Reflecting on comments made by Mr Bowen in Budget response speeches last week, SMSFOA executive director Duncan Fairweather said the cost projections are “not so”, along with the claim that the cost of these incentives will “rise to $50 billion”.
The SMSF trustee advocate said Labor has arrived at its figures by adding together two numbers that Treasury says should not be added together”.
Mr Fairweather said based on a media release distributed by the shadow minister, he has added together $20 billion in estimated on superannuation contributions and $30 billion in estimated concessions on superannuation fund earnings.
“These numbers are from Treasury’s 2014 Taxation Expenditure Statement (TES) included in the Budget papers,” he said.
According to Mr Fairweather, however, it cannot be claimed by adding these two components that the total cost to the Budget will be $50 billion and this is potentially the saving that could be made if superannuation tax concessions are removed.
“They can’t be added because they measure different things. If the tax concessions on contributions are removed or reduced so less money flows into superannuation, then the earnings of superannuation funds will also be lower,” he said.
The Treasury warned in the Tax Estimates Statement that these components should not be added, according to Mr Fairweather.
“The shadow treasurer has not heeded this warning and so had double counted in arriving at this $50 billion number,” he said.
Our super system is amongst the greatest in the world, and the tax breaks for the “rich” have been fixed by now having limits on how much people can contribute to super.
“Poor” people can also benefit from putting money into super, maybe less so from the tax breaks, but certainly from the money being locked away and invested and compounding instead of wasted by them on smokes and mag wheels and foxtel…
Oh dear. Wow.
What will it cost if people don’t bother to save for retirement?