Superannuation tax concessions mostly help those on higher incomes and it also has an impact on the way the climate emergency is tackled.
Treasury recently undertook a Retirement Income Review to look at the 15% tax rate on superannuation earnings — lower than taxes paid on income — and found that “the current system design increases inequality”.
How does it do that?
The tax concessions mostly apply to those on very high incomes and with very high superannuation balances. That means people on low incomes, work part-time or are casuals and who are very often women earning less than men, miss out on the superannuation tax concessions.
It has been said that, in the coming years, the amount of tax concessions that do not flow into the tax system will become larger than the total cost of the age pension itself.
Think about that. Why is that happening?
Socialist Alliance believes that we should scrap those tax concessions and use the money to top up the age pension. If it’s going to cost about the same as the age pension, you could immediately double the age pension, which would be a lot more equitable.
We could have a universal age pension system for everybody — a much better system than exists now.
How does this relate to the climate emergency?
Since the 1980s, all parts of our lives have become increasingly financialised as neoliberalism demands our services are privatised.
Many public services that were once publicly owned, like the Commonwealth Bank, Telstra, Qantas, airports and, more recently, roads, have been sold off and superannuation funds have bought them up.
Why do they like them? Because they are monopolistic assets. They even admit this.
We’ve gone from a public system, with public pensions, using public assets to help pay for them and transferred them to private investors.
That means that through our superannuation, many of us are now investors in the share market. But we don’t have as much control over these assets as we did when we could vote for governments that would look after these public assets for the whole society.
I’ll give you an example. A lot of superannuation funds are heavily invested in fossil fuel production. Some unions and environment groups, such as Friends of the Earth and Market Forces, are campaigning for superannuation funds to divest from this fossil fuel infrastructure.
Superannuation funds are reluctant to do that because they don’t really care about the sustainability of the planet. They’re only there to make profits for their shareholders.
You can choose among the various super options, but if you choose “sustainable” in most cases you’re going to take a 2% hit. In the long run, that will have a big impact on your retirement balance.
Why should I have to choose between having a future and having a decent pension? It doesn’t make any sense.
While there has been limited success in getting funds to divest from fossil fuel extraction, I’m very concerned about car dependency and toll roads and so many superannuation funds — UniSuper, Australian Super, industry super funds — are all heavily invested in WestConnex and Transurban and other major toll road operators.
I contacted them to tell them that this is just as bad as investing in a coal mine, and they ignored me.
It is very hard to get these superannuation funds to act in the benefit of all of us — unlike if those assets are publicly owned and where politicians are made accountable at the ballot box.
This is a serious problem.
Socialist Alliance says scrap superannuation tax concessions and use it to raise the age pension and make it universal for everybody. That would be much better for people’s retirement incomes and it would be much better for the planet.
[Andrew Chuter is standing for Socialist Alliance in the seat of Sydney.]