Labor’s Stephen Jones has warned those “gaming the system” by encouraging the use of superannuation for cosmetic surgery “risk ruining” early release of funds for those who genuinely need it.
The assistant treasurer and financial services minister’s comments indicate that the government’s proposed purpose of super “to preserve savings” will involve a crackdown on existing loopholes, not just preventing the Coalition’s scheme to use super for housing.
Jones also suggested that capping super balances was an “obvious” way to achieve the purpose of super for retirement savings and to improve budget sustainability, helping to pay for the growing cost of government services including aged care and the national disability scheme.
Since proposing the purpose for super on Monday, the Albanese government has launched a reform debate that has narrowed to improving the “sustainability” of super by limiting balances to $3m.
The Coalition has singled out that measure, which the government insists has not been formally adopted, to argue that it is set to break an election promise against major changes in super.
Labor’s proposed preservation objective is designed to rule out schemes such as the Coalition’s super release for household stimulus during the Covid pandemic, but has also sparked debate about existing loopholes.
“We have no intention of removing compassionate access on very narrow grounds,” Jones told Guardian Australia.
“There are people gaming the system at the moment … superannuation was not set up for cosmetic surgery.
“People who are trying to abuse the system, and this is not directed at the patients here, it’s directed at the surgeons … and schemes promoting it, they run the risk of ruining it for everyone else who is doing the right thing.”
Tax office data, seen by Guardian Australia, reveals that of $573m released early from superannuation in 2021-22, some $545m is spent on medical treatment including $234m on weight loss, $171m on dental treatment, and $45m on IVF.
The treasurer, Jim Chalmers, has noted that “less than 1% of people have got more than $3m in their super” so the government is “up for a conversation about whether paying a lot of taxpayer money in concessions for that group is the best use of that money”.
Jones said some industry stakeholders had asked the government to reconsider the threshold for the extra 15% tax on superannuation, but this was “not something we currently have before us”.
“The only thing that we’ve talked about … is the excessively large fund balances.”
“If we agree [that super is] all about retirement income, it beggars belief that those have anything to do with retirement income.
Jones told Guardian Australia that “Australians collectively expect the government to deliver a lot”.
“It’s not sustainable on current budget settings and we’re having to grapple with that.
“We have inherited budget problems, we’ve got a structural deficit and we have to deal with all of it.”
On Thursday the shadow treasurer, Angus Taylor, told the Association of Superannuation Funds of Australia conference that “the entire super system is undermined when parties break election promises, particularly when it comes to the tax arrangements”.
“Super is fundamentally Australians’ money … it isn’t a revenue loophole to be closed.”
“Labor does not have a mandate to tax and spend Australians’ super.”
In response, Chalmers accused the Coalition of “more of the same hypocritical hyperventilating from the same party that jacked up taxes on super when they were in government”.
Despite the Coalition backlash, the Senate crossbench, including David Pocock and Jacqui Lambie Network’s Tammy Tyrrell, have lent support for limiting super tax concessions.
In a statement Pocock said he is “not interested in attacking people’s super … [but I do want to see] an end to generous tax concessions for superannuation accounts with multi-million dollar balances”.
Savings should be “directed into other areas such as health and housing that are crying out for funding”, he said.
“This is a conversation the Coalition was prepared to have in 2016, I hope there’s room to continue that conversation this year.
“Fundamentally, this isn’t actually about retirement income, it’s about closing loopholes that allow Australia’s most wealthy to pay less tax while they generate more wealth.
“This is about finding fair and sensible ways to manage our federal budget.”
