Aussies who risk losing super concessions

Treasurer Jim Chalmers says the federal government risks further budget pressure without a rethink of Australia’s superannuation system.

Labor is under fire from the opposition for announcing it was assessing the current superannuation tax concessions after saying in the lead-up to the election it would not make any changes to the system.

Dr Chalmers said the government hadn’t changed its position, rather acknowledged the concessions were “expensive”, the budget needed balancing and now was the right time for a “national conversation”.

“As part of what I acknowledged earlier in the week, these concessions in the superannuation system are not cheap,” he told ABC Radio.

“I don’t think it’s especially controversial to acknowledge that, and when you believe in superannuation and its capacity to deliver a dignified retirement for people, then you need to make sure that these kinds of tax concessions are sustainable and affordable into the future.”

Super tax breaks were first introduced as a way of encouraging workers to save super rather than rely on the pension. The concessions are now costing the budget more each year than the aged pension.

Asked multiple times whether there would be any change to the super tax concessions in the May budget, Dr Chalmers finally conceded the government had not yet determined.

“When you believe in super and there’s an important role for these tax concessions, you need to make sure that you can afford them against all of the other pressures on the budget,” he said.

Dr Chalmers earlier this week sparked debate about superannuation after beginning a consultation period to bring about a defined objective of super, specifically that it is “to preserve savings and deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.

Part of what the government wants to look at is the tax concessions available to the wealthiest Australians.

About two-thirds of the $50bn in annual concessions go to the top 20 per cent of income earners.

One idea being floated is removing tax concessions for super balances over $3m, while another proposal is to lower the cap on concessional super contributions.

Dr Chalmers said the average balance of super was about $150,000 and less than 1 per cent of people in the system had balances higher than $3m.

“The average among that group is $5.8m and they have access to a whole bunch of tax concessions … the point we’re making is we’ve got to work out where we get the most value for money when it comes to some of these concessions,” he said.

Financial Services Minister Stephen Jones said the government was looking at what was a “reasonable amount” of money for a retirement income.

“This is not about the government saying to people they can’t save more than $5m, $10m, $100m for their retirement. We’re saying what is a reasonable contribution that the Australian taxpayer, through the budget, should be making to assist people to save for retirement incomes,” he told ABC News.

“The average retirement balance, the average superannuation fund balance at retirement is around $150,000. That’s a long, long way from $100m.

“If we all agree that the purpose of superannuation is to provide retirement income in retirement, it beggars belief you could have $100m in a superannuation account attracting very generous tax concessions that aren’t available outside the system … clearly it’s not about retirement income. It’s about tax management, estate planning – not about retirement income. That’s an obvious place to look at.”

Shadow treasurer Angus Taylor on Tuesday slammed the government for going back on its promise to “not play with super” but said any change needed to be made carefully.

“Any change to super needs to be treated with great caution,” he said.

“People have got to have confidence in the system, and change risks undermining the competence that Australians have in the system.”

Mr Taylor said the opposition would wait to see “what Labor comes up with”