TOP income earners will have their tax concession for superannuation slashed in half, saving $1 billion to help the bottom line in next month's tough budget.
The July 1 change, hitting only those who earn more than $300,000, will reduce the tax concession wealthy taxpayers receive on their super contributions from 30 per cent to 15 per cent.
Under the present system, the top 1 per cent of income earners would receive an average concession on their super contribution of $7350 in 2012-13. Their concession will fall to $3675 under the change.
Those who earn more than $300,000 comprise 1.2 per cent of those contributing to superannuation. For all contributors on less than $300,000, current arrangements will continue, so someone on $295,000 would still be receiving the 30 per cent concession.
Superannuation Minister Bill Shorten said that while the government believed superannuation should be concessionally taxed it was clear a small number of high income earners "are getting a better deal out of super than millions of Australians on average incomes".
"That's why we are making the system fairer by ensuring that the tax incentives for super are more in line across income ranges."
A contributor on average full-time earnings (about $69,000) will receive in 2012-13 an average concession of $1670, which is a 17.5 per cent tax break. A minimum wage earner on $31,000 will receive a concession of $690 (a 19 per cent tax break). This is partly funded by the government, from the mining tax, which starts on July 1.
It is understood the savings over the four-year budget period are mostly garnered in later years.
Despite the change, there would still be a tax incentive for high income earners, Mr Shorten said.
He reiterated that the budget would reflect "Labor values" . "This means looking after low and middle income families, so they're not subsidising high tax breaks for the very highest income earners."
The Howard government had a superannuation surcharge from 1996 to 2005.
Mr Shorten said Tony Abbott and the Liberals had gone into bat for the billionaires by opposing the mining tax and for the millionaires to protect their private health insurance rebate.
"If Mr Abbott goes into bat for the top 1 per cent of income earners to protect their massively higher tax breaks, it'll be the final proof he's betrayed the ordinary working families".
The government yesterday unveiled a plan to force super funds to reveal the pay of their top executives and publish more detailed information about how members' retirement savings are invested.
Mr Shorten said he was also considering laws that would require fund managers - who are often external from super funds to disclose their pay.
Fund managers can earn between $500,000 and several million dollars a year for investing members' money, but their pay packets are a closely guarded secret.
"We've increased super from 9 to 12 per cent, but we don't want to see that all frittered away by fund managers clipping the ticket on the way through on people's retirement earnings," Mr Shorten said.
He also said the proportion of female board directors in the nation's $1.3 trillion superannuation industry should be doubled to 40 per cent in the next 10 years.
About 20 per cent of super board members today were women, Mr Shorten said.While he did not support a binding quota, he said there was clearly room for improvement. "I think the industry should agree to set an aspirational target of 40 per cent of directors over the next 10 years," he said.