Very interesting suggestion reportedly made yesterday by federal Superannuation Minister, Nick Sherry – floating the removal of the 15 per cent super contributions tax for women as one way of bringing their retirement savings into line with men.
“Women spend significant more time out of the workforce than men and super splitting is not a solution, it’s just playing around the edges,” he said. Senator Sherry was referring to a concession introduced in 2006, which allows couples to split their super contributions to potentially gain tax benefits.
“Women earn 15 per cent less than men on average and the solution is either to pay maternity leave or remove contributions tax for women and not for men. There’s a real radical solution.”
I have to say I can immediately see the potential for significant anomalies if a part of the tax law is based specifically on gender alone. And one would also want to see some thorough modelling to see whether this sort of proposal actually resulted in greater equity, as might appear on first glance.
However, one should also keep in mind the central existing and very large anomaly (and injustice), which is the one Nick Sherry highlighted – that women on average still earn significantly less than men over a lifetime, and this seriously impacts on their superannuation, and thus on their life choices and individual freedom.
Despite significant advances over the last 30 to 40 years, this particular inequity remains very much entrenched. Some creative solutions are worth considering.
This post gives me a chance to say in passing that Nick Sherry is one of my favourite federal Ministers. He’s competent, diligent, consistently sticks to his core business, has overcome major career hurdles through persistence, and is not prone to indulging in some of the more distasteful aspects of political behaviour. Given the obvious problems that a measure like this would create, I suspect on this occasion he is mainly trying to spark debate rather than float a real policy shift. However, it does draw attention to something which remains a core problem at the heart of retirement incomes policy.