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22 February 2013

File photo: A woman putting money in a piggy bank (Getty Creative Image)

Tax concessions make for super hypocrisy


Mike Steketee

Mike Steketee

Tax concessions on superannuation cost the Government $32 billion this year. That makes it worth asking whether it is money well spent, writes Mike Steketee.

"Hands off my super!" is the rallying cry from Australians outraged at suggestions the Government may announce cuts in tax concessions in this year's budget.

It may be a sign of how strongly people feel about protecting their nest eggs but it also points to just how warped the debate on superannuation policy has become.

Many of those most vehement in their criticisms of the Government for squandering money and failing to get the budget back into surplus are also those who regard the tax concessions for superannuation as sacrosanct.

The same people who rage against the nanny state and the culture of entitlement often also seem to think that it is the job of government to give them whatever level of retirement benefits to which they aspire.

Some even argue that the low tax on superannuation contributions and earnings and the zero tax on super benefits after 60 are not concessions at all.

Whatever they are, they represent money the Government would otherwise have available for other purposes and that makes it worth asking whether it is money well spent.

The cost to revenue of the concessional treatment of superannuation reached $32 billion this year. That is almost 50 per cent more than the Defence budget and $2.3 billion above Commonwealth spending on education.

Treasury projects that the figure will jump to $45 billion by 2015-16, by which time it will overtake the cost of the age pension. So where is the sense of outrage about this budget-blowing, out-of-control 41 per cent increase in government spending, making it the fastest growing major area of government?

The sense of injustice about proposals for change often runs most strongly amongst so called self-funded retirees - that is, those not receiving an age pension.

Sure, it is commendable for those who can to provide for their own retirement. But the Government, aka taxpayers, tips in substantial amounts for these people, too, particularly if they are high income earners.

Treasury estimated last year that the top 1 per cent of income earners receive an average of $510,000 in government support for retirement over a lifetime, all of it in tax concessions. That compares to $250,000 for the bottom 10 per cent, nearly all of it through the pension. This turns on its head the notions of progressive income tax and needs-based welfare.

Defenders of the present system have been strident in their complaints about one of the few measures Wayne Swan has taken to pare back its generosity - placing a cap of $25,000 on the amount attracting tax subsidies that people can contribute to superannuation each year.

Much of the discussion proceeds on the assumption that $25,000 is both inadequate and an absolute limit. It isn't and it isn't.

There is nothing to stop people putting more into their super; it is just that, if they do, they have to pay tax of 46.5 per cent, which is what they would be doing anyway on incomes over $180,000.

If you aspire to build your super up so you can live the life of James Packer in retirement, go for it. Taxpayers, most of whom will be on lower incomes, will be contributing generously but the rest is up to you.

Those who rail against the iniquity of putting limits on the tax concessions really are spruiking for a flat tax because that is the basis of the compulsory super system.

The 9 per cent of wages going into super - rising gradually to 12 per cent over the next seven years - is taxed at a uniform rate of 15 per cent up to incomes of $300,000 and so are the earnings in the fund.

From this financial year the Government introduced a rebate which refunds the 15 per cent super tax for those on incomes up to $37,000. This removes one of the starkest inequities: even though people earning below $18,200 a year paid no tax on the rest of their income, they still lost 15 per cent of their super contributions to the Government.

Above that, the rebate is equivalent to a tax concession of 5.5 per cent, compared to 31.5 per cent for high income earners. Tony Abbott's commitment to take away the low income rebate, on the grounds that it is supposed to be funded by the mining tax which he will abolish, has received much less attention than his more recent promise ruling out any "negative, unexpected changes" to the superannuation system in the first term of a Coalition government.

Apparently we cannot afford a tax break of up to $500 a year for lower income earners under an Abbott government but will have no trouble funding one of $19,000, which is the average annual benefit Treasury has calculated for the top 1 per cent.

Strictly speaking, there is no need for the Government to offer tax deductions at all under a compulsory superannuation system. There is the argument that forcing you to put money aside that you can't touch until at least age 55 warrants a tax break. But that would be a stronger point if the tax concessions did more to reduce reliance on the age pension.

Thanks to very generous means tests, there will be only a slight rise in the proportion of people not qualifying for any age pension by 2050, according to Treasury projections. Although there will be a larger increase in those receiving a part rather than full pension, the overall cost of the pension still will go up from 2.7 per cent to 3.9 per cent of GDP by 2050 - or if you prefer that in current dollars, from $38 billion to $55 billion.

The case for a tax deduction also would be stronger if super actually had to be used for retirement income. Instead, there is nothing to stop people spending all their superannuation the day after they retire and going on to the pension. The Australian Prudential Regulation Authority says that in 2011-12, the $35 billion withdrawn as pensions almost exactly matched that taken out in lump sums.

As the proportion of future taxpayers shrinks and the cost of subsidising superannuation keeps outpacing the growth in the economy, future generations are unlikely to thank us for taking the money and running.


House Rules

Comments (125)


  • Warshawski :

    25 Feb 2013 7:03:48pm

    Once upon a time the idea of super was to get all Australians to save for retirement, mostly to protect future government budgets from increasing aged pension costs. The scheme was generous with tax incentives to encorage additional contributions to fund a realistic lifestyle in retirement. Soon after an new government also introduced the future fund to fund government liability for government super which was un-funded. Unfortunately super was popular and the govenment changed super rules to have a maximum amount you could have in super and restrict how you could use it. Then the government changed again and got into the future fund and it limited the amount you could put in each year. Then it thought about taxing super more and more.
    At this rate super will not be enough to live off and it will be effectively just another government tax.
    If Super is to actually benifit the person who contributes the tax rate needs to be concesional otherwise there is no point in locking away your money and denying access to invest and build wealth. There are som many restrictions on what you can do with super you are mad to put it in unless you get a substantial benifit such as concessional tax rate.

  • Dave of WA :

    25 Feb 2013 3:27:56pm

    Its simple.
    TAx concessions create an incentive to save into super.
    People are then largly independant of govt handouts in old age.
    Self funded retires save the Gov $0.6M per person.

      • Clive :

        25 Feb 2013 6:38:28pm

        Dave you miss the point. In order for you not to cost the Govt as you so sweetly put it , concessions have to be made which forego revenue you (and I) would otherwise have to pay to keep the Govt going. SO you are effectively just as much subsidised by the Govt as any pensioner - in fact the point is many like you are more generously treated than pensioners. That is Mike's point as I read his piece.

  • Citizen Smith :

    25 Feb 2013 3:10:43pm

    The Superannuation scheme is a retirement fund to ensure that Australian workers can retire with dignity and that they and their families do not end up destitute on the streets.

    Australian 'retired' workers destitute, on the streets.

    The first sentence describes what superannuation is supposed to do. The second sentence is what will happen after the useless third of society i.e. politicians, economists, superannuation experts, financial experts, public relations executives and public servants have finished 'managing' the shit out of the super scheme.

    Take it as prophecy.

  • John of WA :

    25 Feb 2013 2:26:51pm

    You conveniently overlook the point that low income earners are still likely to be entitled to a government pension regardless of their superannuation payout, whereas those at the higher end will not. Also, not everyone wanting to put more than $25k away per year (which includes employer contributions) earns more than $180k pa. And if they do, good luck to them.
    It was the Government that said they would leave the limit at $50k for the over 50's; they reneged in an effort to keep the phantom surplus. Don't blame us for complaining, it was not we who effectively moved the goalpost 50m up the paddock with 5 minutes to go.
    Take away the tax breaks if you wish, but then take away the mandatory requirement and let people invest the money where ever they choose. Watch how many squander it and put their hands out for the pension later on.

  • Stirrer :

    25 Feb 2013 1:50:40pm

    Interesting article in the Australian the other -titled-" The Year of Small Government".
    It was having a go at Kevin Rudd's lack of fiscal conservatism.
    But it also had a go at John Howard'c Coalition which it said were past masters at buying their way into voters' hearts.
    It also said quote "the task of cutting $15B from recurrent spending, the estimated cost of funding the national disability insurance and the education reforms proposed by Gonski may not be as difficult as some would have us believe"
    Joe Hockey please take note.

    It also said quote' Winding back middle class welfare would yield several billion dollar"

    As only those in the middle class or above can afford to take advantage of the super tax consessions one would be right to assumer the writer considers it middle class welfare.

    It will be interesting to see if the Australian will be urging the LNP to stop buying votes and cut super consession to the middle class in the name of 'Small Government".

      • Grunter :

        25 Feb 2013 6:03:58pm

        Short answer to the last question: No.

        They know the electoral bribes help their side.

        Rudd at least had the GFC as an excuse - in fact, the spending intervention did have an affect in staving off recession and especially high unemployment.

        Howard had no excuse for his frittering of the first big mining boom ($300 billion + windfall). Where was the infrastructure? Where was the skills training? Where was more than the minimal surplus they deliberately left the ALP to try to vandalise their budget?

  • DeadParrot :

    25 Feb 2013 1:23:55pm

    Great article! Surely it's unfair that Super is subsidised by the taxpayer, and then the recipient can pay off their house, buy a new car, go on a spending spree for a couple of years, and then settle back on the pension while they do a little cash-in-hand work? Isn't that like double-dipping at the taxpayer's expense? And why isn't the industry more regulated so that the hanger's on don't get to charge ridiculous fees for doing not-much-at-all? Lastly we really can't really afford that $32 billion, it's a ridiculous cost. A mix of rorting by super managers, over generous tax concessions, and greed. Just ignore those with vested interests and bring on the reform!

      • Jimmy Necktie :

        25 Feb 2013 2:32:30pm

        "'s unfair that Super is subsidised by the taxpayer"

        That would imply the taxpayer is contributing to my super which is of course not true. In fact the tax I DO pay on my super subsidises the taxpayer. And now the taxpayer wants more.

