Govt frustates savings industry

Outgoing Investment Savings and Insurance chairman Paul Fyfe has expressed his frustration at the lack of progress the Government is making on superannuation issues.

Writing in the association's annual report Fyfe says that a year ago there was some optimism that the government had recognised the need for encouragement to kick start long-term saving for retirement.

"While that optimism may have been justified at the time there has been no movement by the government to make it a practical reality."

He welcomes the salary sacrifice arrangements available to people who earn more than $60,000 annually, but describes it as "no more than a toe in the water towards encouraging savings for retirement."

While there is growing frustration at the lack of progress there are no signs the government is going to move quickly to make changes.

Finance minister Michael Cullen, when appearing in front of Parliament's Finance and Expenditure Select Committee last week, restated his position that the government won't be moving quickly to extend the salary sacrifice tax breaks to encourage employer-based superannuation schemes.

He says to give low income earners the same tax breaks as those on $60,000 or more would cost the government $60 million a year and that is money it doesn't have.

"If you look at the available headroom on the fiscal forecasts ... $80 million comes to a large chunk of that," Cullen told the committee.

Fyfe also expresses concerns that the government has squandered an opportunity for a first principles review of the tax system.

He says the McLeod tax report presented an opportunity to address some of the fundamental issues surrounding the tax treatment of collective investment investments, but in reality nothing happened.

"Discussion on tax issues arising from the review was very muted and it would be difficult to claim that any significant progress has been achieved," he says.

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