It is hard to believe that the Red Book and bits of the Blue Book have been released under FOI, although it seems that certain bits have been blacked out – eg. the Treasury’s view on the cash-for-clunkers program – no surprise there. (Who makes the decision to get out the black texta, by the way?)
While there have been previous hints about Treasury’s attitude to superannuation, the criticism of self-managed superannuation funds (SMSF) is instructive as “tax minimisaton vehicle of choice”. Channelling Brian Toohey, or is Brian Toohey channelling Treasury, there is a strong view that superannuation is essentially a rort for the rich.
This view has been challenged by one of the members of the Cooper Review, Meg Heffron, noting that the tax breaks on superannuation are deliberate government policy to encourage retirement saving. If someone is to lock up their saving in the form of superannuation who is, say, 35 years of age, and cannot access these funds until the age of 60 or whatever the age the government prescribes, incentives are required.
In this context, the work of David Knox from Mercer Australia is particularly important.
The research shows that those with higher incomes … do receive a higher level of superannuation tax concessions than low income earners – but they are also likely to receive a lower level of government funded aged pension. What is interesting is the overall cost to the government is rougly the same, regardless of whether the funding is weighted towards tax concessions for a higher income earner or providing the aged pension to a person who needs to top u ptheir income in retirement.
Looking at Knox’s figures, what is apparent is that for middle income earners, saving in the form of superanuuation (compulsory and voluntary) looks like a bit of zero-sum game – just knocking off part-entitlement to the aged pension.