KATHRYN ROBINSON:
Superannuation tax concessions worth up to $48 billion to the budget bottom line are in the government’s sights. But it’s not yet clear what exactly will be targeted. Caps on super fund balances will be in the spotlight according to Assistant Treasurer Stephen Jones. But before any decisions are made, the objective of superannuation must be worked out.
STEPHEN JONES:
Look, we’re starting from the position of defining the objective of superannuation, because that’s where any sensible policy must start. What are we trying to do here? And if we can get a legislated objective of superannuation, hopefully we can get everyone on the same page that says "this is about retirement savings". It then begs the question – at some point when you’re getting in the tens of millions of dollars in a superannuation account, you’ve got to say this is probably not about retirement savings; it’s about estate management or tax management, and that’s not what super is set up to do.
ROBINSON:
So what do you think the objective of superannuation should be? Is it for wealth transfer or income in retirement to take pressure off the Budget?
JONES:
Well, it’s supposed to be about putting money away each week to ensure that you have money for retirement, retirement income for a dignified and secure and safe retirement, either replacing or supplementing the pension. And for the majority of Australians who are retiring with somewhere between 140 and $180,000 in their retirement savings – they’re the median figures by the way – that objective is being met – tax‑preferred saving mechanism. But once you’ve got – I think there’s about 30‑odd funds with more than a 100 million in them. I think the top one is 400 million. Nobody can seriously argue that a fund with $400 million in it is about retirement savings. It’s about something else, and, sure, that’s fine, but the taxpayers shouldn’t be subsidising that through a preferred tax system.
ROBINSON:
Well, super tax breaks for the wealthy is estimated to be costing the Budget around $48 billion. How much do you think is reasonable to claw back in super tax concessions to make the system more fair and scale back money to mend the Budget bottom line?
JONES:
Well, that’s why the conversation has got to be had. And we know at the ridiculous outer limit what it’s not – it’s not 400 million. It’s not 100 million. We know that that is actually not what super is all about. I think we’ll have a conversation where ‑ around which more modest balances can be looked at and said, “Well, okay, that’s well within the range of what’s acceptable for us to be subsidising through preferred tax arrangements.” It’s not 10 million either – somewhere south of that is probably what we’re looking about. But, frankly, let’s get the objective settled first. I want to make an important point ‑ this is not about saying people can’t or shouldn’t save for their retirement. It’s about saying how much should we be subsidising through the Budget, through tax‑preferred arrangements, something that is for retirement purposes?
ROBINSON:
So what, then, is an acceptable limit on super balances? The Association of Super Funds Australia supports a 5 million limit; the Grattan Institute is in favour of a $2 million cap. I mean, how much is enough? What do you think the cap on super balances should be?
JONES:
Yeah, look, we’re not going to rush to conclusions. And it’s reasonable for you to want to know the answer to that question now. But we’ve set out a process. First we’ll talk about the objectives of superannuation. And once we get that nailed down through a legislative objective which has many other benefits as well, we can then have sensible policy discussions about where the maximum amount of tax‑preferred savings or tax‑beneficial savings should be in the superannuation system and where people can quite rightly put those savings or those investments in other investment arrangements.
ROBINSON:
So would Labor consider bringing the family home into the pension asset test?
JONES:
Not on the table. Not something that we’re considering. I’m 100 per cent focused on what we need to do around the objective of super and all the things that follow from that at the moment.
ROBINSON:
So you’re comfortable with retirees living in multimillion‑dollar homes qualifying for a similar aged pension to other pensioners who are renting and struggling to pay the bills?
JONES:
I think there’s something sacred about the family home. And you can understand if this is a place where you’ve lived in your entire life and through no action of your own apart from maintenance and upkeep the suburb that you have lived in has gone from being a very modest home and a very modest home value to something 3, 4, 5 times its value, I think any government would want to be very cautious about whacking pensioners/retirees because of those impacts which are way beyond their control.
ROBINSON:
Stephen Jones, thank you.
JONES:
Good to be with you.