          • Grunter :

            25 Feb 2013 7:05:36pm

            The taxpayer is 'contributing' by there being concessions of lower tax on super over income tax rates for most people.

            Did you read the article? The system is bloating in cost and has to be reined in. The wealthier you are the bigger the concessions as a percentage and far bigger as dollars.

            Should it be the case that someone in the top 1% gets effectively $500 000 from the taxpayer for their retirement versus someone in the bottom 10% of income who gets $250 000 (including pension)?

            Given there has to be cost savings, where should it be directed. The greedy sense of entitlement thing need moderation - the wealthy simply do not need as much taxpayer contribution to encourage saving as super.

            Capping voluntary contributions attracting the concession at $25 000 makes sense, as people who are putting in a loose $25 000 pa are not on the breadline.

              • Jimmy Necktie :

                25 Feb 2013 10:04:16pm

                I understand your point. And I admit I’m out of my depth so take it easy on me, but I still don’t see how the tax payer contributes. In reality you are saying people should pay more tax on their super than they currently do, aren't you? I won’t contest that, I don’t know enough about it. But missing out on tax revenue is not the same thing as contributing. And I don’t think it’s just semantics. If we say the miners have not paid enough tax we don’t say we contributed to them, we say they have not contributed enough to us. Is this not the same dynamic?

  • M goes Viral :

    25 Feb 2013 1:16:26pm

    Three recommendations for improving the equity to super and increasing tax revenues without further taxing:

    Forfeiture of attached imputation credits on exempt pension funds
    Mimumum perserved benefits limits on member balances up to $250K
    Not eligble for any exempt income during transition to retirement / while member is still contributing

      • OUB :

        25 Feb 2013 2:42:44pm

        I don't understand super well enough to make an informed response. You don't mind an uninformed response do you?

        I suspect forfeiture of imputation credits on pension-paying super funds would make it more economic for people with smaller balances to exit the system altogether. Once the funds are shut down or heavily drawn upon the funds released are more likely to be spent on lifestyle enhancement. Centrelink here we come!

        I don't understand your second point and I suspect most readers here would need some explanation too. Perhaps you could expand here?

        I won't rush to agree on transition to retirement arrangements but agree they are quite generous. I suspect throttling back on the tax free status may be the way to go otherwise quite a few older workers may decide to simply exit the workforce completely. That might not be a bad thing in the current economy where there is widespread underemployment (so many bloggers) but when the labour market eventually tightens again the aging population would result in a much diminished workforce. I'd be careful here.

  • bondwana :

    25 Feb 2013 1:02:02pm

    Stupid argument - that money does not "belong" to the government, it belongs to taxpayers who pay tax and have paid tax and super is their own investment against the future where governments like this have no idea.

    The government gets a fair return already, now it wants more and equates saving to income for itself.

  • harry :

    25 Feb 2013 1:00:35pm

    There is a presumption that super is income, and so anything that isn't precisely the tax payer's highest marginal rate is presumed to be a "tax concession" or a subsidy. Super isn't income, super isn't even a normal investment. Super was devised during the Hawke/Keating years to help reduce the impact of an ageing population and the large welfare exposure that Australia was (and still is) heading towards.

    In creating the 9% "employer funded" super contribution, employees took a reduction in real wages.

    Super is a long-term risky investment, particularly when incompetent governments with a spending addiction and an inability to manage their finances see it as a way of financing more of their failing programs.
    $25,000 is the maximum yearly super contribution.
    At that rate, it would take 40years or an entire working life to save $1m. If managed well, super can grow to provide a comfortable retirement. I expect very few people start their working life contributing $25k/year, so this level of contribution happens towards the end of one's career, when retirement is near and maximising saving is important.

    To put it into perspective, Nicola Roxon will retire on an indexed $120k pension. To achieve this at current interest rates, she would have needed super savings of over $3m, which is out of the reach of anyone receiving the "subsidies" available to the first $25k of contributions. And she managed this in 15y of parliament, not a 40 year working career. Think of this when considering the statements of Labor politicians.

      • Rob :

        25 Feb 2013 1:26:24pm

        Super IS income- but instead of taking it in cash spending it or investing it themsleves employees leave it with the employers to invest on their behalf in a super fund. You are splitting hairs.

        As you are with blaming incompetent Governments-what about incompetent/ greedy and sometimes corrupt fund managers?

        As for your bit of nastyiness on Nicol Roxon? How much did John Howard, Peter Costello, Peter Reith on?
        Why do you neo cones always twist things?

          • OUB :

            25 Feb 2013 2:22:14pm

            Superannuation contributions can be from income or capital (non-deducted contributions) I believe. I don't think there's a cap on non-deducted contributions. If you come by an inheritance or a lottery win talk to an adviser about investing some of the proceeds through your superannuation.

            Employers don't do the investing although they may get a say in which fund gets your money if you don't make an election. If you think fund managers etc are corrupt you can start up your own SMSF. Unless of course you think that might corrupt you.

            Howard and Costello sought to make superannuation more generous. Roxon's lot are seeking to make it much less generous. The Libs may have been misguided in making super more generous but their measures didn't appear to benefit them directly.

            On the other hand Labor is happy to make life more difficult for superannuants while benefiting enormously from the old scheme. Such a disparity should be pointed out. And let's face it, Roxon is a fairly unpleasant person. Boots away!

            (Oh all right, Costello and Reith weren't that crash hot either).

          • harry :

            25 Feb 2013 6:51:01pm

            Super was carved off income growth during the Hawke/Keating era. It isn't income, since I can't take it as income. Employers don't invest the super, you have no idea what you are talking about.
            Employers just sign up one or two super funds that can be used by employees by default. Employees can nominate another fund or manage the super themselves. The one thing they can't do is take it as income. So talking about super in terms of income tax is just plain silly.

            I self manage my super because fund managers are mostly crap.

            Howard, Costello and Reith didn't run around attacking people with $1m in super and considering them wealthy. The cretinous Labor Party and the incompetent Swan are running around saying this while benefiting from the equivalent of several multiples of that amount, indexed and tax free.

  • OUB :

    25 Feb 2013 12:35:38pm

    I agree that incentives to lock funds away in super have probably become overgenerous. To me it seems inequitable that large sums can be socked away in super and income and capital gains from that fund are tax-free in retirement mode.

    There have to be some incentives if the government wants us to save more than the compulsory amount for retirement. Otherwise there would be no reason to lock funds away until we reach 60 or struggle with extreme hardship (simple hardship doesn't seem to be enough). Unless perhaps they were shonks seeking to protect their funds from bankruptcy or struggling with a gambling or other addiction.

    But taxpayers in the workforce should not be required to carry the entire burden, plainly that is inequitable.

    For myself I see little benefit in topping up low paid super. The amounts accumulated will struggle to be meaningful and on retirement it will often make sense to save fees by withdrawing all funds and reinvesting directly. And paying negligible tax on the income therefrom. A combination of low cost LICs, fixed interest instruments and term deposits with living funds in deeming accounts should replace most of the super fund's earnings and be low maintenance.

    I don't disagree with a cap on contributions but I think the $25000/$50000 regime is too low. It doesn't affect those who have already socked large amounts away. Increasing the rate of compulsory savings to 12% is a retrograde action and likely to slow down the economy further when fully implemented. This is a backdoor attempt to raise cash by a morally bankrupt government in my view.

    I would strongly caution against governments hamfistedly changing the tax regime on current superannuation savings. Already the fiddling is eroding trust in superannuation as an investment vehicle. To lumber superannuants with heavy taxes would cause widespread anger. Better to levy taxes on future savings so that people go into it with eyes open. Any attempt to make superannuants fund the government's deficit or infrastructure by forcing super fund's to invest in government paper rather than apply fiscal discipline would be a negative for the country.

    So Mike are you now transitioning to retirement and paying no tax on your super as a result? Is this a pang of conscience from you?

      • bluedog :

        25 Feb 2013 1:12:29pm

        Of course the contribution rate is too low at $25-50k, Bill Shorten, the responsible minister was saying so last July year. I heard him say it with my own ears, and Shorten's a man with children being privately educated so he understands the need for financial independence. He said that too.

        But would Bill Shorten be prepared to re-endorse what he said last year in the current and very different pre-electoral climate?

        Over to you, Bill!

        Let's hear it for higher contributions.

          • Rae :

            25 Feb 2013 2:20:33pm

            Why would you put all your eggs in the superannuation basket.

            There is just as much money to be made outside of super and in some cases the tax benefits are greater.

            It doesn't make sense to have too high a forced saving regime.

              • OUB :

                25 Feb 2013 3:07:11pm

                I don't think blkuedog was advocating the 12% rate there so much as wanting a bit more headroom for those wanting to salary sacrifice, especially once the mortgage is out of the way and parents have successfully hidden from their kids.

                I agree ideally people would have additional savings outside of superannuation to draw down on in case of need but I am not sure what the superior tax outcomes you are thinking of outside of the superannuation system, except for those on very low marginal rates of tax. What are you thinking of here?

              • Rae :

                25 Feb 2013 9:31:08pm

                Was thinking of gearing into property or even better fully franked shares.
                Especially saving and then buying quality when everyone is selling.

                I know super has tax benefits but borrowing to buy dividend paying shares has paid off for me over 30 years. I now pay little tax at all on the income because the companies pay the 30% and I get the tax rebate.
                It might not work for high income earners. You have to be frugal and not waste money so you can save and invest.

                I invested on an annual income of around $40000 but did not spend much on consumption during those saving years. I was a single mum but read Benjamin Grahams book on value investing when I was young.

                I also have superannuation but after fees they don't do as well because they are locked into an investment formula and need to pay advisers, rents on offices etc.

