Plenty of superannuation promises are being thrown around by both sides of politics, but if history is any guide, the biggest promise of all is unlikely to be kept.
Both sides of government have a history of promising they will not make adverse changes to superannuation. However, there’s a fundamental flaw in this track record: the purpose of superannuation isn’t enshrined in law, so each party’s definition of “adverse” is different.
In 2014, a major inquiry into financial services recommended the definition of super be legislated, and the Turnbull government introduced a bill to that effect. It got stuck in the Senate, and hasn’t seen the light of day since 2016.
So, here we are again. The federal election is a month away. Both sides of government are saying they’ll make superannuation better for Australian investors, but without bipartisan support, this simply means Australians aren’t protected from confusion and unpredictability in the superannuation environment.
Already, the promises of the major parties don’t stack up. The federal election is now a month away, and the major parties are again promising that, this time, Australians can expect a more stable superannuation environment. However, there is a line-up of changes waiting in the wings.
The Liberal Party
The Morrison government has issued a guarantee that his party will not implement new taxes on superannuation. At this stage, there is no time frame for how long this guarantee will last in the Liberal Party’s statement.
It’s important to note that when Scott Morrison was federal treasurer in 2016, he introduced the biggest round of changes to superannuation since the era of Howard and Costello. This includes the $1.6 million transfer balance cap. Mr Morrison also moved to introduce a lifetime cap on contributions of $500,000 for non-concessional contributions, which never eventuated.
The Morrison government will again move to have six-member self-managed superannuation funds (SMSFs) legislated, despite the proposal being removed from a bill introduced earlier this year.
The Labor Party
This week, Opposition Leader Bill Shorten said only what has been announced by the Labor Party will be in the pipeline for superannuation if he’s elected to government.
Changes to the division 293 tax threshold, at which high-income earners pay an additional 15 per cent tax on concessional contributions, would also be lowered from $250,000 to $200,000 under Labor.
Labor is also proposing lowering the non-concessional contribution caps and removing the provision for catch-up contributions.
Mr Shorten disputed claims that these measures constitute an increase in taxes.
“I do dispute it as a tax increase. I absolutely do. What happens when you give a concession to someone is that’s a tax expenditure. If I was to give you a concession on something, that is money that we take out of the tax system, which you get,” Mr Shorten said.
“That is a concession to you. And that, therefore, becomes a choice. Is it the best use of a concession to give someone a concession, preferential treatment on one aspect of superannuation? Or to invest in other parts of our nation’s priorities?”
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