Tax breaks in superannuation for the rich is the worst piece of public policy since ‘white Australia’, Garry Weaven pioneer of industry funds said at Conexus Financial’s 18th annual Investment Administration Conference.

Addressing over 200 superannuation professional Weaven spoke on how most countries view Australia’s system as close to perfection, but despite this significant changes needs to take place to make it sustainable.

“The Peter Costello gift to the rich by entirely abolishing earning tax for older people and by lifting the limits dramatically of what they can pump in (to superannuation), has generated massive amounts of concessionality that is devoted to the mega-rich in their later years. It is probably the worst piece of public policy since the white Australia policy,” he said.

The continuing increase of average life expectancy is underpinned by a persons’ finances – their access to quality accommodation, health and aged care are all dependent on being able to afford them Weaven added.

“It will be a tragedy if poor people die and rich go on living forever,” Weaven said.

Ian Silk, chief executive of AustralianSuper agreed and said superannuation was not designed for taxpayers to provide tax benefits to multi-millionaires.

“I would go with a more interventionist regulatory framework that might have, for example, limits on the taxation benefits that individuals can take out of the systems. I’ve seen reports of people with double digits million dollar ($10s million) superannuation accounts, even triple digits million dollar ($100s million) superannuation accounts. Put as much money in the system as you like, but don’t expect to get taxation benefits beyond a reasonable level,” Silk said.

He added that a consensus needs to be reached on the purpose of superannuation as this will allow issues within the sector to be effectively addressed.

“The superannuation system is an arm of public policy, it is essentially a creature of two sets of parliamentary acts, concessionary tax savings vehicle and it’s compulsory, this infers on parliament the right to intrude,” Silk said.

Weaven, Silk and Nicole Smith, chair MLC Superannuation Fund are all supportive of the financial systems inquiry recommendation that superannuation should be defined as  “providing income in retirement to substitute or supplement the age pension”.

“It may seem simple, but it is profound, if we start from that premise, some problems become easier to solve. I say this with hope of a bipartisan view,” Smith said.

Silk was also heartened to see the FSI recommend responsibility for products to be shared between designers and financial planners, saying in some past instances the designer’s poor product had “strapped a suicide bomb on financial planners”.