This government would like us to believe that it has changed. Whether it is pensions, whether it is cuts to schools and hospitals, whether it is attacks on penalty rates, unfortunately, changing the front-man has not changed the play list. Unfortunately, that is also the case when it comes to superannuation.
Those opposite see superannuation as some kind of Petri dish for one ideological experiment after another. The new Prime Minister would have us believe that he is some sort of middle of the road, cuddly character, but in reality when it comes to superannuation and all these other areas he sounds more and more like his predecessor every day. When it comes to the economy he has adopted the same script that he was so critical of in the first place, to get the job. The shame of that is that there is so much for Australia to be proud of when it comes to our quarter century of uninterrupted economic growth, particularly when you consider that that 25 years includes the sharpest global recession since the 1930s.
Among our proudest boasts, not just for this side of the House but indeed for the whole nation, is the role that the superannuation system has played and is playing in our economic success. Superannuation is the hope of the side when it comes to boosting living standards in retirement, taking pressure off the pension and creating deeper pools of capital to invest and re-invest in our economy. There was more than $2 trillion in funds under management in June this year, which is up 10 per cent on the year before.
Millions of Australians depend on superannuation to fully or partially fund their retirement. Paul Keating's achievement in 1992 of compulsory superannuation for everyone is not just one of Labor's greatest achievements, but is one of the country's finest achievements. It is something we are recognised for around the world. It means that everyone has the chance to save for a comfortable retirement, not just the most well-off in our community. We are proud to have created a superannuation system that is the envy of the world. Now, this side of the House has a very detailed plan that has been worked up to improve it so that it is adequate, fair and sustainable into the future.
Having a fantastic superannuation system does not mean having a perfect superannuation system. There are still issues that we need to work out. We do need to make it fairer. It is not fair right now to have 38 per cent of the concessions flowing just to the top 10 per cent of income earners. In a tough fiscal environment, something that both sides of the House accept, we need to better target our superannuation tax concessions to those who need it.
The earning concession on superannuation is the fastest growing tax concession in the federal budget. The government's own budget papers show that the cost of the concession is doubling, over just the next four years, to more than $30 billion. That means it will overtake pensions, in terms of cost, in the next four years.
We also need to make the superannuation system work better for women. The fact is that the average retirement payout for women is $112,000, compared to $198,000 for men. Almost 35 per cent of women have no superannuation at all. This means that more women will be reliant on the full or part age pension, and they are at greater risk of experiencing a sharp decline in living standards when they retire.
We need to make sure the superannuation system is adequate and that it is actually paid. Many employees miss out on a superannuation guarantee payment entirely. According to the Australian National Audit Office, something like 20 per cent of employers are failing to meet their SG obligations. There are real issues in the superannuation system for us to solve.
On the one hand it was good to see the Prime Minister in question time today concede the issue around women in the superannuation system. It is a real shame that the policy agenda pursued by those opposite is actually working against the objective that he said he held only minutes ago at the despatch box.
With all of these issues that we can improve in the superannuation system, what we have instead on the government's agenda is to freeze the superannuation guarantee, completely abolish the low-income superannuation contribution, lower penalties for noncompliant employers, and fiddling with superannuation boards. With all of these things that we could do to improve the superannuation system, instead they are on this ideological, badly motivated and unnecessary frolic, when it comes to superannuation boards.
Freezing the superannuation guarantee makes millions of Australian worse off. Rice Warner, an institution that has a lot of regard and respect in the industry, has said that the Abbott government's decision to pause superannuation contributions at 9.5 per cent has wiped the equivalent of $20,000 from the retirement savings of every Australian, and the total cut to the Australian superannuation pool is something like $146 billion.
When we look at the cutting of the low-income superannuation contribution, that of course makes superannuation less fair. A total of 3.6 million Australians depend on the low-income superannuation contribution to help offset the tax on their superannuation. So it will rip $500 off the superannuation accounts of working Australians earning $37,000 or less. This will have a particularly profound effect on 2.2 million women who receive the payment and who will not be receiving the payment once the cut of those opposite comes into effect.
They have also released the draft legislation to lower penalties for noncompliant employers. Remarkably, the government thinks that paying employee SG payments on time is unnecessary red tap and should be removed. It beggars belief.
There is also now the legislation before the parliament—if not today then early next week—that attacks the representative model of superannuation boards. Again, this is badly motivated. It is ideologically driven and it is unwarranted. Having one-third independent directors flies in the face of evidence that industry funds are among the most successful and high-performing in the country. These changes are expected to cost Australians $168 million a year.
While the government engages in this ideological warfare, we have a plan set out to create and build a stronger and fairer tax system as it relates to superannuation. I pay tribute to the member for Oxley, who did a lot of work in this space, the member for Fraser, who is here at the table, the member for McMahon and others who have done such great work in this area. We are still a year out from an election and these guys put on the table such a detailed plan for superannuation tax concessions. I pay tribute to them for that work. We have said to the government, 'Here it is. Here's a fairer way to do things. If you want to put it into the parliament, we'll vote for it. We'll get it up and we'll have a fairer tax system when it comes to superannuation.' A fairer tax system in super means tightening the excessively generous and unsustainable tax breaks for the wealthiest people. We want to reduce the concessions by 15 per cent for earnings over $75,000 a year, reduce the high-income super threshold from $300,000 to $250,000 and apply the same treatment to defined benefit funds. That plan is expected to return more than $14 billion to the budget bottom line—a far better and far fairer way of returning the budget to surplus than some of the cuts to hospitals, schools, pensions and all the rest of it that are proposed by those opposite. There is a really wide base of support for this plan from well-known socialists such as Tony Shepherd, David Murray, the Business Council of Australia and others—people who have said publicly, over and over again, that the tax concessions at the very top of the superannuation system need to be addressed.
We are also looking at other issues like super adequacy and the gender gap to make sure our system works for more people. I note for the House the good work that my colleague Senator McAllister is doing in the other place to put the gender gap in superannuation on the public agenda through her Senate committee. We await the progress and the report of that committee with great interest.
Some people in the community were heartened when the change of Prime Minister and Treasurer created the opportunity to herald a more sophisticated conversation about super. Those people were tricked. If you take the comments from the Treasurer during the week, it seems that the initial hopes that maybe we would have another look at superannuation tax concessions have been dashed. When you consider some of the things that the Treasurer has been saying, it is very clear that there is no appetite on that side to make superannuation fairer. We know the previous Treasurer, who is in the House, requested advice from the Treasury about concessions on four occasions, the last time being the day that we announced our policy, and since then a lot of those opposite have come out against changing the concessions.
We have a whole plan to improve superannuation. There is some more work to do, but we have some good initial policies on tax concessions. That is how you improve the superannuation system, not by freezing the super guarantee, not by abolishing the low-income super contribution, not by fiddling with boards that are among the most successful funds in the country delivering big gains for their members and not by continuing these ideological, unnecessary and badly motivated crusades, which are more befitting of the Prime Minister's predecessor than the leader of a first-rate First Worldeconomy that should be proud of its superannuation system and should be doing all it can to improve the superannuation system for more Australians.