The Greens say increasing the lifetime non-concessional cap above what was announced could mean the policy costs money instead of improving the Budget bottom line.
The Government may be considering increasing the proposed lifetime non-concessional contributions cap from $500,000 to $750,000.
Setting the lifetime cap at $500,000 is estimated to save the Budget $550 million over the forward estimates, according to the Budget papers. The Greens say, pointing to earlier Parliamentary Budget Office (PBO) estimates, that increasing the lifetime cap to $750,000 is likely to actually cost the Budget money.
“The PBO found that the current annual non-concessional cap of $180,000 with its ‘bring forward’ provision acts as an effective super lifetime cap of $540,000 and that any lifetime cap higher than this amount may see more income channelled into superannuation to avoid paying personal income tax, costing the Budget revenue,” said a statement from the Greens.
The PBO costing, which was completed in September 2015. estimated that a $500,000 lifetime cap would save the Budget $165 million over the period 2015/16 – 2018/19. It also estimated that a $600,000 lifetime cap would cost $85 million and a $800,000 lifetime cap would cost $335 million, over the same period.
“Advice from the Parliamentary Budget Offices suggests that increasing the lifetime cap could actually see the government lose revenue,” said Greens MP Adam Bandt.
“It beggars belief that the government could put forward a measure that could cost the Budget money and make the superannuation system less fair.”
“I am concerned that the government is intent on giving even more money to the very wealthy just to appease hard-right conservative backbenchers.”
Recently Coalition MP George Christensen said that raising the lifetime cap to $1 million would “satisfy most concerns” over the policy.
“Treasurer Scott Morrison must come clean and release any advice from Treasury about whether an increased lifetime cap would save any money at all, or in fact come at a cost to the Budget,” said Mr Bandt.
“The government is looking in the wrong place for super reforms. There are billions of dollars in potential revenue available by reining in the generous concessions given to the very wealthy when they contribute to super in the first place.”