12.00am June 29 2016
David Uren – Economics Editor
Labor’s plan to shelve its own superannuation policy while booking savings from the Coalition’s proposal would face difficulties with Treasury if it were elected, and might also be rejected by the Parliamentary Budget Office.
Costing guidelines and budget practice require policy be spelt out in detail before it is included in budget estimates.
Former deputy secretary in the Department of Finance, Stephen Bartos, said Treasury and Finance would have difficulty incorporating savings from the Coalition’s superannuation plan if a newly elected Labor government put it up for review.
“Unless they have a plan they haven’t revealed to do something equivalent, I think that they are in a difficult spot,” he said. “If things are put up for review and not formal policy decisions, then they have to be taken out of the estimates and that would make the estimates worse.”
At the National Press Club yesterday, Bill Shorten emphasised his concern with the claimed retrospectivity in the Coalition’s plan to cap non-concessional contributions to superannuation at $500,000, backdated to 2007, but was unable to say how a Labor government would deal with a funding shortfall if it decided not to go ahead with that.
“I think that the mess that this government’s thrown the whole superannuation system into can be best resolved when Labor forms a government and we talk to people.”
Labor Treasury spokesman Chris Bowen and superannuation spokesman Jim Chalmers have said a Labor government would conduct a review in the second half of this year to report in early 2017, for next year’s budget preparation.
However, Mr Bowen has also promised to bring forward the traditional end of year budget review to September, which would force Labor to crystallise its budget position on the Coalition’s budget proposals.
An added difficulty is that the proposal to which Labor objects most strongly — the cap on non-concessional contributions — actually took effect on budget night, May 3. Excess contributions after that date have to be withdrawn or incur penalty tax.
Deferring the measure would invite wealthy superannuation fund members to maximise contributions before it took effect.
The uncertainty left by Labor’s superannuation retreat is drawing fire from self-managed superannuation funds, with a lobby group saying people needs to know how Labor would affect retirement savings before voting.
“The government estimated its superannuation measures in the budget would result in a net gain to revenue of $2.9 billion. Labor is now proposing to tax superannuation savings to the same extent but is not saying how this will be done,” said executive director of the SMSF Owners Alliance, Duncan Fairweather.
Mr Bowen said he believed the superannuation sector would sit down with a Labor government to come up with a solution “quickly”, to ease the uncertainty.
Whether Labor wins or not, the Parliamentary Budget Office must conduct a review of all party policy costings within 30 days of the election. It might reject Labor’s claim to the budget savings on superannuation but not the policy that delivered them.