Government bows to the big end of town on super

The federal government has dropped a plan to place a $500,000 lifetime cap on after-tax superannuation contributions made since 2007. The backdown ensures that the rich will maintain another loophole to minimise their income tax payments.

Combined Pensioners and Superannuants Association policy coordinator Paul Versteege said: “The government has caved in to the super rich by abandoning the $500,000 lifetime cap on after-tax contributions … After-tax contributions must stop once people have $1.6 million in their super, but this is virtually meaningless, as only 1 percent have that much”.

Changes to superannuation were unveiled in September after a deal with the ALP to get them through the parliament. The super industry, which has grown to a financial behemoth since the introduction of compulsory contributions in the early 1990s, unsurprisingly welcomed them as a “workable compromise”.

The package is being marketed as a measure to make the system more sustainable and reduce tax rorting. But if there were any doubts about who will really benefit, the front page of the Australian Financial Review surely put them to bed. The headlines read: “GAME ON! How to exploit the new super rules” and “Wealthy to dump billions into super”.

Currently, tax concessions to the value of $18 billion per year are claimed by the richest 20 percent of income earners. Economist Richard Denniss told ABC News that the latest changes will not make much difference: “The idea we are having a debate about being able to contribute almost double average weekly earnings into super in a year shows how far the debate has strayed from the lives of ordinary Australians”.