A Shorten Labor Government will review the Turnbull Government’s proposed changes to superannuation contained in this year’s federal Budget.
Labor will not make the same mistake the Turnbull Government has made in coming to a final view in advance of properly analysing each measure and how it relates to the others.
Superannuation changes should be made in a careful and cautious way, not dropped on an unsuspecting public on the eve of an election, without due consideration or warning.
The Turnbull Government’s inability to explain or defend these changes has caused a lot of anxiety in the community and has diminished confidence in the system.
Labor will conduct a review in the second half of 2016, to report in early 2017, in time for the Budget and in advance of any legislation being introduced into the Parliament.
We will take the outcomes of the review into account when implementing any proposals which turn out to be fair and workable and when considering any alternative measures which yield similar savings.
Labor has spent recent weeks consulting with the community and key stakeholders on the best way forward and there is still more to be done. It isn’t possible or desirable to understand and untangle all of these complex changes without the resources of government, in a rush, and during a federal election campaign.
Australians already know where Labor stands on extra assistance for low income earners and that Labor wants to deal with the poorly-targeted tax concessions at the top end and repair the Budget, but we will not rush through changes which have not been properly considered.
A vote for Labor on July 2 is a vote for fairer super, and for changes to be made in a more careful, consultative way, unlike the Turnbull Government’s hapless and haphazard approach.
Our Fairer Super Plan
Labor is committed to ensuring the sustainability of the retirement income system in a way that delivers fairness and enables Australians to maintain a comfortable standard of living in retirement.
Tax concessions (forgone revenue) are an important part of the superannuation system, as they encourage people to contribute funding and preserve these savings until their own retirement.
However, some of these tax concessions disproportionately benefit high income earners and will place an increasing burden on the Budget over time. This is unsustainable and unfair.
What is the issue?
High income earners, particularly very high-income earners, receive a disproportionately large benefit from superannuation concessions, because the difference between their marginal tax rate and the concessional superannuation rates grows as their income increases.
The Government’s own Financial System Inquiry found that 10 per cent of Australians receive 38 per cent of Australia’s super tax concessions, more than the combined benefit received by the bottom 70 per cent of Australians.
As the Inquiry found, “the majority of tax concessions accrue to the top 20 per cent of income earners. These tax concessions are unlikely to reduce future Age Pension expenditure significantly.”
What's Labor's Plan for Superannuation?
Our plan is to put the retirement income system on a sustainable footing by targeting superannuation tax concessions to those that need them the most. We will achieve this by:
1. Reforming the tax exemption for earnings on superannuation balances that exceed $1.5 million
2. Reduce the Higher Income Superannuation Charge (HISC) threshold from $300,000 to $250,000
How will these measures be implemented?
As with any change to superannuation Labor will work to ensure that this is implemented with minimum cost to funds and superannuants.
Importantly, Labor will provide extra resources to the Australian Tax Office so it is well equipped to shoulder the bulk of implementation work.
For further information on our positive plan for fairer superannuation please click here