Super on election agenda

The Federal Government has turned up the heat on the Labor party to outline how it will pay for $1.4 billion worth of planned superannuation tax cuts, as retirement savings become a key battleground ahead of next month’s election.

At a debate held at the Press Club in Canberra last week, Minister for Revenue and Assistant Treasurer Mal Brough and Shadow Minister for Retirement Incomes and Savings Senator Nick Sherry both attempted to claim the high ground over superannuation policy.

While Sherry insisted that superannuation under the coalition had major “structural” problems, Brough claimed Labor’s proposed tax cuts would lead to a $1.4 billion revenue shortfall.

Brough argued that Labor’s proposal to cut the 15 per cent contributions tax by 2 per cent “provides little benefit to low and middle income earners whose contributions are too small to make a tax cut meaningful”.

He also questioned whether the country could rely on the Labor party not to dip into the superannuation money pot to fund other expenditures.

“If we don’t overcome people’s fears that the money put in super will be there when they retire then they won’t invest in their future,” Brough said.

He said the Government would aim to raise the level of retirement savings through a series of recently introduced policies.

“Choice, portability, disclosure and incentives summarise the four directions the Federal Government wants to go in order to help people build a secure retirement income,” Brough said.

Sherry countered this by revealing that Labor leader Mark Latham and Shadow Treasurer Simon Crean would soon outline how the party would fund its promises.

He also took a shot at the Government’s own retirement policy, which he claimed was based on the simplistic assumption that Australians should work longer.

“Labour recognises that most Australians wish to retire in their early to mid-60s. By contrast, the Liberal policy is that Australians should work longer, and longer, and longer — to age 70 and beyond,” Sherry said.

He also argued the existing super system had a number of structural issues.

“We have a massive structural problem with lost super as there are over 4.5 million lost accounts containing more than $7 billion, while taxation on super has spiralled under a Liberal Government, jumping from $1.6 billion in 1995-96 to a forecast $6.9 billion in 2004-05.”

He also reiterated Labor’s threat to ban exit fees ahead of the choice of fund environment to protect consumers.

Sherry said even if individuals are in a position to invest in their future, the majority of consumers do not have the financial wherewithal to make informed decisions.

“I’m not calling Australians ignorant, it’s the fact that super is very complex and not all the 10 million Australians having money put into super are financially literate to the level of a financial planner,” Sherry said.