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Super changes would be fairer and repair budget: report

Superannuation will be the sternest of tests for the Turnbull Government.

Superannuation will be the sternest of tests for the Turnbull Government. Photo: AAP

The Federal Government’s plan to wind back superannuation tax breaks would create a fairer superannuation system and contribute to budget repair, according to new analysis by the Grattan Institute.

Grattan chief executive John Daley rejected claims by the superannuation industry that the changes could leave as many as 9 per cent of super account-holders worse off, saying the figure was the result of double counting.

Instead, the institute’s upper estimate was 4.2 per cent, close to the 4 per cent figure which the Government is claiming.

“Claims that the budget changes will affect many low and middle-income earners are wrong,” the institute wrote in The Conversation.

“Our research shows the changes will affect about 4 per cent of superannuants, nearly all of them high-income earners who are unlikely to access the Age Pension.”

The Grattan report shows that either of the reform packages proposed by both major parties would be a big step in the right direction and how the current system provides much larger benefits to those with such ample resources that they will never qualify for an Age Pension.

“At present, someone in the top 1 per cent of income-earners can expect to receive nearly three times as much in welfare and tax breaks from super in their lifetime as an average income-earner,” the Grattan Institute claimed.

“The government’s changes would trim some of these excesses: the top 1 per cent would instead receive just twice as much as low or average income earners.”

The report goes further, claiming that the superannuation changes represent a huge political challenge which, if unsuccessful, could seriously destabilise the Turnbull Government.

“Super is only the first of a number of difficult choices that will come before the Parliament as government seeks to promote economic growth in a sluggish global economy, and bring the budget back under control,” he report states.

“If we cannot get reform in this situation, then our political system is in deep trouble.”

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