Australia’s superannuation system must be “equitable and sustainable”, the federal government has declared, in a move that will fuel speculation about a future budget crackdown on tax concessions at the top end.
The treasurer, Jim Chalmers, will say in a speech in Sydney on Monday that he wants to “end the super wars once and for all and make sure that future changes to the system are compatible with its very objective”.
The treasurer will propose to enshrine in law a new definition that states “the objective of super is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.
Chalmers will argue recent “disastrous policy proposals” – such as allowing billions of dollars to be withdrawn from superannuation balances during the pandemic – came about “because our predecessors were navigating the super landscape without a compass”.
“It moved us further away from where we need to be: better living standards in retirement for as many Australians as possible,” he will say.
The inclusion of the phrase “in an equitable and sustainable way” will only add to speculation about the government’s future plans for super.
It follows recent analysis from the Australia Institute, a progressive thinktank, that tax breaks for superannuation will cost the federal budget $52.5bn this financial year, almost as much as the aged pension.
In early February, when asked about super tax concessions, Chalmers said it was important “to make sure that all of the various concessions are sustainable in this area but in other areas as well”.
The assistant treasurer, Stephen Jones, has previously suggested that a legislated definition for super might pave the way to capped balances or other restrictions on tax concessions.
“If the objective of super is to provide a tax-preferred means for estate planning, you could say it is doing its job,” Jones said in November.
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In Monday’s speech to the financial services industry, Chalmers will say the proposed definition will guide future policy decisions and be “a true north, a shared goal that we can work towards together”.
“To my mind, defining super’s task as delivering income for retirement isn’t to narrow super’s role in our economy – it’s to elevate it, and broaden it,” he will say, according to speech extracts distributed by his office in advance.
“A sharper focus on delivering for members requires that funds always invest in a way that secures the right risk-return profile, but it doesn’t preclude you from doing so in a way that befits a stronger economy.
“Those opportunities to achieve a double dividend – good results for super funds and members and good results for our nation – can only enhance the ability of super to meet its core objective.”
The proposed objective will be set out in a consultation paper to be released on Monday to coincide with Chalmers’ speech. The government will seek feedback from the community about the benefits, phrasing and implementation of the objective.