Generous super concessions in the human rights landscape


Superannuation is not often enough thought of in terms of human rights. The goal of such a scheme is to provide security for those in their retirement and to restrain pension expenditure. The super concessions afforded by our current system excessively boost the savings of some of the wealthiest sections of the population to the detriment of those in real need.

Since 1992, Australia has had a compulsory superannuation system which revolutionised our nation’s retirement saving scheme. These historic reforms were introduced to better ensure that every Australian has the opportunity to be self-sufficient and to live with dignity in their old age.

Tax concessions for superannuation were introduced under the Howard Government which undermined the original intention of the retirement savings scheme. Tax concessions operate to allow income earners to keep some of the money that would have otherwise been taken as personal income tax. Superannuation is currently taxed at a flat rate of 15%, unlike the bracketed, equitable taxation used for personal income. The impact of this is twofold – high income earners can significantly reduce their tax bill by salary-sacrificing, and low income earners are taxed at a rate higher than they usually would. These concessions act as an economic mechanism for high-income earners to avoid paying tax up to 30 cents to the dollar.

According the Australian Government’s 2013 ‘Tax Expenditure Statement’ the taxpayer contributed $30.3 billion in 2011-12 to the retirement savings accounts of Australians. This cost is projected to increase to $44.8 billion by 2015-16.

In early August this year, BT Financial Group chief executive Brad Cooper called on the Government for superannuation caps to be put in place during the Senate’s Tax Inquiry.

“Super is meant to be used to generate replacement income in retirement. Beyond this, I do not think it's appropriate for people to use its tax-free status to build incredibly high levels of wealth or serve as a proxy estate planning tool," Mr Cooper said.

Superannuation was created to enable comfortable self-funded retirement for all Australians. The use of billions of dollars worth taxpayers’ money to boost the retirement incomes of Australia’s wealthiest is not only illogical but also economically unsound. Many low income earners receive literally zero benefit as a result of such exorbitant government spending. Billions of dollars of the Federal Budget is thus diverted away from other essential public services as a result of these policies and will soon be the largest Commonwealth expense if reforms are not enacted.

Taxation is a human rights issue. It raises revenue for essential public services such as healthcare, education, infrastructure, national defence as well as our social security system. In an attempt to get the Federal Budget back to surplus, many frontline services working with Australia’s most vulnerable have been hardest hit. Cuts to legal services affects access to justice. Cuts to women’s shelters puts more lives in danger. Cuts to indigenous communities threatens the continuation of ancient cultures.

The Labor party announced in June that it would look at superannuation reform if it wins Government next year. Treasurer Joe Hockey has not yet ruled out changes if voted in for a second term.

The fifteen billion dollars spent in super tax concessions to Australia’s wealthiest 10% could be used in a myriad of ways to ensure a fairer and more equitable Australia.



Michaela Vaughan

Human Rights Defender intern, Semester two, 2015

Read more about our internships.


Photo credit: Alex Proimos via Wikimedia Commons