The Coalition in-fighting over its superannuation package has taken another turn, with the the small business policy committee of the Liberal-National Party (LNP) of Queensland labeling the reforms “madness” and demanding a rethink. From The Australian:
In a motion to be debated at the LNP’s state convention next month, the committee said the Turnbull government had “broken faith’’ with the Australian people in the changes announced in the May budget…
The committee accused the government, which hopes to raise $550 million from the $500,000 cap, of breaking assurances not to target superannuation.
“On budget night 2016, the government broke faith with the Australian people and undermined their trust in the superannuation system,’’ the motion reads.
“Although there were positive changes, several measures broke repeated assurances that there would be no additional taxes on superannuation and that ‘the government is not coming after your superannuation’.’’
The Australian’s Grace Collier has also vented her rage at the superannuation reforms. Over the weekend, Collier accused the Coalition of failing to look after its “friends” and its “base”:
At present, the party is going out of its way to harm its friends, via an illogical imposition of life-changing, financial disadvantage…
This is a tax grab by a government too incompetent to cut obscene amounts of wasteful spending in other areas…
Malcolm Turnbull and his team underestimate the anger out there. This superannuation issue is the last straw. The base is in despair, on the verge of abandoning the party for good…
The base is sick of being taken for granted, pushed around and punished by the people they vote for, give money to and volunteer their time to assist. The base does not care if the superannuation policy affects 4 per cent, 0.04 per cent or 40 per cent. The point is that the policy is disgraceful, unfair and cruel.
If something doesn’t change, come the next election the base will dig the Liberals’ grave, push them in, then dance on top with gay abandon.
This superannuation policy is a measure of how foolish the Liberal Party is now; a senseless decision, made after swallowing the Labor agenda, is turning its greatest friends and advocates into bitter enemies.
And today, Collier has continued her ranting:
With its foolish superannuation changes, the Liberal Party is hitting the people who do everything for them; it is taking money out of the pockets of its own support base.
Small business people, the wealthy and the non-wealthy but aspirational are all going to be unfairly penalised by the nonsensical changes the Turnbull government has planned.
The government is hopelessly addicted to spending, and when a government addicted to spending can’t break its habit, it robs the piggy banks of those closest.
It abuses the rights of those within the family; it takes advantage of the close relationship, banking on the hope there will be reluctance to retaliate.
Nowhere above do these ‘critics’ actually address the merits of current superannuation settings and the reform package.
Where is the admission that the existing superannuation system is busted, with the lion’s share of benefits flowing to the top 10% of income earners, who are perversely receiving more generous taxpayer assistance than the other 90% of income earners (see below AIST and Mercer chart).
How is this optimal from either a Budget sustainability or an equity perspective?
Moreover, where is the admission that even after the Coalition’s superannuation package is implemented, high income earners would continue to receive the lion’s share of benefits (albeit less than before), as noted by AIST and Mercer [my emphasis]
[AIST and Mercer’s] research shows that the top 1 per cent of income earners will be hit hardest. Despite the heavy backlash over the plan to limit after-tax super contributions to $500,000 over a person’s lifetime, AIST and Mercer found that the measure would have almost no impact on savers overall because so few superannuants opted to inject after-tax dollars into their super pots.
The budget measure that will have the biggest impact is the $1.6 million limit on super pension transfers. Reducing the pre-tax concessional contribution cap to $25,000 will also have a sizeable effect on high-income earners.
If the lower pre-tax limits were adopted, as well as the super pension transfer cap and a doubling of the contributions tax to 30 per cent for individuals earning between $250,000 and $300,000, the level of government support for the top 1 per cent of wage earners would fall to $450,000 from $600,000 over their lifetime.
The level of support for the top 10 per cent of income earners will fall from $500,000 to about $470,000. Individuals on full-time salaries who fall in the seventh decile will continue to receive the lowest level of government support, estimated to be just over $300,000 over their lifetime.
So, under the Coalition’s superannuation package, the top 1% and 10% of earners would continue to receive the lion’s share of taxpayer assistance, only it would be a bit lower than currently. Hardly a cause for righteous indignation, is it?
The Turnbull Government would do well to ignore the special pleadings from the likes of Grace Collier and continue to focus on developing good policy in the national interest – reforms that blend Budget restraint with fairness, as well as combine efficiency with equity.
The Coalition’s best hopes of holding on to government rest with it capturing the ‘middle ground’, not lurching to the right and governing in the interests of the wealthy elite.
Australia needs more policy along the lines of the superannuation reform package, not less.
