1. Releases 2012

Media Release: 8 May 2012

Parliamentary inquiry needed into tax efficient investments: ASFA

The peak body for superannuation tonight called for a parliamentary inquiry into the mobility of tax effective investments in the wake of the Budget announcement that the contributions tax on super is set to change.

The Association of Superannuation Funds of Australia (ASFA) said superannuation tax concessions must be set with a long-term view of ensuring better retirement incomes for ageing Australians.

"Making small changes at the edges to gain revenue for short-term political gain does not contribute to the development of long-term sustainable retirement incomes policy," said ASFA chief executive Pauline Vamos.

"The issue with changes to taxation settings is that they drive behavioural change.

"A parliamentary inquiry would get all political sides together to develop a unified, long-term approach to retirement incomes, and their tax settings, going forward.

"Australia's taxation system has a strong role in influencing investment decisions through establishing different incentives for different kinds of investments.

"In the case of high-income earners, they have other investment vehicles where tax incentives apply and there is a strong likelihood you will see more money moved into things like negative gearing, rather than super, as a result of this change.

"A move away from superannuation investing means a move away from a diversified investment approach in a highly regulated environment.

Superannuation is an efficient allocator of capital to the most productive needs in the economy," said Ms Vamos.

The intention of superannuation is to ensure that more Australians have dignity in retirement in the face of an ageing population and increasing pressures on the public purse.

"Superannuation is not about short-term collections of tax, it's about addressing a long-term, demographic time-bomb.

"Currently there are five working people to support each Australian aged 65; this is projected to drop to 2.7 by 2050.

"Superannuation will take the pressure off Government budgets (and taxpayers) of the future by reducing the reliance on the Age Pension.

"And super is working for the Australian economy now.

"The role of the superannuation pool in the economy is one of Australia's strengths: It invests in all aspects of the economy including infrastructure, property, mining and financial services.

"This decision to increase the super contributions tax by the Government looks short-sighted: There has been no consultation on this issue and no holistic review of taxation investment incentives.

"ASFA believes an inquiry is needed to understand the interactions between different investments and, in particular, how incentives in one investment area can impact on investment decisions across other investments.

"Superannuation is about delivering to people in their retirement. We are already facing an ageing population with insufficient savings for retirement - and we are living longer.

"Adjusting incentives to save more through superannuation could erode confidence and may have a snowball effect which could mean less money invested in the Australian economy through the diverse holdings of the super pool and a much bigger burden on the taxpayer down the track."

For media inquiries, please contact:
Pauline Vamos, CEO, 0433 169 342
Rebecca Glenn, GM Marketing and Communications, 0416 170 439
Megan McDougall, Media and Communications Coordinator, (02) 8079 0849

About ASFA - the voice of super
The Association of Superannuation Funds of Australia is the peak industry body representing the superannuation and retirement industry. ASFA is the only organisation that represents all types of superannuation funds (retail, industry, corporate and public sector) and associated service providers. ASFA members manage or advise on the bulk of the $1.3 trillion in superannuation assets as at September 2011. Its members represent over 90 per cent of the approximately 12 million Australians with superannuation.