29 April 2015

I'm being upfront and honest with the Australian people about Labor's plans for superannuation. We're proposing fair changes that will boost the budget bottom line and reduce reliance on aged pensions while supporting the right of all Australians to dignity and security in retirement.

We continue to support tax concessions for all levels of the superannuation system because Labor has always believed in encouraging Australians to save for retirement, but at the top end the growth in tax concessions and lost revenue is unsustainable and unfair.

How unfair? The recent Financial System Inquiry found that the wealthiest 10 per cent of Australians currently receive 38 per cent of all superannuation tax concessions.

It's ironic the man responsible for this imbalance, Peter Costello, bobbed up in these pages yesterday to criticise Labor's superannuation policy.

Ironic, but hardly surprising. Costello has never been able to admit the short sighted largesse he presided over as treasurer blew a long-term hole in the Australian budget.

Even though Costello took more taxes as a proportion of the economy than any treasurer in a generation he used these rivers of gold to turn superannuation into a tax haven for the wealthy few instead of a means for a comfortable retirement for all of us.

Labor has fair policies, which will address this. Our two proposals are straightforward.

First, right now, retirees with millions of dollars in their superannuation accounts pay no tax on the money they earn in their accounts during the retirement phase. Labor's plan will apply a concessional tax rate of 15 per cent to earnings in the retirement phase of more than $75,000.

Make no mistake, every dollar of interest earned up to $75,000 is still tax free, and the 15 per cent rate is still a very healthy 30-cents-in-the-dollar discount on the top marginal rate.

This change is fair and it is fairly targeted. The Parliamentary Budget Office has calculated it will affect approximately 60,000 account holders, just 0.25 per cent of our population.

By contrast, Tony Abbott's cuts to the age pension hit more than three million Australians with little or no superannuation.

Second, Labor will tighten the tax break on the superannuation contributions of very high income earners.

Our policy will lower the threshold for the 15 per cent High Income Superannuation Charge from $300,000 to $250,000. Together, these changes will raise $14.3 billion over 10 years. When you include our policy to ensure multinational companies pay their fair share of tax in Australia, Labor has already outlined policies that will save more than $20 billion.

Planning for Australia's future demands a commitment to building the world's best retirement savings system.

Yet last year the Abbott government broke its promise and froze superannuation for nearly 11 million Australians - twice. An average income earner, aged 25, will retire with $100,000 less in retirement savings because of the decisions of this government.

If Labor wins the next election the two measures here are the final and only changes we will make to the tax treatment of superannuation. We are determined to offer all Australians certainty in superannuation and security in retirement. This is exactly what our fair and targeted policies will achieve.

Bill Shorten is Leader of the Opposition.

This opinion piece was first published in The Daily Telegraph on Wednesday, 29 April 2015.