With the ongoing uncertainty the world finds itself in, it is increasingly evident that governments – and more pertinently our Australian government – are looking at how best to repair budgets severely dented by Covid-19 and, more recently, rising prices and interest rates driven at least partly by the Ukrainian crisis.
When addressing the unenviable challenge of budget repair stretched to its limits by all the stimulus handouts over the past three years, it is clear from recent utterances by our Treasurer, Jim Chalmers, that the Federal Government has its eyes on the easy target of superannuation.
There’s talk of the Federal Government lifting the concessional tax rate applied to future earnings for balances over $3 million to 30 per cent.
And Treasurer Chalmers hasn’t shied from the real motive behind it, having been quoted as saying:
“…this change that we are proposing is not about redirecting it to another purpose. It is about improving the structural position of the Budget.”
That’s hardly surprising, if concerning.
After all, the Association of Superannuation Funds (ASFA) tells us that the superannuation assets in Australia as of September 2022 was $3.3 trillion. To put that into context Australia’s Gross Domestic Product (GDP) in 2021 was $2.35 trillion in today’s money.
No wonder superannuation has recently been referred to as ‘the honey’, with Government in control of ‘the hive’.
Superannuation is our largest asset outside the family home, albeit one we cannot touch until the later years of life. And it is for this reason that we don’t hold it as close to our hearts as property, and why it is an easier target to reform.
Adding to the fiscal conundrum facing the country is a sizeable demographic shift characterised by an ageing population and declining birth rates. The result is fewer people in the workforce with each passing year – and that, in turn, creates a tax crunch, with a dwindling pool of taxpayers and their financial contributions struggling to fund our country’s current and future spending needs.
But the message needs to be unequivocal: leave our super alone.
Superannuation remains the most tax-effective environment to accumulate wealth for retirement, it will continue to be heavily supported and so it should be. However, it is the constant changes, tinkering and more to come that creates uncertainty.
When you have worked most of your life to build a nest egg for retirement only to find what you thought would be your financial comfort in your autumn and winter years is no longer the case, how do you sleep comfortably at night?
