Superannuation savings a small drop in the ocean: Ben Spies-Butcher

The Labor Government’s proposed changes are a small step in the right direction of reforming support for superannuation. Following increased public debate and scrutiny over the large deductions offered to high income earners it is good to see some action.

But it is only a first step. The changes do not change the inequitable tax rates on super that give the most to those on high incomes. Instead the changes simply limit the amount of additional money people can claim a deduction on. Those over 50 who can afford it will still be able to salary sacrifice $50,000 a year into super – more than many full time workers earn in total.

Even this change highlights just how unfair the current system is. Sydney’s Daily Telegraph reports that the change will effect less than 2% of Australians with an average income of over $200,000 a year. That gives you an idea of who is currently taking advantage of the worst aspects of the current laws.

But real problems remain. Saving less than $700 million, this change is a small drop in the ocean of the tens of billions of dollars of tax concessions currently handed out. Let us hope that when the Henry Tax Review comes down this proves the first step in a broader, more genuine reform process.