Superannuation is unlike any other product in Australia. There is no other product that all employees are forced to spend nine per cent of their income buying. In fact, the proportion of income spent on compulsory superannuation is to rise to 12 per cent by 2020.
But it is not just individuals that spend a lot of money on compulsory superannuation. According to the Tax Expenditure Statement the taxpayer contributed $30.3 billion in 2011-12 to the retirement savings accounts of Australians and this cost is projected to increase to $44.8 billion by 2015-16. Unlike most areas of government spending however, the benefits of tax concessions to superannuation flow overwhelmingly to high income earners with many low income earners receiving literally zero benefit from this largest of government expenses. That is, according to modelling by the Commonwealth Treasury the wealthiest ten per cent of the population are expected to receive 31.8 per cent of the tax concessions on superannuation contributions in 2012-13.
The same Treasury modelling shows that the poorest ten per cent will receive no benefit from those tax concessions and the bottom half of the population will receive 18.7 per cent of the concessions on contributions. Those with the lowest incomes and those who spend time caring for their children or family members receive virtually nothing from the enormous cost of concessionally taxing contributions to superannuation.