David Thorp has spent the past 15 years telling anyone who would listen about his proposal to reform the superannuation system. Finally, he says, politicians are starting to take notice. 


Dr. Thorp, a policy adviser with the NSW Treasury, likes the changes to superannuation announced in the Federal budget in May.


The changes, which include a tax of 30% on super contributions for those earning over $250,000 a year and a lifetime limit on the post-tax superannuation contribution of $500,000, reintroduce an element of fairness to the superannuation system, according to Dr. Thorp.


According to Treasurer Scott Morrison, the changes affect just the top 4% of Australian income earners. Mr. Morrison claims that the changes create “a fairer, more sustainable retirement income system for a 21st Century economy”.  


Dr. Thorp’s work at the NSW Treasury, where he focuses on family and community services, particularly for the aged, has made him familiar with the problems of the existing super rules. He became so engaged with the issue that he wrote a paper in 2005 suggesting how superannuation could be made more flexible. 


The paper had a specific focus on creating a fairer system that did not disadvantage those who chose to spend time out of the workforce. “The current system is not designed for modern flexible careers,” he explains, “People don’t want to lock their money away until age 65.” 


Dr. Thorp’s system revolves around allowing people to withdraw money from their superannuation at any age, with concessions designed to encourage workers to leave money in super until retirement.  


Nothing if not persistent, he has constantly revised his proposal, resubmitting it to government tax reviews, independent think tanks and directly to politicians. The feedback from both sides of politics has been positive. 


He thought he might have made a breakthrough when Peter Costello as Treasurer made substantial changes to Australia’s superannuation system in the 2006 and 2007 budgets. He was quickly disappointed, however, when he realised that the tax concessions were introduced without accompanying tax increases. 


Dr. Thorp believes that tax concessions, such as a reduced tax rate on earnings, should be used to encourage workers to contribute to super. However, they should also be taxed if they withdraw funds from their super accounts. He believes the tax concessions provided by Howard government Treasurer Peter Costello were exploited by the wealthy, resulting in a largely unfair superannuation system. 


“I don’t know whether he read my paper and didn’t understand it, or it was just pure politics. But he sort of took one-half of what I said and not the other half. So it was just basically a big tax giveaway,” Thorp told UniPollWatch


Brendan Coates, a Fellow at the Grattan Institute, believes the changes announced in the budget go a long way towards aligning Australia's superannuation system with its intended purpose. “The previous arrangements are far too generous to high-income earners,” he says, “and allow a lot of tax concessions to go to high-income earners (who) are never going to access the pension in their lives.”