Labor has used the change of Liberal party leadership to renew its calls for the federal government to wind back generous superannuation concessions in the interests of equity and genuine taxation reform.
The shadow treasurer Chris Bowen said on Tuesday current superannuation tax concessions were “not equitable and not sustainable”, and he made an overture to the new prime minister, Malcolm Turnbull, saying he could have the capacity to rise above the unsophisticated scare campaigns of the past.
“I believe there is a sensible discussion to be had about tax reform,” Bowen said.
“We have a new prime minister, a new opportunity. Perhaps he can rise above the scare campaign and embrace our policy, our call for this serious tax reform. If he does, it will have our bipartisan support.”
Labor has announced it will move against the generous concessions for high income earners by putting a 15% tax on super earnings worth more than $75,000 a year and taxing super contributions for incomes more than $250,000.
Treasury advice released under freedom of information suggests the government was considering an overhaul of existing superannuation concessions before Labor announced its policy.
But despite a wealth of advice that super concessions are currently highly inequitable and unsustainable, the former prime minister Tony Abbott shut down the debate to create a point of political difference between the government and the opposition.
“This is one of the fundamental differences between the Coalition and the Labor party, we respect people’s savings,” Abbott said after the release of the Labor policy.
“We don’t think that superannuation is government money, we think it’s your money. But Bill Shorten wants to tax your super to fill his $58.6bn budget black hole.”
“He regards your super as his piggy bank to break open whenever he needs money, and I just think that’s dead wrong.”
The government’s tax review advocated an overhaul of super tax breaks on the basis of equity and sustainability. “The flat rate of tax on superannuation contributions means that most high income people receive a larger tax concession, relative to their marginal tax rate, than low income people. The same is true during the accumulation phase and even more so during the retirement phase when there is no tax on earnings,” the review said.
A report by the Association of Superannuation Funds of Australia also found thousands of retirees with more than $2m in their superannuation accounts received more than $5.2bn collectively in tax-free income-stream payments in a single year.
Labor’s policy proposals would raise about $14bn over a decade.
Turnbull is attempting to reset the conversation around the economy and says tax reform will be a “big part of our reform agenda going forward”.
The new treasurer, Scott Morrison, was sworn-in on Monday. Kelly O’Dwyer will have responsible for tax policy in a cabinet-level role as assistant treasurer.
Turnbull on Monday night declined to say whether he was considering using the mid-year economic forecast, due in December, for a mini-budget.
“We’re obviously considering all of our economic responses and it is absolutely critical that we provide strong economic leadership,” Turnbull told the ABC.
“And you know, above all, confidence. It’s not just the measures. If you talk to Glenn Stevens, the Reserve Bank governor ... this is what he says everywhere; he’s certainly said it to me in recent times: that one of the missing ingredients at the moment in our economy is confidence.”
Asked whether he intended to increase the base or the rate of the GST, Turnbull said: “I’m not going to rule things in or rule things out.”
Bowen on Tuesday said Labor remained opposed to a GST increase, and it was “simplistic” to equate tax reform with a rise in the GST.
“Are we really going to increase the GST every time the nation has to deal with bracket creep?” Bowen said.
The shadow treasurer said Labor would have more to say shortly about housing affordability and about the “inexcusable gender gap that exists between men and women in Australia when it comes to retirement incomes”.
“The financial services council has estimated that there is a retirement savings gap of over $330bn for women,” Bowen said.
“Only two in ten single women retiring today have enough savings for a comfortable retirement. Compare this to men, where around five in ten men meet this benchmark.”
“The current concession arrangements actually cost females in the bottom decile over $32,000 or about three years of work over their working life. This is also an area we will have more to say about before the election.”
