There have been many policies and legislation coming out of Canberra that fit into the category of "it seemed like a good idea at the time". Unfortunately, superannuation seems to have had more than its fair share of them.
A classic example was the Coalition's legislation that enabled SMSFs to borrow. At the time of its introduction, many superannuation legal experts said it took the award for the most badly drafted piece of legislation ever.
Under the Rudd/Gillard governments there have been at least three examples of policies that fit into this good-idea-at-the-time category. Thankfully, only one of them has become legislation and the other two will hopefully never become law.
The first policy came out of the Cooper Review. It intended to ban off-market transfers of investments from members into an SMSF. The legislation would have resulted in shares being bought and sold simultaneously on the stock exchange.
Unfortunately the legislators forgot about an ASIC regulation that banned people buying and selling listed shares in the one transaction.
After delaying the introduction of the redrafted legislation the policy has now been dropped.
The second policy is unfortunately still on the Labor Party drawing board. It is all about increasing taxes on superannuation. It involves taxing currently tax-exempt income on pension accounts that exceed $100,000.
This policy is not covered by the Labor promise to not make any adverse changes to superannuation for five years. Where a person has only one superannuation pension account it would be relatively easy to administer, but where a person has multiple pension accounts it would be a logistical nightmare.
On fairness and equity grounds this policy would be the worst piece of superannuation legislation that has been proposed by an Australian government. This is because it would be the first retrospective imposition of income tax on superannuation ever made.
The final policy, that has become legislation, almost manages to have all of the bad characteristics of the previous two examples. It is the imposition of the extra 15 per cent contributions tax on super contributions on incomes above $300,000 a year.
There is a social equality case that can be made for the imposition of this new tax: it is not fair for someone on the highest tax rate to receive a tax benefit of 30 per cent, while people on middle incomes only receive 17.5 per cent. It means high-income earners will receive a tax benefit of only 15 per cent.
The drafters of this new tax have also forgotten about another piece of conflicting legislation that allows a person to split up to 85 per cent of their concessional superannuation contributions with their spouse.