Main Points

One of the least effective and most unfair forms of government spending has increased dramatically. Tax expenditures (in the form of tax breaks on superannuation, the private health insurance and childcare rebates, housing concessions etc) are increasing in number and cost, despite being significantly less equitable than other forms of government assistance.

Download Reforming Australia’s Hidden Welfare State by Ben Spies-Butcher and Adam Stebbing

Because tax expenditures do not go through the same review process as normal government spending, they tend to be less accountable and transparent. As a result, tax expenditures attract less media attention and less democratic scrutiny. It is essential that their growing slice of Commonwealth spending be scrutinised and in some cases reconsidered.

Case Study: Superannuation

This paper outlines possible reforms to one of the largest tax expenditures, superannuation. By transforming this particular tax expenditure into a rebate program, which would be subject to proper budgetary scrutiny, Australia’s superannuation arrangements could be made more accountable and more equitable. If successful, this model could then be applied to other areas of tax expenditure.

Read coverage of this paper in the Daily Telegraph and the Sydney Morning Herald

Update: Minister for Superannuation Chris Bowen has spoken in favour of making super tax breaks fairer. Read CPD’s Ben Spies-Butcher in the Sydney Morning Herald on Bowen’s comments here