because there is a large measured expenditure, government should necessarily do something about it. That is not the case,” he said.
Others in the super industry have noted the need to adopt a more “sophisticated model” for determining the true cost of superannuation concessions.
AMP SMSF’s head of policy, technical and educational services, Peter Burgess, previously told SMSF Adviser it’s necessary to have a more holistic approach to calculating superannuation tax concessions.
“If we’re going to move this debate forward, we’re going to need a lot more holistic and sophisticated approach to valuing these tax concessions, with a model that does factor in the offset in reductions in the age pension costs,” said Mr Burgess.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.