Tax cuts still needed

The Federal Government has a lot more work to do on superannuation policy if it is to win the plaudits of the superannuation industry, according to the latest IUS/Super Review Super Outlook survey.

While the survey found most respondents believed the Government’s policy changes had made at least some improvement, it also made clear that further work was needed, particularly with respect to reforming the taxation regime as it impacts the industry.

Surprisingly, the industry was less than convinced about the need to increase the superannuation guarantee to 15 per cent, despite the measure remaining at the forefront of both union and industry fund agendas.

While the Federal Government has signalled it has gone about as far as it is prepared to go with respect to reworking the superannuation tax regime, the industry is sending a very different signal, with close to 100 per cent of respondents making it clear that a reduction in tax scales should be a priority.

Asked to nominate the importance of policy issues that might be under consideration by the Federal Government, reducing tax emerged as the priority, with 87.2 per cent of respondents saying it was of either large or major importance, while a further 12.8 per cent said it was of moderate importance.

The second priority issue for the Government to consider was extending the superannuation co-contribution regime, with 94.9 per cent of respondents saying it was of moderate to major importance, while providing greater incentives to savings was regarded as almost equally important.

Increasing the superannuation guarantee to 15 per cent was regarded as being of large or major importance by 52.8 per cent of respondents, with 33.3 per cent saying it was of moderate importance and 8.3 per cent saying such a measure was of small importance. Just 5.6 per cent of respondents said it was of no importance.

The findings of the IUS/Super Review survey coincide with the central thrust of the pre-Budget submission filed with Treasury by the Association of Superannuation Funds of Australia in December, which called for a reduction in the superannuation tax regime and an extension of the co-contribution regime.