The Federal Treasurer has confirmed that the May Budget will contain key changes to superannuation tax concessions reflecting concerns that superannuation has become an estate planning device.
The Treasurer has used an address to an economic conference in Melbourne to reiterate the Government's concerns on superannuation and to expand on the position he outlined to last month's SMSF Association annual conference in Melbourne.
However the Financial Services Council (FSC) has already hit back with its chief executive, Sally Loane arguing that the Government is over-reacting and the only a handful of Australians have multi-million dollar account balances.
Morrison noted that the Government had successfully legislated the first phase of its reforms to retirement incomes with changes to the pension assets test.
He said the changes put in place by the Howard Government were unsustainable in today's economic environment.
"These changes were based on the simple principle that the pension is a welfare payment for those who are not in a position to support themselves independently in retirement," he said. "After the changes of leadership last year, in September, we embarked on the second phase of retirement incomes review which addressing the various incentives and arrangements associated with superannuation and Jennifer will remember at the time that was a key argument and discussion that was happening with BCA and ACOSS and COTA and other groups that wanted to see the entire retirement income systems, for us to have a good look at that."
"That is what we have done, post September. We have opened up that other area of retirement incomes to this process. The outcome of this process will be announced in this year's Budget, at the latest, and will be designed to reflect our clear statement or purpose that will be enshrined in legislation as recommended by the Murray Review. This is currently proposed to provide income in retirement to substitute or supplement the age pension. I think it's a very clear and very concise statement of purpose," Morrison said.
"This draft statement will be finalised following the completion of our consultative process over the next few weeks. The point is that any changes that we make to superannuation will be about that purpose and making it fit for that purpose. Any and every change should be assessed against that purpose. How tax incentives are structured will no doubt form part of these changes but the changes will be about delivering a fairer and more sustainable retirement income system for our 21st century economy building on the pension reforms in last year's Budget."
It's not about revenue raising. It is not about higher taxes to fund higher spending. It's about a better retirement incomes system.