  • Frank :

    25 Feb 2013 12:25:59pm

    Dumb arguement and of course takes the simplistic socialist view of robbing from the rich to pay for the poor. It is the in betweens who cop it all the time because (after all) that is where the majority of taxes come from in any case. Governments should be more concerned about their waste and misuse of taxes then perhaps their wouldn't be a need for them to continually mess with superannuation as a cash cow for them. For example, who is the Minister in charge of the Sydney Office (Taj Mahal) project that has seen tens of millions poured into luxury office suites for what can only be described as politicians pandering to their own ego's. Write an article about that for goodness sake, and think about the social welfare consequences of the wasted millions/billions from this supposed Party for the battlers.

      • John51 :

        25 Feb 2013 5:46:28pm

        Frank, I am confused, how are the in betweens copping it. After all this measure does is nothing other than claw back a tiny bit of the Howard/Costello largess to the wealthiest in our society. They are the only ones who really benefit from allowing people to sock away 50,000 at a much lower tax rate into super.

        Even at the reduced rate of $25,000 it is still very generous for what will be a very small group who will benefit from it. As I have argued for anyone to have a $25,000 super contribution at the 9% rate of contribution from an employer you would have to be on $280,000 a year. Most people are struggling to pay their mortgage or rent than to have a spare $25,000 each year to sock away on super.

        Even most self employed people are struggling to put anywhere near $5 or $10 thousand a year in super. To have a spare $25 or $50 thousand each year to sock away into super and substantially reduce their tax rate is a very different thing. All this measure is doing is to subsidise the rich so they can reduce their taxes.

          • Frank :

            25 Feb 2013 7:01:34pm

            Yes John your right to be confused, I'm am just sick of the fact that the more you aim for the bigger target you become for an incompetent Government. My contributions taxed on the way in, taxed on the way out and the more you try and set up for a comfortable retirement income you see that nest egg being eaten away. The Labor Governments view, you always have they old age pension to fall back on, yet I never will like I suspect many others in the middle wont. Just sick and tired of the socialists view that if you work hard and set yourself up for comfortabl;e retirement, you owe those who did little about that through their working lives (and I'm not talking about the disabled or destitude) a pension for life.

              • John51 :

                25 Feb 2013 9:47:26pm

                Well Frank I am still confused. You say you are in the middle and yet you worried about the still very generous $25,000 limit to the tax deduction component of your super. You must be talking about a different middle to me. The average wage, a misnomer, is around $60,000 a year. Is that the middle you are talking about because the majority of people earn less than that?

                Yet if you were earning $600,000 your 9% super contribution would only be around $5,500. That is about $19,500 short of the new limit of $25,000 before the contributions are taxed at the full tax rate. And if you think you can't provide a decent retirement with being able to put $25,000 a year into super, just think of the very, very large majority who will have far less.

                Just remember you are making a lot of money up front with the large reduction on your tax that you would have otherwise paid on that $25,000 without the super subsidy. See that is what get me people are claiming poor when they are getting a big tax saving in the first place. And that is a tax saving most people cannot get because they are not on a high enough income to take advantage of such tax breaks.

              • harry :

                26 Feb 2013 6:54:00am

                9% of 600000 is $54000, not $5500.
                Australian average full-time wages are $70,000
                People earning over $300,000 a year are taxed 30% for their super contributions, not 15%.

                As for making money "upfront" due to super, no, you are losing less upfront, and then you have to wait decades to access it, and every year the rules change. You'd be lucky to see any of it if Swan remained in power for a few terms.

  • Nip :

    25 Feb 2013 12:04:52pm

    For a start, the 32 billion figure is just wrong. It is based on the proposition that if the rules were changed, people would continue to do just as they do now but pay the extra tax. That won't happen. Secondly it assumes that any earnings that the government fails to extract from the taxpayer is expenditure. It is a foolish argument and only a fool would accept it. I don't think the author is foolish, but I also don't think he believes the truth of what he says. Just more class warfare.

  • cicero :

    25 Feb 2013 12:02:39pm

    Good article Mike, the debate on Super must be elevated, let the sunshine in ! Aussies are going to have to get to grips with our 'entitlement society" and the fact ( like the US/UK) it is unsustainable. Our nation cannot sustainably afford our current structures and arrangements.Defined benefit schemes, for those very fortunate to have them, cannot be funded,particularly the Public Service schemes, unless there is further Gov't intervention. My own situation is a bit different to most, my having been retrenched from 8 industries over the years and in my 14th job,we formed our own SMSF in order to consolidate the various small Super accounts and make them work more satisfactorily and take some control over the risks involved and lower the admin costs. My wife and I want to be independent, we have never taken the dole and don't qualify for many of the State benefits others do. We are pretty sure that when we retire in 5-10 yrs the State will not be able to afford to support us by any current pension scheme, there will simply not be funding available in our opinion for anything that will keep up with the cost of living. However, the constantly changing rules make our " super investment decisions" increasingly challenging. We make decisions based on the current applicable rules, only to find they get changed down the track or ASIC/APRA competely fail in their governance responsibilities and allow organised crime to steal our Super, despite such "rules", yes we are Trio Capital Fraud victims.Smart analysis of high wealth individual's Super outcomes is required, they should not be rewarded from the public purse. But for all the debate, the current dysfunctional regulatory regime needs an urgent major overhaul but Mr Shorten is very silent and has yet to respond to the PJC Enquiry on Trio Capital, despite his "promise" to do so prior to the end of 2012. In my opinion and from the available evidence, there is very little to stop an even bigger Trio Fraud occurring today and what a big Honey Pot there is now and growing.Trio criminals "fooled" everyone, don't let them say it was an SMSF issue, Industry funds, Pension Plan funds and private investors were all taken.It's just the compensation forthcoming that is discriminatory. If you have an SMSF, get Insurance ! and don't trust the Regulators, Research Houses, Custodians or Auditors, verify things for yourselves, "Show me the money !"

  • Julian :

    25 Feb 2013 11:59:55am

    Yes there are signficant tax concessions for super - but this completely ignores the fact that super funds do pay substantial tax on earnings and contributions in of themselves. I have seen projections that the pool of super will grow from $1.5 trillion today to well over $7 trillion by 2030 (if the politicians can leave super alone for a while). At that point it was estimated that nearly 20% of the Commonwealth Budget would be funded from tax revenue from super. So why not let the pie get bigger rather than fighting over and continually changing and eroding confidence in super. This pot of money will give this country many options including the fact that it would allow us to be a "creditor" nation and get our balance of payments back in order. There would be more cash available than the banks would need so they wouldn't need to borrow from o/seas any more. This would mean lower interest rates and allow us to minimuse any future fallout from the GFC. So it's not just about how much it is "costing" the budget.

  • spud :

    25 Feb 2013 11:51:11am

    Mike falls for the same old leftist trap of short-term thinking; that concessions which encourage people to look after themselves should be taken away to serve more immediate (and usually grossly political) needs. So instead of encouraging people to save for their own retirement, you take away any concessions to that end and thereby encourage people to spend while they have the money, and then go on the pension when they retire. That way, the government gets more taxes now, which (when they are not wasting it as per this government) inevitably goes to the government buying votes and "providing services" to this same generation of people right now. And then when it comes time for those people to retire and get the pension, the government of the day has to tax their kids, and increasingly even their grandkids to pay their pensions as well as all their other myriad costs and benefits.

    Hasn't this government left a big enough bill for our kids to pay off yet? Or will it just print money and thereby devalue all savings and all earnings right across the economy?

    It also begs the question, if it is good to not encourage people to contribute to their own super, then how can you possibly justify forcing employers to do so out of their pockets?

    This bunch and their myriad media supporters and hacks are so economically illiterate, so short term in thinking and so out of touch, that a person like me, who only knows economics from what I can pick up in the real world, could do a far better job of managing our economy, at least so far as our kids and their kids are concerned.

      • Stuffed Olive :

        25 Feb 2013 12:45:19pm

        Whinge whinge whinge and not even appear to have read the article. The concession is still there but it is capped at a generous amount instead of being open ended. The debt bill is also a furphy - it makes little difference to you or me and it has always been there one way or another. It gets paid off and it gets borrowed again when needed. Howard left Keating a nice big bill but apparently that just doesn't count.

          • spud :

            25 Feb 2013 2:08:39pm

            Give me a break. If you think 25G p.a. (cut from 50G) is a "generous amount" to be able to contribute to your super, then it is clear that you have never run an SME, where you have little or nothing left over to contribute while you are raising your kids and paying off your mortgage, and then when you are clear of that, your income is still so variable that in some years you can't contribute anything, whereas in odd others (though I admit they haven't happened under this government!!) you can contribute a good deal more than 25G. Why is it fair that because you are comfortably employed in the public sector or by some other poor sucker employer on a guaranteed salary, you are able to contribute 25G every year and get the full concession, but that your employer who gives you that job and guarantees your salary, can't?

              • Stuffed Olive :

                25 Feb 2013 2:52:08pm

                $25,000 is a good break. You can muddle up your business gumph as much as you like and just tell us the sad bits and not the good bits as usual. Still, one local business person I know (reasonably well) laughed when he saw how much tax we had paid as PAYE - he said he paid none and all his spare income went into buying properties. He is a plumber, now property developer.

              • spud :

                25 Feb 2013 4:15:52pm


                Firstly, I told you the good bits as well as the sad/bad bits. It is a pity you (and the government) lack the life experience to recognise the realities in relation to this, because this constant attack on business operators, large and small, by people who live in the comfort of knowing they are getting a good reliable wage every week is killing us. Secondly, beyond noting that he obviously doesn't think super is a good investment either, the circumstances you outline with your plumber mate have nothing to do with super tax breaks.

              • John51 :

                25 Feb 2013 3:16:18pm

                Spud, did you even read what you wrote. If you have little or nothing left over raising your kids and paying off your mortgage than how do you have more than $25,000 to put into super a year? Do you realise how much you have to earn a year to have $25,000 as your 9% super contributions. It's 280,000 a year.

