Treasurer Jim Chalmers has queried the long-term cost of superannuation tax breaks, which is on track to exceed the aged pension by 2050.

Dr Chalmers has taken aim at the tax concessions as part of his government’s work to enshrine the definition of superannuation in law, unveiled on Monday.

He said the tax concessions were at odds with the government’s goal of repairing the budget and a functional super system.

“I’m not convinced that’s a sustainable way to get to our destination – good retirement incomes for more Australians, now and into the future,” he said at a superannuation event.

Dr Chalmers said locking down the new objective for super was the priority but reforming super concessions should be on the table.

Tax breaks on super were introduced to encourage more people to save super rather than rely on the pension.

However, critics say the existing rules are being used by wealthy individuals to minimise tax.

Concessions include a lower 15 per cent tax rate on super earnings during the accumulation phase, allowing high-income earners to put money into their super funds and get taxed less than the 45 per cent marginal rate they would otherwise pay.

Retirees also don’t tend to pay tax on the income from their super fund, with some exceptions, and leftover super balances are passed on to children or other beneficiaries tax-free.

Australians have about $3.3 trillion invested in superannuation. Legislating what the money can be used for was one of Labor’s promises ahead of the 2022 election.

Assistant Treasurer Stephen Jones first floated the possibility of overhauling tax concessions on super in November.

“If the objective of super is to provide a tax-preferred means for estate planning, you could say it is doing its job,” he said.

The Albanese government is also looking at ways to block the early release of retirement money.

Australians pulled out about $36 billion from their retirement funds during the pandemic. Industry analysis from August 2022 suggested that about a million people cleaned out their entire retirement savings.

Dr Chalmers said the early withdrawal of billions was a “disastrous policy” from the former Coalition government.

The Coalition policy was intended to give a financial buffer to those impacted by COVID-19 shutdowns.

Opposition financial services spokesman Stuart Robert defended the Coalition’s early access superannuation policies, including its election promise to allow first-home buyers to invest some of their super into their first home.

“What can be more dignified than an individual Australian owning their own house?” he said on Monday.

“Frankly, what can be more undignified than a super fund using your money to buy a house that you have to rent,” he said, referring to the government’s efforts to funnel superannuation into national priorities, such as housing projects.

Nationals MP Barnaby Joyce said the former government’s decision to allow early access to funds was intended to give people access to “their money”.

“They want to buy their own house, a lot of people want their own business … Superannuation is a great program, but I don’t think you should rule out letting people have access to their own money,” he told Seven’s Sunrise.

Independent senator Jacqui Lambie said restricting superannuation access was unhelpful as Australia headed into troubling economic times.

She said people should be able to tap into their super in the event of a financial or health emergency and said she would have lost her own house had she not accessed her super during a period of hardship.

“I would have lost my house, I would have been so much further behind and my sons would not have had a roof over their heads,” she told Sky News on Monday.

The Association of Superannuation Funds of Australia welcomed the proposed super objective as “the next chapter in the Australian superannuation story”.

ASFA chief executive Martin Fahy said the proposed objective placed preservation, retirement income, equity, sustainability and a dignified retirement at the heart of superannuation policy.

“The government has proposed an objective that can underpin much-needed policy stability and help anchor future policy debates in ensuring our age pension remains affordable, that superannuation savings are preserved to retirement and that the system delivers in an equitable manner for women and low-income earners,” Dr Fahy said.

The New Daily is owned by Industry Super Holdings

-with AAP