If, as is being widely speculated, the Federal Government uses the Federal Budget to once again alter the tax setting around Australia’s superannuation system, the Australian Labor Party (ALP) will have arguably forfeited the right to call itself the “party of superannuation”.
The ALP’s right to claim ownership of Australia’s world-leading superannuation regime is owed in large part to the efforts of former Prime Minister and Treasurer Paul Keating, and to the efforts of those leading the Australian Council of Trade Unions at the time – particularly Bill Kelty.
However, in less than two full terms of government, the Gillard Government has managed to erode the party’s standing as a sound policy maker where superannuation is concerned by tinkering with concessional contribution caps and excess contributions, together with a couple of more minor tweaks.
It is true that the Gillard Government has also set in motion the machinery necessary to lift the superannuation guarantee from the current 9 per cent to 12 per cent, but in doing so, it has effectively transformed what has always been a non-wage benefit into an appendage to the controversial minerals resources rent tax.
It is in these circumstances that the major organisations representing the superannuation industry, the Financial Services Council, the Australian Institute of Superannuation Trustees, the Association of Superannuation Funds of Australia and the Self-Managed Super Fund Professionals' Association were right to last week unite to condemn any further tinkering with the super regime.
They were right to do so, not only because such tinkering fundamentally undermines investor confidence in superannuation, but because such tinkering is taking place as part of the Government’s almost Quixotic quest to return the Budget to surplus in line with a promise premised more on attempting to build political capital than any critical economic necessity.
What is more, the Government’s tinkering with superannuation in the Budget needs to be viewed against the background of the fundamental changes inherent in its Stronger Super policy approach and the reality that three consecutive intergenerational reports have reinforced the need for Australians to reduce pressure on forward budgets by becoming more self-sufficient in retirement.
Of course, no-one should be particularly surprised by the Government looking to Australia’s superannuation regime to fund election promises – looked at from a narrow, entirely political perspective it represents a honey pot which must be almost thoroughly irresistible to any government long on promises and short on resources.
Instead of further tinkering with superannuation in next week’s Budget, the Government and its Treasury advisers would better serve the Australian community by properly fixing the excess contributions regime and by focusing on what matters rather than on narrow political agendas.
