ACOSS: Super changes must deliver for 3.4 million people on low incomes
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ACOSS has released a new proposal, building on the government’s superannuation reforms, to deliver better retirement incomes for 3.4 million people on low and modest incomes while strengthening federal revenue.
ACOSS CEO Cassandra Goldie argued that the government should hold the line on its proposed curbs on tax breaks for superannuation for people on the highest incomes.
“These are modest changes. After they are introduced, the average level of government support for retirement incomes (tax breaks and pensions) for the top 1 per cent of wage earners will only fall from $850,000 to $650,000 over their lifetime. Support for those in the lowest 10 per cent is estimated by treasury to be just over $300,000,” Goldie said.
“We urge the government to take a step further and improve support for saving by people with low incomes by doubling the proposed tax offset for people with low incomes (LISTO). This would bring a much better balance to the taxing of superannuation so that tax concessions for superannuation are better targeted to the core purpose of superannuation.
“Under the present system, a person earning $200,000 saves 34 cents per dollar contributed to super but a worker on $20,000 or less receives no tax break at all. Our proposal would go some way to fixing this inequity.”
Goldie said this would ensure scarce government resources are directed at achieving the core purpose of superannuation – delivering decent retirement incomes for people who will otherwise rely mainly on the Age Pension.
“It will improve equity and it will put the Federal Budget on a more sustainable footing for the future. This is hands down the best policy outcome for Australia,” she said.
“This should be paid for by not proceeding with three of the government’s changes to super that would cost $1.5 million and create even more generous tax breaks for people with high incomes. Instead of further reducing tax for people with high incomes, the system should redirect support towards those on low incomes, 60 per cent of whom are women.”
Goldie said in contrast, the government’s three new tax breaks would disproportionately benefit high income-earners who are unlikely to receive a pension in the first place. For example, only 51,000 women earning less than $79,000 a year could benefit from the ‘catch up’ proposal compared to 153,000 men earning more than $79,000 a year.
“The government’s reform proposals go a long way to curb poorly targeted tax breaks for people with very high incomes. They should do more for people on low incomes who are very poorly served by the present superannuation system,” she said.
ACOSS has provided the briefing paper to the Government, Labor and the Greens.
