Importantly, defining adequacy puts a ceiling on government responsibility for retirement incomes. It recognises that while lifestyles beyond a certain adequacy level may be desirable, governments and taxpayers are not obliged to support individuals to achieve them. The AIST/ISN submission calls on the Government to make the super system more equitable for low income households by re-balancing the tax concessions.

The previous government’s ‘Better Super’ reforms have skewed our superannuation system in favour of the well off. Unlike employees on the top marginal tax rate, the contributions tax of 15 per cent is of little or no saving to the estimated 2 million plus Australian workers who pay little or no tax. AIST and ISN have proposed that low income earners receive a tax rebate on the 15 per cent tax on their superannuation contributions, paid into their super account in a similar way to the co-contribution.

Our submission also recognises that inequities exist for many women – who take longer career breaks than men, and often return to work on a part-time or casual basis. Our other proposals include improving the efficiency of the super system through the banning of sales commissions (especially for compulsory superannuation savings); a $1500 ‘super baby bonus; an increase in the base rate of the Age Pension; a review of the $450 monthly income threshold for super contributions and a close look at the generosity of the existing taper rates.

Our submission also recommends that government look closely at the adequacy of the retirement incomes of the self-employed before some of them end up as the new group of older Australians living in poverty in retirement with little or no savings. We have supported an increase in superannuation contributions to 12 per cent but we recognise that more research needs to be done on how such an increase would be funded and how it may impact different income groups.

We also recognise that, if the current inefficiencies in the system are rectified, there would be less of a need to increase superannuation contributions. And let’s face it, now is not necessarily the best time to be asking the Government or Australian households to get behind a lift in contributions.

Australia has a world-class superannuation system but it isn’t perfect. Through the Henry Tax review, the Government has a rare opportunity to revisit the chief objective of the system – that being that ALL Australians – not just the wealthy – get to enjoy their retirement.  

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