Opposition Leader Bill Shorten has offered the government a way through its politically difficult superannuation reform process, with the proposal of a compromise deal.
Speaking at the National Press Club in Canberra, Mr Shorten said he would support Turnbull Government plans to cap lifetime after-tax contributions at $500,000.
But to get around criticism that the Government’s plan to backdate the cap to July 2007 is retrospective, Labor would make the start date Budget night, May 2 2016.
“This means that Australians who invested for their retirement in good faith, based on clear rules no matter how generous, will not be punished after the fact,” Shorten said.
No administrative headaches
“Nor will they be put through the administrative headache of tracing back a decade when the law doesn’t require them to keep these documents.”
To make up the extra revenue, Labor wants to lower the high-income super contribution threshold so that anyone earning over $200,000 a year will pay 30 per cent tax on their contributions, rather than 15 per cent. The current limit is $250,000.
“Together, our measures will improve the Budget over the forward estimates by $238 million and $4.4 billion over the decade, Mr Shorten said.
“In a time of budget pressures, the Government should be closing unsustainably generous high-income loopholes in superannuation; not opening new ones,” Mr Shorten said.
No blank super cheque
Labor will oppose some parts of Government super package outright. It will not allow tax deductions for personal super contributions up to the concessional contribution limit.
It won’t allow those aged between 65 and 74 to make super contributions without passing a work test.
Nor will it allow catch-up provisions on any unused concessional contributions for up to five years for those with less than $500,000 in their fund.
“Despite the merit of some of those propositions, this new spending cannot be a priority, especially when it will set the Budget back $1.5 billion over the forward estimates and $14.7 billion over the next ten years,” Mr Shorten said.
“Labor’s plan will preserve a strong tax incentive for Australians to contribute to their own retirement savings, while also ensuring the whole is sustainable and fair into the future,” he said.
“In that spirit, I spoke briefly to the Prime Minister this morning and will be writing to him, urging him to accept Labor’s measures in the constructive spirit we offer them.”
Senator Cormann not impressed
Finance Minister Mathias Cormann criticised Labor’s deal, labelling it a cash grab.
“What Bill Shorten did today was demonstrate that Labor looks at people’s superannuation as a piggy bank,” he told 7.30.
“He was proposing a revenue raid, he wasn’t proposing reform of superannuation to make it fairer and more sustainable.“