WAYNE SWAN is no Robin Hood. While the Government would like you to believe this budget is about robbing the rich to help the poor, it is more about future retirees funding higher payments for today's pensioners.
The two big-ticket savings items that the Government estimates will deliver more than $1 billion of its $2.7 billion pension increase will come from cuts to superannuation tax concessions.
The Government reckons it will save $620 million next year - and $2.75 billion over the next four years - by halving the limits on tax-deductible super contributions.
Given that fewer than 2 per cent of people who make concessional contributions will be affected by the measure, that one can readily be written off as hurting only higher-income earners.
But the other $385 million in savings next year - and almost $1.4 billion over the next four years - cuts right into Labor's heartland.
The Government plans to temporarily cut the super co-contribution by up to $500 for the next three years and $250 for the following two years. Instead of contributing $1.50 for every dollar an individual contributes, it will contribute $1 for the next three years.
This means someone earning less than $30,342 who contributed $1000 of their after-tax income to super would receive a government contribution of $1500 this year but only $1000 next year.
The Government has made much of its desire to better target super concessions, but this makes a lie
of its words.
The co-contribution is already means-tested. Once you earn more than that $30,420 the maximum co-contribution is reduced and no benefits are payable once your income exceeds $60,342.
Last financial year the Government paid contributions to more than 1.3 million super accounts. Unlike salary sacrifice super arrangements, where the benefits are enjoyed mostly by well-off older blokes, 60 per cent of recipients were women and almost 20 per cent were 30 or younger.
The Government argues the lower co-contribution is still attractive. But the budget, coupled with the Henry review's report on the retirement income system, suggest super's glory days may be over.
The review will come as a slap in the face to those who have argued compulsory super contributions of 9 per cent are not enough to meet retirement aspirations.
It argues 9 per cent is enough for lower to middle-income earners, and by restricting super access to age 67 we can ease the pressure on the pension and retirement savings.
Those with higher aspirations can contribute extra, but higher earners deserve less generous tax treatment.
These are only recommendations, but the Government needs to clarify its intentions. Treating super as a cash cow for a short-term savings grab is no way to build confidence
in long-term savings.
