Government to release objective of super consultation ‘very soon’
Minister Jones has suggested that balances above $5 million are not consistent with the purpose of super as the government prepares to release consultation.
Minister for Financial Services Stephen Jones has revealed that the government will be launching a consultation paper on the objectives of superannuation “very, very soon”.
Speaking to ABC News Breakfast on Friday, Mr Jones said that superannuation is one of the areas he would be looking at ahead of the federal budget in May.
However, he stated that the government would be undertaking consultation with stakeholders in the community on the objective of super before proposing any changes to superannuation tax concessions.
“It’s important in the area of superannuation that we get the right order of things and that we don’t have continuous chopping and changing in our policy direction,” said Mr Jones.
Mr Jones said that from the government’s point of view, superannuation was established to provide retirement income for Australians.
“If people have got superannuation balances in excess of $100 million or even $50 million, I think it’s pretty hard to argue that that’s about retirement income.”
“It might be about estate management, it might be about tax management, but it’s not about retirement income and that really is not the purpose of superannuation.”
While Mr Jones said the government doesn’t a “preconceived outcome” in terms of its consultation and what level any proposed superannuation balance cap would be set at, he noted that “$5 million is a lot closer to the purpose of superannuation than $100 million”.
“We’ll look at where the right number is but it’s definitely something that we are considering,” he said.
His comments follow recent research released by the Australia Institute which stated that superannuation tax concessions included in the budget for the 2022–23 year were estimated to cost $52.6 billion, which was just below the value of the age pension at $55.3 billion.
“This puts tax concessions for super in the top three expenditure programs by cost. Tax concessions for superannuation dwarf items such as funding for the NDIS at $35.5 billion, medical benefits at $31.3 billion and assistance to the states for hospitals at $26.6 billion,” the research paper stated.
The Australia Institute also noted in the paper that the cost of super tax concessions has risen from less 1.5 per cent of GDP at the start of the century to over 2 per cent.
“The cost of the aged pension has been relatively consistent at around 2.2% of GDP.”
The public policy research group stated that the 2016 budget changes which introduced changes to contributions and the transfer balance cap “had done little to reduce the cost or improve the distribution of tax concessions for superannuation”.
“Major changes are required, such as abolishing concessions for people whose existing superannuation balance makes them ineligible for the age pension,” it stated.
“This would lead to significant budgetary saving, significantly reduce wealth inequality, and significantly increase the ability of the Commonwealth Government to invest in solutions for other policy problems.”