One of the few pleasing aspects of this term of government is how the issue of superannuation reform has gone from a policy no-go zone to virtual bipartisan agreement that the system implemented by Peter Costello is overly generous, unsustainable, and must be wound back.
That said, it remains highly disconcerting that Labor continues to attack the Coalition’s policy announced in the Budget, maintaining the false argument that it comprises a “retrospective” change. Here’s yesterday’s attack as reported in The Australian:
Dr Jim Chalmers, Labor’s spokesman for financial services and superannuation said: “Scott Morrison’s ill-considered superannuation policies are quickly unravelling”.
“When Peter Costello of all people tells the Liberal Treasurer that his policies are irresponsible, you know that there’s something deeply wrong,” Dr Chalmers said.
“Scott Morrison needs to own up to his policy mess in super and admit that his proposed policies are retrospective and of a type he has railed against previously.”
Dr Chalmers has, of course, used the whinging comments of Peter Costello – the creator (and protector) of the current super mess – to attack the Government. Costello’s view was debunked yesterday, which you can read here.
Labor’s claims about the Coalition’s superannuation policy are both wrong and hypocritical.
First, the Coalition’s policy is not “retrospective” since the changes would apply only to future super earnings, not income earned in the past.
It’s no different to when changes are made to pensions, family tax benefits, child care rebates, or the like. These are rarely grandfathered and almost always affect existing users, not just users in the future.
Moreover, it is no more retrospective than when Peter Costello dumped the super earnings tax for over-60s in 2006 and allowed those with pre-2006 super balances to benefit from the changes. Funny how there are never howls of “retrospectivity” when a tax change is in one’s favour.
Second, if the Coalition’s plan is “retrospective” then so is Labor’s. Under Labor’s proposed superannuation reforms, annual earnings in retirement of more than $75,000 would be taxed at 15% versus 0% tax currently. Assuming a 5% return, this equates to a super balance of $1.5 million – even less than the Coalition’s $1.6 million cap.
There’s a lot to like about Labor’s election platform. But it undermines itself when it makes misleading and hypocritical arguments about “retrospectivity”.
Superannuation reform is one of the few areas where Australia could have had bipartisan support for change. Instead, Labor’s opposition to the Coalition’s policy has given oxygen to the rent-seekers, thus making actual reform more difficult.
Such is the adversarial nature of modern politics, whereby scoring a quick political point always trumps the national interest.
