Every year Australian tax payers provide more than $27 billion to support the retirement savings of Australians with superannuation. A large chunk of this money goes to increasing the retirement incomes of some of the wealthiest people in the country. People living on or below the poverty line get no such support.
Superannuation assistance works so that people with the largest savings (earning the highest incomes) receive the most support, while those who earn the least receive little or no support. Those who can't work, or who care for other people who cannot work, receive nothing. It's unfair, but that is how our tax dollars are being spent.
At two per cent of GDP, $27 billion is a significant spend, falling just short of the $30 billion that goes to the age pension. However, tax concessions for superannuation are increasing at a faster rate than the amount we spend on the age pension. If we keep going at this rate, it won't be long before Australia is spending more on superannuation concessions than on the age pension.
The rationale for this generous taxpayer support is thin. Foremost is the fallacious theory that boosting private retirement incomes reduces the number of people on the age pension.
The last years of the Howard Government saw very large increases in the generosity of the means tests for the age pension. Under the new arrangements a couple who own their own home can have more than $1 million in super and still draw a part pension. The changes also made all income from superannuation tax free.
The changes saw a big increase in the disposable incomes of some of the wealthiest Australians, paid for by ordinary taxpayers, each year. Adding insult to injury, this group is now also eligible for the Commonwealth Seniors Health Card and around $800 of taxpayers' money every year to help with their utility bills, even if they are drawing hundreds of thousands of dollars tax free from their super.
Australians expect that their tax dollars will be used effectively and that some sense of balance will prevail. The average retiree will only have $100,000 in super, and hundreds of thousands of Australians will have no super at all. The support we do provide