Superannuation tax breaks for the rich are back on the agenda after the head of the Government’s Financial Services Inquiry (FSI), David Murray, urged the new Prime Minister to rethink his predecessor’s stance. The current framework for super tax concessions favours the rich, with Mr Murray labelling the existing scheme “particularly harmful” to low income earners. Superannuation tax concessions cost the Government close to $35 billion a year, and this amount is expected to continue increasing.
The Financial Services Inquiry has called for a full review of retirement income policy, including Age Pension, tax, superannuation and other welfare policies. The change in federal leadership has delayed a cabinet meeting that would have approved the government’s response to the inquiry. Mr Abbott and Mr Hockey both publically promised “no adverse or unexpected changes to superannuation” even before receiving the findings of the inquiry.
“In order to deliver value to the Australians in the superannuation system, policymakers will have to come to grips with the fact it doesn’t deliver the value it should, given the vast amount of money people are putting into it via contributions and as taxpayers,” said Mr Murray.
“By reforming superannuation tax concessions for the wealthy, the Turnbull Government could deliver a fairer system and save billions of dollars,” said Australian Council of Trade Unions president Ged Kearney.
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Under Tony Abbott’s leadership, Australians were left to wonder why money was being spent on Financial Services Inquiry when the Prime Minister and Treasurer were steadfastly stating that any recommendations from the inquiry would have no bearing on their superannuation system stance.
The FSI white paper was created to provide the Government with a list of recommendations that aim to improve Australia’s financial system. More importantly for the Turnbull Government, it provides a framework for change to take to the next election. The timing of the leadership change couldn’t have been any better for lower income earners, as the cabinet was expected to meet last week to sign off on the Abbott Government’s response, which has now been delayed.
Prime Minister Turnbull comes across as an extremely smart and financially savvy man, so let’s hope he heeds the call of the Financial Services Inquiry head David Murray before releasing the new government’s official response.
What do you think? Should the Government consider significant changes to the current retirement income policy? Specifically, should the generous tax concessions on the superannuation of wealthy Australians be wound back? Is Prime Minister Turnbull the man to make this happen?