                I am sorry to tell you this but if you are earning $280,000 or equivalent and can not afford to raise a family and pay a mortgage than you have really problems with managing your money. If you can afford to pay more than $25,000 into super a year and think you are living on Struggle Street you have a real problem.

                Do you not realise that it is people living on $25,000 a year are actually living on Struggle Street. It is not someone who can afford to pay more than $25,000 a year into super. And that is the problem with what you are arguing, in that you have a real creditably gap.

              • OUB :

                25 Feb 2013 4:14:58pm

                John you're missing Spud's point. When burdened with a mortgage and kids the 9% is a real imposition. When the kids are standing on their own two feet (multiplied by the number of kids) and the mortgage is paid off there is scope for saving a much higher proportion of your income. With retirement starting to cast shadows it is a good time to start salary sacrificing to build up the balance in your super. You don't need to be earning anything like $280,000 to breach the $25k cap if you salary sacrifice at that stage in your life. That's partly why I dislike the 12% rate - it makes life difficult when you're younger and results in less incentive to save heavily when you are in a position to do so. And perhaps by making housing less affordable the habit of saving never happens.

              • spud :

                25 Feb 2013 4:31:14pm


                Yes I did read what I wrote. Assuming you did, then you must be totally unaware that people who do take their super seriously don't just rely on the SGL their employer is required to pay by law, but look to top it up as and when they are able with the money they have earned for themsleves. It is called taking personal responsibility for looking after yourself in retirement; apparently a completely foreign concept to you.

                And I know all about living on 25G a year; it is something I have learned under this government, while being forced to pay the cleaner a greater hourly rate than I get. It is one hell of a struggle, made even worse by people and governments who choose to show callous and cavalier disregard for the fact that this does happen regularly in SMEs.

              • Foxy :

                25 Feb 2013 5:37:14pm

                Those figures may not be accurate. While your emploer needs to put in 9%, you also can - and should - put in more yourself. So $25k = $280k isn't accurate. The $25k is not the employers contribution, but all contributions to be taxed at the 15% rate.

                Even after tax there is a limit on how much you can put into super. There will be no pension to speak of when I retire. We all need to be self funded retirees, and the scheme under the Howard government encouraged that.

              • John51 :

                25 Feb 2013 10:05:11pm

                Foxy, it is a comparison. If your employer was paying the standard super contributions of 9% to get $25,000 worth of super you would have to be earning $280,000 a year. It is a comparison to show you how much money it is as a super contribution whether it is put in by your employer, or by yourself.

                The very large majority of people would only dream in their wildest dreams of being able to put that much into super. And people keep forgetting they are not just putting into their super, they are also using a great big tax break. That is, for those people who actually have the spare money after paying off their mortgage/rent and other costs of living? And yet people expect that tax break should be even larger at the previous $50,000. What do you expect next? A flat tax of 20%, or 10%, or maybe even 5%, but by than the whole country would have gone down the drain.

      • Grunter :

        25 Feb 2013 3:24:37pm

        Skeketee is leftist? What strange ideas people have.

        The black/white argument is wrong. The issue isn't whether there should be concessions on super to encourage saving for retirement per se, but the detail of how much and who gets them.

        Plus the fact the concessions are blowing out so badly any government will have to address the detail.

        Abbott says he will remove low to middle income rebate to save money, punishing those people who inevitably struggle to put money into super. Actually the ones who should be encouraged to put money into super, by making the incentives more attractive than buying a bigger television or something if there is a bit of spare cash.

        I was in that category when studying and working part time - now Abbott will punish the likes of me going back to study.

        He will do nothing for high income earners who get such a bloated concession - as Mike says, Abbott will remove $500 from a low income earner, but keep $19 000 for a high income earner. This shows his ideological bent, but also doesn't solve the problem of containing the super concession blowout, especially as he promises to remove taxes, increase spending AND balance the budget every year.

        The ALP low income rebate and the capping of voluntary contribution are reasonable. Some one has to get less, and by preference it should be low income earners.

        Putting in $25 000 pa still gives a big tax break for the few who will be able to do this. If they can afford more, they can afford to pay tax on the full extra.

  • dont touch :

    25 Feb 2013 11:27:55am

    Middle Australia - all the pain / No gain !!!!

    That's right, squeeze the 'average' Aussie harder - surely you can get a bit more blood out of that stone !!!

    So we are to 'give back' the tax the government are entitled to (as we earned that money in the first place) so they can spend it today.
    Then, when we retire they will fund our pension with what ????

    Oh yeah, an ever diminishing tax revenue stream, where the aging population will suck more pension money than ever before !!!!!!!!!

    But hey, as long as the egotistical maniacs look good today, that's all that matters.....

    Don't forget who has access to their Super (taxed at the low rate !! ) as soon as they finish their job, regardless of age (a perk not allowed by the rest of us) and then use it to invest / make more money. i suppose politicians will be imune from the Super tax grab ???
    OR maybe they'll just put their salaries up to cover the extra shortfall !!!!!

    If it wasn't so serious, it'd be laughable !!!!!!!!!

      • Tax U Bet :

        25 Feb 2013 12:20:42pm

        What % of Middle Australians (hard workers) have a second investment property?

        Tax advantages?

  • harvey :

    25 Feb 2013 10:57:59am

    I don't trust any money that is controlled by someone else. So, super and pensions are right up there.

    Why? Because its too easy for any government to change the rules whenever they like to suit themselves. You just need to see what has happened with super over the past 15 years.

    One trick the govt will probably do with the pension in the future is what they've done with the dole.

    They index it using the CPI, which is a doctored measure of inflation the sole purpose of which is the make inflation seem lower than it really is. Its all on the ABS website. Thats why no-one can live on the dole any more, its been cut and cut by using the CPI so that the cuts are hidden.

    Super pensions are treated the same way. On my calculations, a super pension or annuity of $33,000 pa paid today will only buy $22,000 in 20 years time if indexed by the CPI.

    So when we hit 85 and need lots more medical care, suddenly we will find ourselves with a lot less money. This is why people should be socking money into super now, and making sure they manage it themselves after retirement.

    Otherwise, theres too many snouts in the trough, siphoning off our hard-earned.

  • llanfair :

    25 Feb 2013 10:37:59am

    Just a couple of points:

    1. Can we put all of this into the context of the superannuation system's reasonable benefit limits? Taking a $1million lump sum means $350K of this would be taxed at 47% because it exceeds the lump sum RBL. Alternatively you could roll $1.2m into an annuity and receive a retirement income of about $60K per annum - not a fortune for those who reach this level when compared to their likely pre-retirement income. Anything over the $1.2m pension RBL also gets taxed at 47%. If the Government wants to play with contributions tax then simply tax contributions where the RBL has been reached (and accept that it won't be such a big slush fund as for most people it won't have).

    2. Self employed people (like me) do not have someone paying 9-12% contributions every pay day. Depending on how the year went I will put aside what I can. Some years a lot, some years nothing. Any arbitrary limit is simply arbitrary and so the existing RBL rules should be the determinant.

    3. Before carrying on about the 1%, consider that the proposed legislation is likely to impact the 50%. Those people who are net contributors to the tax system - year in and year out, who seek a comfortable (and not a James Packer) self-funded retirement.

    4. If the Government really wants to do something on the Superannuation front, then wind down all remaining public sector defined benefit schemes, and let retired public servants and politicians deal with it like millions of other retirees. My local council is being hit for $10million this year for a now closed scheme that offered outrageous and unfunded benefits to a select few. Add in the state and federal past unfunded liability costs and Australia-wide I am sure there are billions of dollars involved. Close this rort before lecturing me about those less well off.

    5. Before announcing one more issue that urgently needs my money please keep in mind that if you spend the tax receipts you already get more wisely I may be more receptive. This current scheme is yet another middle class tax grab. Do you really think James Packer is fussed about saving for his retirement?

      • Foxy :

        25 Feb 2013 5:26:41pm

        Reasonable benefits limits? I thought they were all removed?

  • Alpo :

    25 Feb 2013 10:34:32am

    "...the top 1 per cent of income earners receive an average of $510,000 in government support for retirement over a lifetime, all of it in tax concessions. That compares to $250,000 for the bottom 10 per cent, nearly all of it through the pension.".... Where is the People revolution against that? Where are the newspaper headlines? Where are the comments on TV and radio?... Oh no, no, there is none, it's only the Gillard vs Rudd fantasy saga that matters, everything else is lost in the dreamworld of an injection of "media morphine", to which the people of Australia are being subject to... without their consent!

      • John :

        25 Feb 2013 1:33:01pm

        Why dont you compare the net benefit that the top 1% of income earners provides to the economy by way of taxation, versus the net contribution that the bottom 10 percent provide. I'd say the bottom 10 percent ought to be fairly thankful that the top 1% are there, don't you?

          • juliet jones :

            25 Feb 2013 2:14:17pm

            Yes, with all their many tax breaks and negative gearing, the poor ought to be SO grateful to the 1%.

              • John :

                25 Feb 2013 8:17:58pm

                Juliet, there will always, always be someone who is wealthier than you. Just accept it and move on. Gillard's new attempt at divisive politics by alienating those who have sacrificed to fund their own retirement is both desperate and immoral. many of these self funded retirees who you and Gillard label as "wealthy" are in the position they are because of choices and sacrifices they made during their working lives. If you understood anything about the system of retirement savings you would know that the bulk of retirement balances were funded by Non-concessional contributions, that is contributions made out of members' after-tax earnings.

