Hume shoots down ‘retiree tax’ budget pitches

The Australian Financial Review

12 February 2021

Ronald Mizen

Proposals to tax retiree savings to pay for aged-care services and remove tax concessions for balances over $5 million have been shot down by the Morrison government, with Superannuation Minister Jane Hume saying she did not plan to introduce more taxes.

Speaking at an Association of Superannuation Funds of Australia conference on Friday, Senator Hume rejected the two proposals put forward by ASFA and the Australian Council of Social Services.

“We have no intention of burdening Australians with a retiree tax,” she said.

In a pointed critique of opponents of the government’s suite of changes to the $2.9 trillion superannuation sector, Senator Hume also said the retirement income system was not perfect and should not be mythologised.

And in a thinly veiled swipe at former prime minister Paul Keating, Senator Hume said the debate about super had been treated as an opportunity to shout about philosophy or legacy rather than the merits of reform.

“Every single reform we have proposed has been met with resistance,” she said. “Indeed, superannuation has proven to be the most frustratingly partisan sector of financial services.”

Earlier in the conference, Mr Keating slammed the Morrison government and Treasury for an “anti-super” bias and said the Reserve Bank was in cahoots with Liberal backbenchers.

The government faces a two-front battle over super: the first, whether to increase the contribution rate; and the second over new “your future, your super” legislation containing sweeping industry reforms.

Industry Super Australia, the lobby group for the union-linked super sector, has been a vocal opponent of the reform package and proponent of proceeding with the increase SG rate from 9.5 per cent to 12 per cent.

Senator Hume said Labor had a right to be proud of the compulsory superannuation system, but it was giving vested interests a platform to oppose sensible reforms that were in members’ interests.

“We’ve seen in numerous examples over recent years, too often, the super industry’s lobbyist leviathan has spoken with a megaphone on the floor of our Parliament in opposing efficiency reforms,” she said.

“Having seen behind the curtain, and worked in multiple sides of the industry, I’ve come into the Parliament as a strong supporter of compulsory super, but someone not blind to its faults.”

Also at the conference, prudential regulator chairwoman Helen Rowell called for fund trustees to make the hard but necessary decisions about mergers and acquisitions and call out poorly performing players.

Ms Rowell said it was the Australian Prudential and Regulation Authority’s position that fund trustees had a responsibility to look broadly at what was in the best interests of the sector as well as of members.

“You all know who the poorly governed, poorly performing funds are that are making poor decisions, and so what is it that the industry can do about that, for example, so that we don’t [have to]?” she said.

“But also just acknowledging the issue more publicly, and that it is needing to be tackled and helping us in our work in cleaning the industry up and getting improvements made.”