Ross Greenwood: super tax increase exposes inequity of $3.3 trillion system and hypocrisy of politicians

The government claims the super tax increase is fair. In truth, it just highlights the inequity of our $3.3 trillion system – and the hypocrisy of politicians, writes Ross Greenwood.

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It’s only a rort if you’re not in on it. The Treasurer claims the increase in tax on superannuation is being done in the name of fairness.

In truth, all it does is highlight the inequity of our $3.3 trillion super system – and the hypocrisy of politicians.

So let’s compare the pair.

First: A former senior politician in the old defined benefits fund has a retirement pension, for life. The biggest will be on more than $400,000 a year … $106,250 completely tax-free.

To create this income stream, an ordinary worker would ­require way more than $3 million in super – and be subject to this new tax.

All smiles.... Prime Minister Anthony Albanese and Treasurer Jim Chalmers in Canberra on Tuesday. Picture: NCA NewsWire / Martin Ollman

Meantime, the politician (or judge, or public servant) has created a new job for themselves and is building a new nest of superannuation alongside their pension.

Fair or not?

Second: Under the Treasurer’s plan, one family has a spouse with an account balance of more than $3 million. They will pay the new extra tax. Their partner, though, has a small account balance.

Ross Greenwood says the government’s new tax is unfair.

Another family has two partners, each with $2.9 million in their fund, so $5.8 million total in super. They are not slugged the new tax.

Third: One person has chosen to boost their super to above $3 million but does not own a home. They will pay the new tax.

Another person has a home worth $3 million – but little or no super. This family will, of course, not pay the new tax, and is likely to even qualify for the Government’s age pension. Fair, or not?

So if the Government is to maintain confidence in the super system – as the Prime Minister and Treasurer are adamant is their aim – then such inequities have to be ironed out – fast.

Originally published as Ross Greenwood: super tax increase exposes inequity of $3.3 trillion system and hypocrisy of politicians