              • Frank :

                25 Feb 2013 10:50:25pm

                Lets see, no contributions through their working life and still get a generous pension from Government Revenue. On the other hand, contributions of 5%, 10% and 15% over a working lifetime (since 1968) ends up with a modest income (and never qualify for any pension handout). That income about twice the married pensioner rate (poor buggers never contributed anything for that). Lucky I also sweated and payed my mortages off early in the process and didn't ever have to rely on Government housing, handouts or other (including not ever qualifying for first home owner grant). Yeah not a bad system for the poor and I don't certainly don't begrudge their lot, but self funded retirees deserve all the breaks of the system (includeing the filthy rich) instead of Governments taking the cream. It wouldn't be so bad if the current (claimed) socialist lot wasn't so incompetent and wasteful of the tax-payers dollars to be looking at changeing the superannuation rules again, and that is where the rot really lies.

          • Alpo :

            25 Feb 2013 4:00:25pm

            John, without getting into the specifics of numbers I do broadly agree with you that the bottom 10 percent should be grateful for the existence of the top 1%, PROVIDED that the top 1% do pay a true fair share of taxes (without getting big chunks back through various means). If they don't, then the bottom 10% are entitled to be rather upset, especially when it is the top 1% that are complaining about the cost of labour in Australia and the need to decrease taxation.

  • Barj :

    25 Feb 2013 10:18:05am

    Unfortunately John Howard muddied the waters by constantly singing the praises of self-funded retirees, even calling hem unsung heroes. Now they appear to believe this nonsense and they cry like babies whenever those in the poor to medium bracket get any concessions but never acknowledge the massive handouts in the form of tax concessions that they received themselves throughout their working lives. Instead, they behave as if tax concessions for themselves were some kind of divine right instead of the disgraceful handouts that they are while begrudging pensions for those less fortunate than themselves.

  • whitelephant :

    25 Feb 2013 9:59:43am

    I retired on the pension and frankly barely understand the language and complexity of most of the posts here.
    BUT-I worked hard for fifty years and believe I am now ENTITLED to my miserable pension.
    So you people parrotting the myth that the gov't can't afford to pay pensions because of an increase in the number of aged people-what crap!
    Take back the $76 million that mining magnates like Kloppers etc get as a retirement benifit. Spread these millions across the needs of the community
    Don't buy American junk fighters costing what $30 billion?
    Spread this over the needs of the community.
    The lack of ability to look after our old is a Liberal/big business myth grabbed onto for expediency by the Labor party -and the unthinking morons who fall for it.

      • Steve :

        25 Feb 2013 12:29:49pm

        You have made a common mistake.

        You think the government cares about you.
        Change your thinking and earn some undeclared cash on the side.

        They will screw you no matter what you do - so look after yourself.

  • Rae :

    25 Feb 2013 9:55:27am

    Investors outside of the super system using gearing are the one's with the truly amazing tax concessions Mike.

    Form a company structure, fly to Vanuatu for a bi monthly meeting and you may not have to pay any tax at all. The flights are even deductible.

    It isn't the ordinary worker paying 10% of income into super that is walking away with the money.

  • Stephen S :

    25 Feb 2013 9:54:49am

    As a former ATO tax auditor with extensive compliance experience in Income Tax, Sales Tax, GST and also superannuation ranging over the years from the late 1970's to the early 2000's I have witnessed first hand the inequities and iniquities of the taxation system in Australia. I have also been in the private sector.

    From this experience I can say that across the board legislation is slanted to to give the greatest benefits to business and high income individuals. I personally believe that a system with a reasonable tax free threshold and a low rate of tax applied in say three tranches of 10% rate applying to a limit of 30% , the same rate as companies, for individuals and no deductions at all would clean p and simplify the system.

    Regarding superannuation in my view there are two options not even discussed.

    First option, no deductions for contributions to the approved super fund and the income of the super fund to have a tax free threshold on first $250,000 of fund balance, then 10% tax on income earned on up to $500,0000 and then 20% up to $750,000 and then 30% over $1,000,000 with withdrawals then tax free for all if taken as a pension but taxed at same rates as super fund income if taken as a lump sum. This taxing of lump sums is punitive but necessarily so to discourage managing assets to avoid not getting a centreline benefit.

    Second option, a flat tax rebate of 20% of super fund contributions for all. The income of all funds untaxed to promote maximum benefit growth then a flat 20% tax rate on pensions or lump sums taken from the fund.

    There is no perfect system but a system that unfairly favours some lucky citizens over others is a despotic and discriminatory system that must be changed.

    I have been taxed at top marginal rates and have managed a self managed super fund and made money in 2008 and 2009 instead of losing it. I am no lefty nor am I an extreme rightist. I sit comfortably in the middle as a stand on your own two feet and accept responsibility for yourself person who believes in a safety net for those who cannot do so through no fault of their own. I try not to judge others unless I have walked a mile in their shoes unlike most in our society today.

      • Peter the Lawyer :

        25 Feb 2013 10:20:20am

        I do battle with ATO auditors every day on behalf of my clients. My impression of the auditors is that they are mostly profeesional in their approach.
        However, I would say that they are not people to whom I would turn to consider the restructuring of the tax system.

        I would also say that my expereince as a tax lawyer doesn't of itself qualify me to talk about the reasoning behind the tax legislation. I could advise on how to make individual tax laws better, but as to the economics I am just as qualified as any AUstralian voter.

        However, it seems to me that the problem is that Government has become far too big and takes up far too much space in public life these days. So a drastic drop in taxation and government reach is necessary.

          • juliet jones :

            25 Feb 2013 2:18:30pm

            How does a country run without taxes Peter? I know your answer. Privatise all schools and get rid of Medicare and Centrelink. The Right always have the same answers and none of them are THE answer. Good strong taxes don't hurt anyone, especially the rich. The rich are already making money hand-over-fist, so why the big whinge about paying their fair share? I pay big taxes and I strongly believe it is fair. Middle class welfare is becoming passe.

              • traveller :

                25 Feb 2013 7:01:43pm

                JJ, as opposed to labours only answer of taxing the productive and borrowing more.

  • Brian :

    25 Feb 2013 9:53:34am

    This is a woeful bit of analysis that needs to start at the beginning of the story. Once upon a time, we were all guaranteed a pension. But the government(s) never put any money aside for it, and a lot of people were screwed. So they made it our responsibility and they made it compulsory. And because it is a good thing and because they know that almost no-one has enough super, they made it cheap to encourage contributions, because everyone involved knows the government still doesn't have the money and the retirees usually still don't have the money. Most of us are still screwed. Our super system absolutely still needs incentives until we reach a point where most of us are going to die with a few dollars left, rather than 'living' with no dollars in the cheapest nursing home until a pauper's funeral.

      • Stuffed Olive :

        25 Feb 2013 10:50:33am

        Incentives are still there Brian. The beginning of the story was also that the age pension was a pittance.

          • Brian :

            25 Feb 2013 2:44:39pm

            No, in the beginning there was no tax and no benefits. But then they introduced the former with promises of the latter. Then, in classic political style, govt took the money and ran.

  • Tax U Bet :

    25 Feb 2013 9:18:26am

    Good to see the "Drum" back up after the two day (weekend off)?

    Superannuation and who's who!

    I always understood that "super" was not the "wealthiest of folks'" avenue for future prosperity or security?

    It is like middle/middle upper class "piggy banks" where they (especially boomers/pre- boomers) received private "super" via their employer in well paid jobs and then in later years "dumped, sorry salary sacrificed" in their last years?

    This has obviously got out of hand...$30 odd billion in earnings not attracting tax, no wonder we can't get the nation moving, the "neo-mort-class" are taking it with them?

    We need to choose a figure based on average earnings plus the old "loading for holidays" say 20% and that be the figure plus CPI increases that is the threshold...then you pay tax!

    The cashing out for the over 65's has to be renewed (Howard and his going away present) with a dash of "retrospective tax" to be paid by the old scrooge(s)"?

    Many of these people (more likely much less than half?) have other properties (inheritance and the easier to acquire in the good old days) therefore, a good deal of assets. That's right "that man again Howard" halved the Capital gains tax...what a hero for the "boomers plus"!

    Real "super" very asset rich and "share port folio's" by the score! The real business class...never tax feared and everybody's option!

  • Tax Me :

    25 Feb 2013 9:12:53am

    Over the weekend a colleague passed on to me the latest press release and research that was carried out by Mercer's into Australia's Superannuation System and how it compares globally. Obviously the author did not receive the paper - not bad for a journo who wants to take a punt at the system.

    The press release is at follows:

    Hopefully some of those that are attempting to hijack our system by the imposition of further cap reductions, taxing arrangements etc will have a good hard look.

    And hopefully this paper will dispel some of the myths being put forward that our system is the most generous in the world in terms of contribution levels and taxing arrangements.

      • John51 :

        25 Feb 2013 10:48:09am

        I am sorry Tax me, but you have completely lost me. From a quick inspection of the linked article they are comparing super of people on average earnings. The problem with that comparison is that the variance of average earnings across countries could vary quite considerably. So it may not even be a good measure to compare super outcomes across countries.

        But of course we are not talking about the super of someone on average earning. That is, even though most of us are not even on average earnings. We are talking about simply putting a limit of $25,000 low tax concessions on super contributions before normal tax rates kick in.

        To get $25,000 super contributions at 9% of your salary you would have to earning at least $280.000 a year. I think on that $25.000 low tax contributions is pretty generous before normal tax rates kick in. In fact I would say very generous considering someone on average earnings of say $60.000 a year super contributions would only be about $5.400. Does that put it in sufficient perspective as to how generous even $25.000 a year is before normal tax rates kick back in.

        Going by how generous tax deductions for super have been before and after it is no wonder it is hitting the budget hard. And the problem is that this is an inbuilt structural problem for the budget. This is another one of the many tax concessions/subsidies that enable the wealthiest in our society to pay so little in tax as a proportion of their earnings. And in the long-term that is unsustainable and bad for our long-term economy. But of course those who simply want to minimise their taxes don’t care about the long-term unsustainability of such measures.

