Crikey’s sometime consumer advocate Peter Mair writes:



One never
ceases to be amazed by grandstanding politicians saying things to court
momentary popularity: Senator Minchin’s offer to scrap the superannuation
contributions tax yesterday is a classic, and poor, example to young liberals at
their convention. His offer has none of the hallmarks of a considered
policy.

The
immediate beneficiaries of scrapping the super contributions tax would
be the financial planners and fund managers who would then be clipping
their excessive “percentage” from a faster swelling pool of funds.
Senator Minchin could more sensibly use the clamour from the
superannuation industry, for reductions in the contributions tax, to
ask it for fundamental reforms in the way financial planners act – now
mainly as commission agents to broker business, at excessive rates, for
their associated promoters of funds-management operations. The claimed
“benefit” to workers would be superficial and illusory.

ASIC and
APRA are increasingly outspoken on this “fees” issue and even the RBA is
politely so. Independent commentators on
Australia’s
superannuation industry see the high fees taken from customers’ superannuation
savings as a most serious handicap for
Australia in
boosting superannuation savings. The tax cut proposal from Senator Minchin is a
very cheap shot – hardly what might be expected from a responsible keeper of the
public purse and a team player with key regulators.

Senator
Minchin might also ponder the possibility of diverting each taxpayer’s
contributions taxes into a personal account with his new Future Fund.
Annual statements of earnings and low, cost-related fees sent out to
his “customers” would be a revelation. Taxpayers comparing the deal
from the Future Fund with their statements from most private super
funds would see the excessive fees charged by private funds and
advisers and, often times as well, poor investment performance.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey

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