The 'super wars' are heating up, and Labor is well on its way of confiscating more of your superannuation nest egg by taxing it at a higher rate, or forcing you to withdraw it from your super altogether, but there will be unintended consequences.
Remember the Treasurer's Orwellian double-speak? "When I think about how best we can use the budget to support Australians towards a better retirement — one fact stands out. Right now, we’re on track to spend more on super tax concessions than the age pension by around 2050. 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."
Super tax concessions are not spent money. It's the people’s money which has not yet been taken away by the government. Welfare and keeping your own money are two completely different things. And why does the greater 'spending' on super than the age pension in 2050 mean super is unsustainable? Wasn’t the whole point of super that it lightened the load on the age pension by encouraging people to take responsibility for their own retirement? Isn’t the huge super system relative to the age pension a sign that the policy worked rather than failed? It certainly isn’t a sign that the super system is unsustainable. How can a retirement savings system be unsustainable by being too big? It can only be unsustainable by being too small. Perhaps the Treasurer means that his budget is unsustainable without a raid on superannuation funds?
You may not be as rich as Packer or be able to employ as many tax lawyers and accountants to minimise your tax as he does, but you don't need to be an Einstein to know where to put all that ex-super money: back into real estate, either into more investment properties cleverly structured to take advantage of negative gearing, or by upgrading into an ever-bigger home which is exempt from both capital gains tax and the pension's assets test, to become one of those "poor" age-pensioners who live on the government pension in a multi-million-dollar mansion.
Kerry Packer, we're hearing you!
P.S. See also Labor's shell game.