      • Gondwana Lad :

        25 Feb 2013 12:49:40pm

        You must have missed the regular Mercer study that compoares retirment incomes and prension systems from all over the world. Plus the other papers from various different bodies.

        All put our Australian three pillars system up in the top five or top three for effiency and sustainability, in great part due to our universal super system.
        Yes there are tax issue that need to be fixed, but don't take one single stuudy of one aspect and use it as gospel.

          • Tax Me :

            25 Feb 2013 1:57:05pm

            Gondwana, as I stated in my post. The study was passed to me via a colleague. Super is not my game. But having read the press release and the link to the study, the research appears to counter many of the arguments that are put forward.

  • Steve :

    25 Feb 2013 9:11:15am

    It's all a scam.

    Stop thinking it's about your retirement.
    It's an industry that didn't even exist when I was born and was created as a new tax stream.

    How many of you see a wolf in sheep clothing and still think it's a sheep? A lot it seems.

    If Super was legit - it would be a compulsory savings account that only attracted interest - not fees. No one can explain the existence of Superannuation when we already have savings accounts or property that the money would return more from if invested.

    Why can't I use my super to buy a house and get out of the rent trap?
    The % the investment will return far outweighs it being gambled by morons on a stock exchange.

      • Jim :

        25 Feb 2013 10:51:59am

        @Steve - it's not a scam. The idea of superannuation is, at its heart, an excellent one. Why shouldn't people put money aside for retirement and why shouldn't they be forced to leave it there until the reach a certain age - after all, I'm sure that whilst you might be sensible and buy a house, there are lots of other people out there who would simply squander the money if they had access to it.

        Whilst some super funds charge ridiculously high fees, there are others that charge much lower fees. You are no longer bound to a particular fund nowadays, so have a look around to see what you can find and then transfer if you wish.

        I'd certainly rather have superannuation than the Age Pension - retiring on a super lump-sum or annuity is much more comfortable.

          • harvey :

            25 Feb 2013 12:22:09pm

            Wherever there is lots of money there are looters. And the super industry has billions of $$ss of our money.

            So, IMHO, if we are saying that this time it is different, its only because we are not on top of the newest forms of looting.

            Our government regulators are almost always asleep at the wheel, or very very careful not to upset 'business'. They come in after the money has gone and say why it would never have been possible for them to do anything. Hello ASIC.

            There are numerous cases where someone has fronted up to ASIC and blown the whistle on fraud, only to be ignored until the fraudster skips town or the company goes bust.

            Only us the contributors really care about whether our money is scammed or not.

          • Steve :

            25 Feb 2013 12:31:41pm

            Then why is it taxed?

            If super was designed for the purpose stated - it would not be taxed at all or attract any fees.

            Property is a better investment for everyone.

      • Maynard :

        25 Feb 2013 1:40:54pm

        Unless you are on a government super scheme paid for us taxpayers. You will never get a better return than that. Nicola Roxon after 10 years in parliament & almost nil contributions will shortly take her/our superannuation that has an NPV of $6M. This is outright robbery from us to them. John Howard already is into this rort. It's only if you are an Obeid that you go for something better.

  • Act Rationally :

    25 Feb 2013 9:00:16am

    Superannuation is a contract between the government and the citizen that says the citizen will forgo the opportunity to be able to spend their own money until a later date in order to save the government funds that it would have otherwise spent on the pension. As an incentive, the government only taxes funds going into super a certain amount and also has a special tax regime for when you withdraw it.

    It is a long term agreement which needs to be honored by both parties. So far this Labor govt has done nothing but sow doubt in peoples minds and changed the goalposts.

    I know Labor is smarting about not being able to get back into surplus but allow me to offer a tip to them - you could actually try to spend less rather than just trying to raise extra money! Get rid of the Dept of Social Inclusion as a first step in savings, followed by a review to see why EL1 positions in Canberra have doubled since 2001?

      • Straight talker :

        25 Feb 2013 10:44:07am

        An alternative view is that the Howard government was excessively generous to those on relatively high incomes and we are now realising that this generosity is unsustainable to taxpayers generally and must be wound back.

          • Act Rationally :

            25 Feb 2013 12:13:58pm

            Have you read some of the other posts below? We are talking about income that the Government has never received. It is money that COULD have been collected IF there were no concessions. Perhaps you should also point out that these very same people on higher incomes would be on higher tax rates as well? And see my point that super is all about a tax break as the quid pro quo of not t=being able to use your own money (that you earned, not the government) now.

            The Government can't have its cake and eat it too. EIther provide incentives for people to save for retirement and survive on their own coin, or find a way to pay the pension to everyone. All sides of politics knows the latter option is not feasible but they want their money now to fix the budget bottom line.

            As I said above, how about some cuts to non-essential services, the Department of Social inclusion being the first stop for any cuts.

          • John51 :

            25 Feb 2013 1:14:21pm

            Straight talker, i agree with that alternative view. And the tax concession on superannuation was only one in a long list of excessively generous measures he put in place for those on relatively high incomes. And just to help them out a bit more he substantially reduce the top tax rate to boot. It's no wonder that so many of them hate labor for even thinking of clawing back a tiny bit of it.

  • phb :

    25 Feb 2013 8:59:11am

    'Tax concessions on superannuation cost the Government $32 billion this year....cost of subsidising superannuation keeps outpacing the growth in the economy'

    These statements are totally incorrect. Why not write that the Australians and companies cost the Government one trillion this year (difference between GDP and tax receipts). Your statement assumes that all income generated can potentially be taken by the government...hhhmmmm smell communism?

    The $32B is not a cost but a tax opportunity which the government wants to use to try and balance its uncontrolled spending. The Labor government is very good at spending money it does not have.

    Tinkering with superannuation may boost the coffers today, but it will be our children and grand children who will have to pay (by higher taxes to cover support for the aging population).

      • M Ryutin :

        25 Feb 2013 10:25:23am

        Yes, a total failure on the most basic level. Copping this rubbish about ‘32B subsidy’ assumes that 100% of all income should be tax and that to limit it to a highest level of 46.5% means that the remaining 53.5% is a ‘subsidy’. It is so head-bangingly basic that you wonder how so many people can just swallow it whole like this.

      • John51 :

        25 Feb 2013 1:07:57pm

        Ah phb, the overgenerous superannuation subsidy is already a cost to our children and grandchildren. The past overgenerous super tax write off is sucking huge amounts of money out of the budget. Even with the reduction to the $25.000 limit before normal tax rates cut in, it is extremely generous to the top end of town.

        On any rational it is simply a tax write down for those on the top tax rate. The people who have the money to make use of this superannuation measure are the ones who are most capable of providing for their own retirement without it. It is no wounder that the well off in this country look back in longing for the Howard years. After all he made an art of providing welfare/subsidies for the upper-middle-class and the rich in this country. And he did it while substantially reducing their tax rates. Ah, the best of both worlds.

  • micka :

    25 Feb 2013 8:48:27am

    That the government does not take more of my superannuation is not a 'concession'. It is not the 'money the Government would otherwise have available for other purposes'. It's the money I worked hard for and saved and I want it for my retirement.

  • Sceptical Sam :

    25 Feb 2013 8:43:57am

    Question 1: Why do bank robbers rob banks?

    Answer: because that's where the money is.

    Question 2: Why does the Gillard Swan Labor government rob superannuation funds?


  • macca :

    25 Feb 2013 8:28:54am

    I'm hoping labor tries to get their sticky little fingers into the nations superannuation. It will only increase the size of the beating they are going to get in September, looks to me like desperation time for labor.

      • Greg :

        25 Feb 2013 8:52:40am

        Of course it is desperate times for Labor, they wasted every other source of ready cash and this is the only remaining one they have not drained.

          • Gondwana Lad :

            25 Feb 2013 11:28:24am

            Sam, Greg Macca,

            The government has moved to restrict some of the super tax loopholes introduced by Peter Costello. No prizes for gussing who they benefited most.

            The government has alos moved to lift SG contributions to 12% by 2019, this helps everyone and is the first move since the SG legislation was introduced in 1992 that took us up to 9% by 2002.

            The government has alos intorduced the Low Income super tax break, that gives 3.6 millions workers, 2.1 million of them women a modest tax break, rebating the 15% contributions tax directly back to into their super accounts.

            This helps all workers earming less than $37K per year, around 1 in 3 of the workforce.

            The Opposition has pledged to abolish this measure, while defending the tax breaks for the very wealthy that super cuurently gives.

            Before you complain about what the Govt is or isn't doing, best to have all the facts on the table.

            The only tax hike here is the one the Liberals want to put on the low paid. An extra 15% super tax increase.

              • Tax Me :

                25 Feb 2013 2:03:17pm

                And as to facts Gondwana, the government has also reduced the co-contribution levels - designed to benefit those lower paid individuals. And it has also almost doubled the lodgement fees for superannuation funds. And to that lift in SGC from 9 to 12% - its not the government that will be paying, funding or otherwise that increase. It will be business - big and small - that will have to fund from cashflows.

      • Gr8Ape :

        25 Feb 2013 9:27:37am

        I hadn't realized that tax minimization was a superannuation plan.

          • John51 :

            25 Feb 2013 1:36:03pm

            Of course super is a tax minimization. And the higher the tax rate you pay at the top end the more you minimise your tax. But for all the hue and cry here labor is still only clawing back a bit of the tax minimizing from the wealthiest in this country.

            You would need to be earning over $280,000 a year to exceed the $25,000 super limit before losing the tax concession. That is how much super you would get at 9% super contribution. I would suggest there a very few people who have to worry about this change by labor.

            Just remember that someone on so called average earning would only have yearly super contribution of around $5,500. $5,500 versus $25,000, that tell you the difference in the people who some are concerned won't now be able to provide for their super. Who do you think this concession is really helping? And the $25,000 limit to the concession is simply what labor is suggesting to lower it too.

