Media Release

ASFA’s response to Australian Financial Review opinion piece

ASFA Statement: 28 May 2014

ASFA’s response to Australian Financial Review opinion piece
We need an informed conversation on superannuation tax concessions, not hysteria

The debate about what tax concessions should be applied to super is a welcome and necessary conversation. Indeed, governments now and into the future, faced with the challenges of an ageing population, will need to take a holistic, long-term view when it comes to retirement income policy. However, it’s crucial that this debate is not based on incorrect figures and assumptions.

In his opinion piece yesterday, Richard Denniss made the claim that the tax concessions applied to super would hit $2 trillion by 2015. There is not a reasonable basis for this. The Treasury has not projected tax expenditures for the next five years and, even if they did, it would be unusual to project them forward at the same rate for the next 35 years, as Mr Denniss has suggested. Furthermore, increasing the taxes applied to superannuation would not lead to a doubling of Commonwealth aggregate tax revenues in 2050 from around the current 23 per cent of GDP to around 45 per cent of GDP.

While tax expenditure estimates for superannuation are significant, they do not actually reflect the overall effect of superannuation on taxation receipts.

There are a number of reasons why this is the case.

Firstly, the Tax Expenditure estimates are based on the revenue that would have been collected if all superannuation contributions and income were taxed at the full marginal rate for every member, as opposed to the concessional rate. For instance, future balances and the associated tax base would be much smaller if higher taxation applied along the way. This is because net contributions after tax would be lower, as would after tax investment earnings.

Secondly, the estimates fail to consider the savings the government makes on the Age Pension due to people self-funding all or part of their retirement via superannuation. Age Pension expenditures are already around $7 billion less a year than they would otherwise be because of superannuation. Going forward, these savings will only increase as the superannuation system matures and average balances at retirement increase.

Thirdly, the Treasury figures assume that the behaviour of individuals in terms of savings and consumption would not change if the tax arrangements applied to super were changed. In essence, they assume that people would continue to place the same amount of money into super, as opposed to other investments, if the favourable tax arrangements were altered. We know that this is normally not the case. Therefore, the leakage into other tax-effective investments, such as negative gearing, is likely to reduce the overall savings to the government as a result of reducing the tax concessions applied to super.

Even the Treasury itself admits that removing superannuation tax concessions would not generate revenue gains as large as the headline figures suggest. In the estimates it prepares based on a revenue gain approach, the Treasury, in fact, shows much lower levels of tax expenditures on superannuation and a lower rate of growth. The revenue gain figure for the concession for employer contributions and investment earnings is $27,650 million under the revenue gain approach, compared to $32,100 million under the revenue foregone approach. The projected increase over three years is 8.7 per cent a year, under the revenue gain approach, and 11.8 per cent per year under the revenue foregone approach.

In the Tax Expenditure Statement this year, the Treasury has also included estimates for tax expenditures for superannuation based on a pre-paid-expenditure tax basis. These figures show tax expenditures on superannuation of $11,240 million in 2013/14, around a third of the misleading headline revenue foregone figure that is often used in public debate.

We need a conversation about future policy settings for both superannuation and the Age Pension, but let’s base it on better data and more concrete projections.

For further information, please contact:
Lisa Chikarovski, Media Manager, 0451 949 300

Carmen Beverley-Smith

Executive Director - Superannuation, Life & Private Health Insurance, APRA

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Carmen joined APRA in March 2023 and holds the role of Executive Director, Life and Private Health Insurance and Superannuation.  

She has had an esteemed career in financial services, spanning over 25 years. She has held diverse leadership roles at Westpac and Commonwealth Bank of Australia, including across risk, transformation and change, product and portfolio development, and sales and service. 

Prior to joining APRA, she held the role of General Manager, Risk Transformation Delivery Integration at Westpac. This involved leading the group-wide implementation of a suite of solutions to uplift risk management capability and develop data, analytics and reporting. 

Carmen leads with a values-driven approach and a particular interest in developing and mentoring talent. 

She holds a Bachelor of Commerce and Accounting, is a certified Chartered Accountant and a Graduate of the Australian Institute of Company Directors. 

Amy C. Edmondson

Novartis Professor of Leadership and Management, Harvard Business School

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Amy C. Edmondson is the Novartis Professor of Leadership and Management at the Harvard Business School, a chair established to support the study of human interactions that lead to the creation of successful enterprises that contribute to the betterment of society.

Edmondson has been recognized by the biannual Thinkers50 global ranking of management thinkers since 2011, and most recently was ranked #1 in 2021 and 2023; she also received that organization’s Breakthrough Idea Award in 2019, and Talent Award in 2017.  She studies teaming, psychological safety, and organisational learning, and her articles have been published in numerous academic and management outlets, including Administrative Science Quarterly, Academy of Management Journal, Harvard Business Review and California Management Review. Her 2019 book, The Fearless Organization: Creating Psychological Safety in the Workplace for Learning, Innovation and Growth (Wiley), has been translated into 15 languages. Her prior books – Teaming: How organizations learn, innovate and compete in the knowledge economy (Jossey-Bass, 2012), Teaming to Innovate (Jossey-Bass, 2013) and Extreme Teaming (Emerald, 2017) – explore teamwork in dynamic organisational environments. In Building the future: Big teaming for audacious innovation (Berrett-Koehler, 2016), she examines the challenges and opportunities of teaming across industries to build smart cities. 

Edmondson’s latest book, Right Kind of Wrong (Atria), builds on her prior work on psychological safety and teaming to provide a framework for thinking about, discussing, and practicing the science of failing well. First published in the US and the UK in September, 2023, the book is due to be translated into 24 additional languages, and was selected for the Financial Times and Schroders Best Business Book of the Year award.

Before her academic career, she was Director of Research at Pecos River Learning Centers, where she worked on transformational change in large companies. In the early 1980s, she worked as Chief Engineer for architect/inventor Buckminster Fuller, and her book A Fuller Explanation: The Synergetic Geometry of R. Buckminster Fuller (Birkauser Boston, 1987) clarifies Fuller’s mathematical contributions for a non-technical audience. Edmondson received her PhD in organisational behavior, AM in psychology, and AB in engineering and design from Harvard University.

 

Daniel Mulino MP

Assistant Treasurer and Minister for Financial Services

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Born in Brindisi, Italy, Daniel was a young child when he moved with his family to Australia. He grew up in Canberra and completed his first degrees – arts and law – at the ANU. He then completed a Master of Economics (University of Sydney) and a PhD in economics from Yale.

He lectured at Monash University, was an economic adviser in the Gillard government and was a Victorian MP from 2014 to 2018. As Parliamentary Secretary to the Treasurer of Victoria, Daniel helped deliver major infrastructure projects and developed innovative financing structures for community projects.

In 2018 he was preselected for the new federal seat of Fraser and became its first MP at the 2019 election, re-elected in 2022 and 2025. From 2022 to 2025, Daniel was chair of the House of Representatives’ Standing Economics Committee in which he chaired inquiries; economic dynamism, competition and business formation and insurers’ responses to 2022 major floods claims.

In 2025, he became the Assistant Treasurer and Minister for Financial Services.

In August 2022, Daniel published ‘Safety Net: The Future of Welfare in Australia’, which aims to explore the ways in which an insurance approach can improve the effectiveness of government service delivery.