Plenty of consternation, conjecture and downright disgust has been witnessed since the proposed changes to superannuation were announced in the 2016 federal budget.
Since that fateful night of 3 May, discussion over the changes has been abundant, with certain elements, such as the $500,000 lifetime non-concessional contributions cap along with its retrospective implementation, being widely criticised from pillar to post.
However, it has been acknowledged there were some positive changes to superannuation mooted in the budget as well. Probably the most welcome change is the ability for individuals to be able to carry forward the unused portion of their $25,000 a year concessional contributions cap for a five-year period if their retirement savings asset balance is less than $500,000.
Other amendments to the framework that have been roundly welcomed are the scrapping of the need to satisfy a work test that would allow super contributions to be made by those aged between 65 and 74 and the abolition of the 10 per cent rule for personal deductible fund contributions.
As the government has prosecuted its argument for all of the changes, it has been banking on the fact the good changes help neutralise the amendments that are less palatable, making the overall policy more even handed.
Those of us living with what could be now considered an over-optimistic attitude toward the situation had been buoyed by comments in response to the super changes emanating from the opposition and some of the minor party politicians indicating they would be looking to address the unpopular superannuation changes, such as the lifetime non-concessional cap and the $1.6 million transfer balance cap.
The Labor Party itself was adamant the cap level of $500,000 was too low and was confident of making a stand against the retrospectivity associated with the implementation of the measure.
Seeing no mention was made of any of the other superannuation items in the budget, an assumption was made these would be passed without question. Well how naïve and gullible were we to believe any of that.
During the first sitting week of the 45th parliament of Australia, the opposition declared it was not going to back any of the changes to the system widely considered a good thing, meaning the work test would be retained, any carrying forward of unused concessional contributions would not be permitted, and the 10 per cent rule would continue.
This, of course, was met with hollers of complaint from the government.
But we have to ask where it now leaves all of us. If everyone in Canberra sticks to their guns, it will basically mean we’ll be left with the worst of all worlds – stuck with the unpopular changes but getting no relief with any positive amendments. If this worst-of-all-worlds scenario plays out, the government has every right to expect even more backlash from the public. It wouldn’t have taken a genius to figure out the Labor Party might not support the proposed changes and especially not the ones that would improve the system for taxpayers.
There is a solution though which no doubt would be considered radical. If the worst-of-all-worlds scenario is a realistic possibility, then why not just retain the status quo. And if this course of action is considered a broken election promise, then surely it would be an acceptable broken promise if ever there was one.
However, if a purely negative set of superannuation system amendments is the end result, I’m sure we’ll all be able to relate to pool champion Grady Seasons’ line from the movie The Colour of Money as he’s wiping the floor with Vincent: “It’s like a nightmare, isn’t it? It just keeps getting worse and worse, doesn’t it?”