              • Tax Me :

                25 Feb 2013 2:19:11pm

                Your middle paragraph is nothing short of misleading. If a person were earning $280k as you assert, their employer would be required by legislation (The SGC Contributions Act) to contribute the amount equivalent to 9% of their salary. Legislated. Not a tax dodge. The same 9% minimum legislated for each and every employee in the nation.

                The $25k maximum contribution limit (previously much higher, and going back even further dissected into three categories by age with differential limits) was designed for those that were self employed or running their own business.

              • John51 :

                25 Feb 2013 3:31:35pm

                Tax me, I disagree that what I say is misleading. I am simply making a comparison of how much you would need to be earning a year to get $25,000 super contribution from your employer. It does not matter whether your employer is making that contribution as salary/wage earner, or as a self employed person.

                $25,000 into super a year is still way, way out of the range of what the very large majority of people will ever be able to put into super. At that amount it is in every way a tax break. And truthfully unlike most people on a salary/wage, self employed people have many more ways of writing down their tax. That is if you are earning enough to put $25,000 a year into super. I would suggest very few actually can.

              • Tax Me :

                25 Feb 2013 4:16:59pm

                John, rubbish. A small business operator, for example could pay themselves as little as a $10k salary, and put $25k into super - legally. Just the same as happened when the $100k limit was in place, and no different to when the aged based contribution system was in place. The business owner makes the decision on whether to take the funds now as salary, or to sacrifice away for later into their super fund (whether self mnaged, industry or pooled).

              • John51 :

                25 Feb 2013 10:09:32pm

                Tax me, all you are demonstrating to me is what a tax reduction rip off for the most well off in this country the super subsidy has been.

              • Tax Me :

                26 Feb 2013 6:31:04am

                So a mum and dad small business operator is "ripping off the system" because they have the foresight and tenacity to put all that they own up as collateral to take on the challenge of determining their own futures via their business and then make decisions on a year by year basis on what they can legally fund to super. You'd better run that thought bubble past the many many thousands of SME's out there and see what the operators of those businesses think.

  • G :

    22 Feb 2013 4:42:19pm

    Labour is getting desperate to find money to plug the black hole they have in they budget, NOTHING ELSE COUNTS.

  • Denny :

    22 Feb 2013 4:36:39pm

    This narrowly focused assessment is so short-sighted and contradictory that it adds nothing to the debate.

    The balance was jsu about right in 2007. Labor said they would not touch it but of course they could not help themselves and the system is now a poor cousin to what it was.

    The only point that has any validity is people taking benefits out as a lump sum and then reverting to the pension. Again there needs to be some context. Many of the people taking the benefit as a lumpsum have less than $100,000 in the account. many have less than $50,000. The amount of pension that they would receive by using that income as a cash stream is minimal.

    People see only a small difference in income vrs a new car or a long holiday afetr 40 years of hard work. Most progressives, sitting in their ivory towers, fail to understand the working man and the attitude to their final superannuation payout. They think because they can afford a new car or holiday without touching their super then everybody should be able to do the same.

    It makes me sick to see a labor government attacking older workers who are now earning $60K - $80K after 30 years in the workforce. They are the ones who have been hurt most by swan and shorten and their money grab.

    Anyone who thinks labor values include taking care of the working man are very much mistaken and the attacks on super are proof.

  • R. Ambrose Raven :

    22 Feb 2013 4:33:49pm

    Superannuation tax concessions are brazen looting of public revenues by wealthy working rent-seekers. Since superannuation is supposed to be profitable in its own right, there is NO good reason for ANY public subsidy. It is gross stupidity to do so once doing so has no net benefit to the Commonwealth Budget. Such tax benefits are a perfect example of enormously increased cost due to privatisation (of the pension, in this case).

    While low income earners can expect their retirement income to be 80-95% of the retirement wage, middle income earners may get 60-80%, and high income earners as little as 57%. Renters will automatically be worse off than non-mortgage home owners by 17% on average. Single renters across all income groups will be worst off.

    A string of intermediaries - fund managers, bankers, financial advisers and asset consultants - line their pockets by servicing the funds and individuals, which have happily outsourced most of their key functions. Fund members are paying around $20.1 billion in fees each year, with $6.2 billion of that money going to fund managers.

    The industry [union-influenced] super sector, which routinely significantly outperforms the big bank and AMP-controlled retail super sector, is a walking, talking rebuke to the free market zealots and the financial planning industry, and the Coalition hates it.” Abbott plans to get rid of the union-influenced super funds will both free up their members' funds for plunder, and remove a source of embarrassment for the profit-seeking non-performers.

    So, yes, there are a few issues.

      • Maynard :

        25 Feb 2013 10:27:42am

        The biggest brazen looting are the public superannuation schemes for public employees of all types including politicians. This crime has been kept off the public agenda for far too long. If these people were treated like the rest of us then the current deficit problem would be solved overnight & some debt payed off. There is upwards of $200Bn that these people have stolen from us and they have effectively cut their tax at least in half. It's not the bloated mining magnates but our politicians & our public employees who should hang their heads in shame and give it back. This is not rent seeking but brazen theft from the poorest in the community.

  • bluedog :

    22 Feb 2013 4:33:48pm

    The most important figure is missing: 300,000, being the estimated number of self-managed superfunds. Any government that alienates this electoral demographic guarantees its own defeat.

    And then there are the industry superfunds run for trade union members. That's another cohort who may turn out to be surprisingly well organised. Of course, the industry superfunds rebate significant fee income to the ALP. Can't risk that little earner can we?

    But Mike Steketee's real colours emerge in this gem; 'Whatever they are, they represent money the Government would otherwise have available for other purposes and that makes it worth asking whether it is money well spent.'

    Translation: how dare these people who have earned and saved their money be allowed to spend it in ways that the Left can't control and may not approve of.

    Oh for a command economy, run by a self-selecting nomenklatura that includes Fairfax Media financial journalists, ex officio.

      • TPG :

        25 Feb 2013 11:11:14am

        Parasitic...300K..."fully-self funded"?

        Why do so many of these so-called SF's receive "health care cards and script benefits"?

      • Gondwana Lad :

        25 Feb 2013 11:20:05am

        Hold on there Bluedog.....

        Industry super funds are run to benefit any workers, not just union members. Secondly indutry funds have equal employer and emploee represntation on the their boards, they are not run by unions. You can see for yourself if you go to their websites.

        Thirdly industry funds do not "rebate significant fee income to the ALP".

        This is plain wrong.
        Check all the disclosures of electoral donations required under law to the AEC?

        No donations listed.

        Check the annual audited accounts of any indsutry super fund. No donations recorded.

        Whoever is telling you this stuff, they are way out of line.

        What industry funds do is give members low cost, well performing investments that out compete the big banks and other financial insitutions. Their members are better of as a result.

  • Pete :

    22 Feb 2013 4:30:31pm

    The unviability of the current system is its deathknell. 'Pensioners' drawing state funds while sitting on property for which they've reaped the benefits of the boom will be first to get targeted as the family home becomes an asset like any other, much to the chagrin of greedy relatives. The treatment of the family home is a bizarre tax aberration that benefits the wealthy at the expense of younger people who are now kept out of the property market due to the boom in prices. Next will be the favourable tax treatment of super: it inordinately favours the rich. The system will change to remove tax benefits for these people, and redistribute tax concessions to those who are more deserving. Younger spendthrifts who save nothing now will find future pensions keep them in penury, and will have only themselves to blame. I've got decent super, having paid in as much as I could afford and own a home, but I definitely don't expect the government to fund a retirement that maintains my lifestyle. I expect to live more simply, and have my medical bills paid, which is still a sizeable contribution from government. Grey panther hysteria centres around the inane arguments 'but we built this country' (they didn't: these boomers spent it all on consumer debt) and 'I've paid taxes all my life' (so why should you suddenly stop paying them when you retire? You're still consuming and most of your healthcare costs will be self-inflicted through obesity and smoking anyway). We need to change societal expectations about the family home. There is no economic reason to keep it tax free, and from an economic perspective re inheritance, unearned windfalls to kids are highly inefficient. In the future, decent pensions should be reserved for those genuinely disadvantaged during their working lives, and no-one else. The only cloud on the horizon for more sensible tax policy will be the shear numbers of oldies forming a sizeable me-first voting block.

  • Peter the retired :

    22 Feb 2013 4:30:26pm

    My own experience with super since retirement has convinced me there is a big focus tax minimization for those able to access it. It has become just another way to avoid tax amongst those with higher incomes. A key strategy is to minimize taxable income (an allocated pension bought with your lump sum is not taxed) so that you can also qualify for the aged pension and associated health cards etc. So best of both worlds, large allocated pension and the aged pension. And no I do not do this as my super pension is taxable.

  • Jarrah :

    22 Feb 2013 4:29:52pm

    Mike, I think it best you stay in journalism than become an economist. And it would be better to report the views of economists than make up your own.

    The pension costs a lot of money, and will become an even bigger burden on Australia in the future. Encouraging Super saves money from being paid by the pension later.

    It is similar to the argument for private schools and private health insurance. Super is in effect a private pension. In each of these cases, you get less bang for your buck and less drive for excellence if the money goes to the government before being applied to the service it is meant to fund. And if you take away the private form, the public form would be overwhelmed. In each case, $1 spent 'subsidising' private health, schools or Super saves more than $1 that the government would otherwise need to spend to provide the service themselves.

  • starkraving ®:

    22 Feb 2013 4:27:25pm

    Ok, so I am under 60 so this is easy for me to say. Those same people don't mind also structuring their financial affairs so as to qualify for Centrelink top ups, health cards or eligibility for tax free super at age 60. The double standard being applied at the same time to criticisms of the deficit and welfare spending which they are also recipients of, is astounding. But I think what is at play here for many people who are doing this is that they believe that they are a special case.

