Clampdown on superannuation tax concessions could help those with less retirement savings: Industry Super Australia chief Greg Combet

Industry Super Australia head Greg Combet says revenue from clamping down on super tax concessions could be reinvested to help people with far less retirement savings.

Greg Combet warned of the ‘craziness’ that could unfold if Australians are given more flexibility to ­access their super early. Picture: Ian Currie

The head of Industry Super Australia, Greg Combet, says billions of dollars in revenue from clamping down on superannuation tax concessions for wealthy Australians could be reinvested in the system to help people with far less retirement savings, including women and those on low incomes.

The Labor veteran, a former cabinet minister and ACTU ­leader, also said super funds could co-­invest in the Albanese ­government’s signature National Reconstruction Fund, which is struggling to gain enough Senate support to pass parliament, but only if it was in the best financial interests of members.

Jim Chalmers last week reignited a debate over reining in tax concessions for the largest super balances, which could save the budget $1.5bn a year.

Mr Combet acknowledged the government would decide where the revenue went but said it could at least partly go towards addressing inequities in the $3.3 trillion superannuation sector.

“One of them is the way that women are disadvantaged through their working lives,” Mr Combet said. “Obviously for many women, taking time out of the workforce to look after kids means they retire with lower account balances. We’re concerned to see ways to address inequities like that in the system.

Treasurer Jim Chalmers. Picture: Gary Ramage

“There obviously also needs to be more resources put by government into enforcing the payment of super.

“There’s $5bn or so of superannuation contributions that just aren’t paid each year. And a lot of lower-income people are missing out on that.

“That’s just theft. That needs to be tightened right up.”

The suggestion of reinvesting funds from an overhaul of tax concessions to more vulnerable Australians came as Mr Combet backed the government’s proposed legislative objective for super, which is “to preserve ­savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.

He warned of the “craziness” that could unfold if Australians were given more flexibility to ­access their super early, saying the Coalition’s policy to allow first-home buyers to dip into super for a deposit could lead to savings being accessed before retirement to spend at Woolworths or on private health insurance.

“There’ll be no end of ideas for why you should release your super early,” Mr Combet said.

“The purpose has always been in offering a tax concession – taxing the earnings on super at 15 per cent rather than the marginal tax rate. The purpose of that has been to provide an incentive for the preservation of your savings to retirement – not just suddenly have access to it.

“That will fundamentally undermine the system and certainly undermine the purpose of tax concessions for preservation.”

While the Greens are holding out their support for the $15bn NRF, which the Coalition has ­opposed, Mr Combet said the ­government’s proposed investment vehicle could co-invest alongside a super fund in nation-building projects, but only if it was in the best financial interests of members.

“Unless it satisfies that, an appropriate risk-adjusted return, then it won‘t be happening,” Mr Combet said.

“You’ve always got to be careful with a government investment vehicle, that it’s addressing market failures, in my view, where the private sector may not be investing.”

The NRF will provide loans, equity investment and guarantees for modern manufacturing, clean energy, defence and medical projects and technologies.

Assistant Treasurer Stephen Jones said the NRF would look to draw investment from different sources, including superannuation funds, to “help create high quality, sustainable industries and jobs”.

The Treasurer, who is pledging there will be no “major changes” to super, has flagged ambitions to leverage super funds to invest in government-backed, nation-building projects but ­opposition Treasury spokesman Angus Taylor was dismissive of funds co-investing in the NRF.

“This is Australians’ money, not the Labor Party or government’s money and it should be ­invested in the financial interest of those Australians, not according to the priorities of the government,” Mr Taylor said.

Mr Combet declined to nominate an amount at which he believed superannuation balances could be capped but said it was reasonable for the government to consider if tax concessions were being used by high-wealth individuals in line with its proposed objective of ensuring super was equitable and sustainable.

“It’s a very small, finite number of people with extremely high account balances,” Mr Combet said. “Several years ago, there was at least one person who had over $400m in their super account. Why should the earnings on that be taxed at 15 per cent? That’s far in excess of what’s needed for their retirement income. I reckon it’s important that we do discuss that, but discuss it rationally. All the carry on in the last week I think has been quite over the top – ‘the Treasurer wanting to get hands on your super’.

“The way in which it’s been put forward I think it’s quite rational.”

Australian Council of Social Service chief executive Cassandra Goldie said superannuation tax concessions must be reformed to reduce inequality and ensure government assistance was ­targeted to those who needed it most. “Superannuation concessions cost the community an eye-watering $52bn a year – money that could be used to reduce poverty and fund essential public services such as health and aged care,” she said.

Nationals MP Keith Pitt said Australians should be able to spend superannuation on their children, to buy a car or go on a holiday. His comments came after Australian Retirement Trust chief Bernard Reilly backed reforms to prevent retirement savings from being used as an “inheritance for your kids”.