In the past year, the total amount of voluntary contributions was much lower than in previous years, he says. Granted, contribution caps have been lowered, and wealth and confidence in superannuation has been rocked by the financial crisis. But in 2007, the final year of the last bull market, in which the opportunity to haul up to $1 million tax-free into super was on offer, master fund inflows reached almost $50 billion. In 2006, $36 billion flowed into master trusts. But in 2009, just $12 billion was contributed. “We should look at contribution caps, and what we can do beyond the 9–12 per cent to really make it attractive – because I think the fundamental issue with a lot of the reform [debate] is a loss of confidence in the system,” Brogden says. Any change to concessions on super should not exclude the people for whom the system was invented, says David Whiteley, CEO of Industry Super Network (ISN). He says there are about 3 million people on annual incomes of $34 million or lower, or working part-time, whose pay is taxed at or below the lowest marginal tax rate of 15 per cent.

“They’re receiving no tax concession on the contribution they’re making to their super.” He notes the government’s tax rebate on contributions of up to $500 each year for people on annual incomes of $37,000 or lower from 2012, but says: “What happens a lot in our industry is we tend to focus more on those members of the community that can afford to contribute more, and while we need to do that, we tend to focus less on those for whom compulsory superannuation was first set up. These are the people that need the system so they’ve got some savings to retire with.”  While there is no problem with the ability of super to augment the savings of wealthy people, its core objective of providing all working people with a pot of retirement money must be preserved, he says. This principle is not lost on Shorten. He would like to see super, in conjunction with the pension, become “the fundamental [savings] vehicle for the majority of Australians post-retirement”. It should not be a “residual system,” a top-up to the age pension, he says.

It has some way to go, then. Don Russell, chair of NSW State Super and a former economic advisor to former Treasurer Paul Keating when superannuation was introduced, says the industry should remember that only 18 months ago, Chris Bowen, Shorten’s predecessor, was yet to be convinced that a contribution rate of 9 per cent was inadequate.  So it was heartening to see the SG boost as the centrepiece of superannuation reform. But it’s also important that tax preferences for superannuation are maintained across the board. For people on low incomes, Russell says, super is one of the few mechanisms through which they can save by tax-preferred means. High-income earners can save tax-effectively through gearing, and if there were no tax benefits for saving through super they may have “second thoughts” about the system. “I think it’s very important to have a Minister who is committed to tax preferences on SG for a vast bulk of the community. I think it’s what gives superannuation its clout. And we’ve moved away from the idea that the SG was really just for people [earning] under $45,000 [each year]. So I think that’s all very important.”

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