    The loopholes in the superannuation system need to be closed that are leading to these rip offs in fees and siphoning off a our super savings by this and that and someone else getting a share before we see our balance. But then the super industry and financial advisers bleat like stuck pigs at that suggestion and claim they will go broke.

    Super, mining taxes any thing with money and these days someone particularly the most powerful will mount a revolution. It has to all come crashing down sooner or later.

  • realist :

    22 Feb 2013 4:26:54pm

    Mike, it would appear that you have cherry picked your figures.
    You state that the top 1% receive $510,000 from the govt and the bottem 10% $250,000.
    Could you give the figures as to what % the govt gives both relative to their income over the same period and the % that the govt gives relative to their retirement funds over the same time.

  • Dom Jones :

    22 Feb 2013 4:24:41pm

    Thank you for this information, Mike. I consider myself to be generally well informed, but it was only recently that I realised how very little knowledge I have about how my superannuation works. Alarmingly, I'm not alone... conversations with my acquaintances have shown me how little thought most people in average PAYE jobs give to it, other than occasionally noting the amount on our pay slips and receiving the occasional insurance cross-sell attempt from whichever super fund our employers have picked on our behalf.

    There are those who think about their retirement when they start their careers, and carefully plan for it, but I dare say they're in the minority. You'd think that for something costing the government so much there would be more of an investment made in getting the general public more informed and in control prior to middle age when the reality of retirement starts to loom.

  • Alfie :

    22 Feb 2013 4:23:44pm

    "The cost to revenue of the concessional treatment of superannuation reached $32 billion this year."

    On the other side of the coin, how much would it cost taxpayers if there were no self-funded retirees? That is, everyone who retires gets a pension entitlement.

  • Aquila :

    22 Feb 2013 4:22:05pm

    In equate uncollected potential tax with real money like the defence budget, and to describe tax "concessions" as something the taxpayer "tips in" to recipents is disingenous. The author knows better.

    The $32 billion does not "represent money the Government would otherwise have available for other purposes". Nobody believes the cost of the theoretically calculated cost to revenue would translate into half that much were the concession to super removed.

    If the concession is removed people will obviously not invest as much in super - negative geared property perhaps?

    If a thirty year old today was, extraordinarily, able to contribute the full concessional $25 thousand per year for their full working life they will not be rich (in real terms). James Packer they ain't.

    And anyone spending this accumulation in order to collect the pension would have to avoid spending it on assets that would reduce their pension. Sounds good for Qantas and suppliers of French champagne.

  • JRM :

    22 Feb 2013 4:21:31pm

    So if no one paid into superannuation - the concessions would have cost the Government nothing. And they would collect nothing.

    But the pension bill would double to about 90 billion.?

    Therefore - I think some tax concessions a good idea. Maybe tone them down a bit. Say raise the tax on contributions from 15% to 25% tax. Still an incentive to put savings to super.

    There is a difference between "costing the government" ie Pensions, and simply "lowering their tax take" - ie Concessional Super.

  • jusme :

    22 Feb 2013 4:17:00pm

    oh so THAT's what all the conservatives are complaining about.
    i agree that there should be an incentive to build your own super, but any concessions or tax breaks should be progressive. as you say, welfare (and tax breaks are just another form of welfare) should be spread bottom up, or at least evenly, (but better bottom up!).

    disturbing how abbott wants to keep the uneven breaks for the rich, but not replace the tiny one the carbon pricing involves.

    thanks for explaining it. this is another example of something the majority of the media are either incompetantly missing, or worse, hiding on purpose!

  • Josh :

    22 Feb 2013 4:16:24pm

    A tax on lump-sum withdrawals, and a tax-break if you leave it in to pay a 'pension' for the rest of your life.

    That encourages people to use it as retirement income, but still gives you the option of taking the tax hit if you believe you can make the money work better for you.

  • Maynard :

    22 Feb 2013 4:13:10pm

    You have missed the biggest superannuation rort of all. That is the public superannuation that is unfunded by at least $100Bn, with about $70Bn in the Future Fund at a federal level. I suspect that you could double that for the states.
    Now this superannuation for public employees, especially politicians has never been paid for by anyone yet it is the most generous in Australia/world and remains untaxed. We the taxpayer are expected to pay for it. It is here that treasury could demand billions in an ethical manner and solve the deficit problem overnight. Let's put these politicians and public servants into a fund that most people (working families) have and make them pay tax like the rest of us. Seventy billion could be used immediately to fund Gonski, NDIS, NBN, health, education and welfare, with plenty left over to pay down debt. This is the real crime that can be solved now. Come on Julia do the right thing stop this political rort, you will go down in history.

      • Rae :

        25 Feb 2013 2:52:12pm

        You have been badly misinformed.

        The govt superannuation schemes required the public servant to pay very large amounts of after tax income into them fortnightly.

        The problem was that they only returned 3% throughout the 70s and 80s.

        The managers of the funds were thus to blame for stupidly failing to make enough money.

        I'm waiting for some lively journalist to write a tell all book about the truth of what happened with Commonwealth and State Superannuation Schemes.

  • MACK1 :

    22 Feb 2013 4:10:35pm

    Your fundamental premise is wrong Mike. Namely "The cost to revenue of the concessional treatment of superannuation reached $32 billion this year." This is simply not true.
    The Treasury statemtent actually says: "Tax expenditure estimates will tend to overstate the
    budgetary impact of removing concessions as the estimates do not take account of behavioural responses."
    Any reasonably competent economist can explain to you why this undermines your entire argument.

  • Act Rationally :

    22 Feb 2013 4:09:42pm

    Money that the government "allows" you to keep is not some sort of benevolence from the government. It was your money to start with and the government should be grateful that it can take what it takes.

    Oh, and those that earn more have no obligation to contribute more. Each should pay the same and no more.

  • GC :

    22 Feb 2013 4:02:22pm

    "Tax concessions cost the government $32 Billion"???

    Mike, you need to change that headline to:

    "Tax ripoff to cost Australians a massive extra $32 Billion after new grab from savings!!! Retirees to starve to death."!!!

    There. All fixed.

  • gregk :

    22 Feb 2013 4:01:48pm

    How about a tax rate of 15% on super contributions for a junior/part time employee earning maybe $25,000/year when their income tax rate is around 10% ? So much for looking after people entering the work force.

  • MJLC :

    22 Feb 2013 4:01:33pm

    Campaigning against misinformation, half-truths, blatant fabrications and hypocrisy is one of the noblest contributions someone can make to our society. When it comes from a former pay-cheque recipient at The Australian it's just funny.

    You're somewhat late Mr Steketee - but welcome anyway.

  • wm :

    22 Feb 2013 3:55:50pm

    Well done Mike.

    If Labor had any soul left and was the true party of the workers, this $35B would go straight back into the kitty.

    Super is there to help for retirement and save the government paying unsustainable pensions. The wealthiest 1% clearly do not need any help. They will never draw on the pension regardless of this criminal tax evasion scheme.

    End of story.

  • A Good Australia :

    22 Feb 2013 3:55:03pm

    Good article pointing out what lies ahead with an Abbott debacle..

    You would not have been allowed to write this article in the Australian.

  • Tombowler :

    22 Feb 2013 3:55:00pm

    As has been noted by more erudite men than me,

    Only a hopeless lefty could consider a tax concession free money (or as you say, "government support").

    The manner in which you talk suggests we ought to be damned grateful the Government leaves us any net income, and greedy for feeling entitled to it to boot.

    You use phrases like "generous means test" as though the government is doing me a favour by taking slightly less of my money to waste on servicing loans and paying public servants (like the 8 currently employed full-time in South Australia to find a rental home for a released convict. Buy the chap a weatherboard house and save a few hundred grand eh?)

    My view is net taxpayers, those that make extra super-contributions and retire with large amounts, have contributed a huge amount through income tax, GST, stamp duty etc to the state and federal coffers. The Government ought to stop milking productive members of society at a certain point and, in acknowledgement of the contribution to society, let them keep a bit of their own cash.


  • billie :

    22 Feb 2013 3:54:24pm

    Is it reasonable for self funded retirees to recieve a tax free pension of $125,000 per year or is superannuation supposed to provide a more modest tax free income of say $40,000 per year?

    Should superannuation assets of say $10,000,000 be tax free given that sum must pay a pension of $500,000 per annum

    Should superannuation assets of $1,000,000 be tax free given that it must pay a pension of $50,000 per annum

    What about superannuation assets of $2,500,000 that will pay a pension of $125,000

  • Let's talk policy :

    22 Feb 2013 3:46:29pm

    Thank you, Mike, you've nailed it in one.

    It's amazing that facts are always drowned out by fear campaigns.

    What's more amazing is that so many are convinced by the wealthy vested interests to support their view of fairness.

    The Government has reduced the concessional deduction to $25,000 per annum, as you say. It beggars belief now to think what the cost would be if the Howard $100,000 concessional limit was still law.

    Think about it. John Howard was giving massicve tax deductions to people who could kick in #100,000 a year for deductible super.

      • John :

        25 Feb 2013 1:40:40pm

        Why not just be honest and say that the ALP/Greens' agenda is that 100% of whatever anyone earns actually belongs to the government and the amount they let us keep is a "concession".
        This argument about tax concessions for the rich betrays all the hard work and sacrifice that many many people on average earnings have made during their working lives to save for their own retirement. These same people will not be eligible for public pensions, nor many of the associated health, travel and other social services that others will enjoy. Those who now call these self funded retirees "rich" or "lucky" are merely the ones who have been too lazy to make the kind of choices they needed to fund their own retirements. Every working Australian has the opportunity to save for their retirement over their working lives. Many choose not to. What is your excuse?