Next month’s federal budget will hit the generous superannuation tax breaks received by the very richest Australians.
The target will be the highest one to two per cent of earners, with the government arguing that the cutback is necessary to keep superannuation concessions sustainable over the longer term.
In 2009-10 the top one per cent of income earners received nine per cent - about $2 billion - of the total value of super concessions.
The average concession on super contributions received by the top one per cent of earners was $8600. This was seven times the tax concession received by an average Australian, which was $1200.
Minister for Financial Services and Superannuation Bill Shorten emphasised that changes were not just a savings exercise.
The budget’s needs were not driving the government’s superannuation reforms - rather they were being driven by the issue of sustainability, he said.
“Our superannuation system needs to be consistent and needs to be sustainable.”
“That is what I have been talking to the industry about during this reform process,” and would be the question focused on at a superannuation round table in Melbourne tomorrow, Shorten said.
The majority of working Australians are retiring with lump sums of just under $40,000. The average balance in super is just over $150,000 for men and $90,000 for women.
In 2009-10 the bottom 30 per cent of income earners received just 1.2 per cent of the value of super tax concessions.
The row over superannuation is dominating the pre-budget debate, with former minister Simon Crean repeatedly warning against the government hitting this area.
Crean said that “the sooner the government spelt out its intentions, the better. People need certainty, especially when it comes to retirement incomes.”
He said the system needed to be made more sustainable but again warned against any retrospectivity in what the government might do.
Opposition leader Tony Abbott continued his attack on the government over its super plans.
“Why should anyone trust a government that is raiding your savings to fund its spending? That is what this government is proposing to do,” he said.
Abbott said that the government’s proposed action was against everything the Hawke-Keating government did and against everything the Howard-Costello government did.
“It’s just a complete attack on a superannuation system which has grown up over the years and which is not perfect but which is probably just about the best retirement system in the world,” he said.
He said the money going into superannuation was “the people’s money - it’s not the government’s money. And that’s why I say to the government ‘hands off people’s savings’”.