Government wants super definition to prevent future bad decisions

Anthony Albanese says there are no plans for a major overhaul of the super system as changes are being considered to stop “bad decisions”.

Anthony Albanese says no major changes are planned for the superannuation system and ordinary Australians won’t be worse off after the government’s review into it.

“We remain the party that’s absolutely committed to universal superannuation and to the system ... and that we also will be always about protecting people,” the Prime Minister told the National Press Club on Wednesday.

“We said during the election campaign that we did not intend to make big changes to superannuation and we don’t.”

Treasurer Jim Chalmers on Monday announced an intention to define the objective of superannuation, which when adopted would ensure all future policies were measured by the same yardstick.

But the government has said in starting the debate on the future of superannuation, there is also a need to assess the tax breaks on super.

The opposition has attacked the goverment, saying it’s going back on commitments it made in the lead-up to last May’s election that it would not make any changes to the system.

Anthony Albanese has again promised no major changes to super in his first address of the year to the National Press Club. Picture: NCA NewsWire / Gary Ramage

Financial Services Minister Stephen Jones said defining the purpose of superannuation was critical in avoiding future “disastrous decisions”, such as allowing millions of Australians access to $36bn of retirement savings early.

Dr Chalmers and Mr Jones have said the former government’s Covid-19 policy of early access to their retirement income was bad governance and would be felt “in the decades to come”.

“Every 10 years we get a cycle of ideas about things we could use people’s superannuation savings for that have got nothing to do with retirement income,” Mr Jons he told ABC News.

“One of the reasons we have this cycle of mad-cap ideas is we haven’t … (got) a legislated objective.”

Former prime minister Scott Morrison and his treasurer Josh Frydenberg gave Australians early access to their super during the early days of the Covid-19 pandemic. Picture: NCA NewsWire / Martin Ollman

Dr Chalmers said the government hadn’t changed its position, but the budget needed balancing and now was the right time for a “national conversation”.

“As part of what I acknowledged earlier in the week, these concessions in the superannuation system are not cheap,” he told ABC Radio.

“I don’t think it’s especially controversial to acknowledge that, and when you believe in superannuation and its capacity to deliver a dignified retirement for people, then you need to make sure that these kinds of tax concessions are sustainable and affordable into the future.”

Super tax breaks were first introduced as a way of encouraging workers to save super rather than rely on the pension. The concessions are now costing the budget more each year than the aged pension.

Treasurer Jim Chalmers says he wants there to be a national conversation about the sustainability of the superannuation system. Picture NCA NewsWire / Aaron Francis

After being asked multiple times, Dr Chalmers finally conceded the government had not yet determined if there would be any change to super tax concessions in the May budget.

“When you believe in super and there’s an important role for these tax concessions, you need to make sure that you can afford them against all of the other pressures on the budget,” he said.

About two-thirds of the $50bn in annual concessions go to the top 20 per cent of income earners.

One idea being floated is removing tax concessions for super balances over $3m, while another proposal is to lower the cap on concessional super contributions.

Dr Chalmers said the average balance of super was about $150,000 and less than 1 per cent of people in the system had balances higher than $3m.

“The average among that group is $5.8m and they have access to a whole bunch of tax concessions … the point we’re making is we’ve got to work out where we get the most value for money when it comes to some of these concessions,” he said.

The government wants a legislated objective of super. Picture: NCA NewsWire / Martin Ollman

Mr Jones said the government was looking at what was a “reasonable amount” of money for a retirement income.

“This is not about the government saying to people they can’t save more than $5m, $10m, $100m for their retirement,” he told ABC News.

“We’re saying what is a reasonable contribution that the Australian taxpayer, through the budget, should be making to assist people to save for retirement incomes.”

Financial Services Minister Stephen Jones said the government was assessing what was a ‘reasonable amount’ of retirement income to benefit from tax concessions. Picture: NCA NewsWire / Gary Ramage

Shadow treasurer Angus Taylor has slammed the government for going back on its promise to “not play with super” but said any change needed to be made carefully.

“Any change to super needs to be treated with great caution,” he said.

“People have got to have confidence in the system, and change risks undermining the competence that Australians have in the system.”