The in-fighting within the Turnbull Government over planned superannuation reforms continued over the weekend, with senior Liberal MP, Peter Dutton, calling for a rethink over the party’s so-called “retrospective caps” on nest eggs. From The Daily Telegraph:
Mr Dutton has hinted that the Turnbull government may need to amend planned budget reforms to super that have prompted a huge backlash over claims that $1.6 million caps on nest eggs are retrospective as they change the rules on existing investors.
“None of us should have a tin ear to the public’s view about a number of issues including superannuation and the Prime Minister’s already flagged that the government should be looking at these issues,’’ Mr Dutton said.
“There’s no question it was raised during the campaign (by voters).”
After the Coalition’s near death experience, he said there were lessons to be learned including the role of campaigners Get Up that influenced outcomes in key marginals.
Cabinet secretary Arthur Sinodinos hit back, however, claiming that the Coalition would move ahead with its plan and playing down any negative electoral impacts. From The SMH:
Senator Sinodinos said the government would not backtrack on planned changes to top end superannuation despite unrest over whether the cap on balances is fair and whether the reform is retrospective.
He said the heat in the super issue had been overestimated, with little sign of any backlash in safe Liberal seats.
“I don’t believe that superannuation was quite the make-or-break issue that some people seek to make it,” he said.
Hopefully, the opponents to the superannuation reforms won’t win the day.
These reforms were projected to save the Budget some $2.9 billion over four years, in addition to funding the low income superannuation tax offset, which means those earning less than $37,000 would not have to pay more tax on their super than they do on their income.
Hence, the Coalition’s super policy is not only sound from a public finances perspective, but is also equitable as it would help those people most at risk of becoming dependent on the Aged Pension in their retirement.
Indeed, recent ASFA research showed that the Coalition’s super policy could adversely impact 1.26 million wealthy people, but improve the lot of 4.3 million lower income earners, as well as improve the Budget by $3 billion. So it’s a win-win policy.
Dutton’s suggestion that the Coalition’s super policy cost it votes at the election is also spurious. As shown in the below table from The AFR, there was was no correlation between the wealthy electorates hardest hit by the Government’s proposed super changes and swings against Coalition MPs:
In fact, of the ten seats most affected by the Government’s super reform package, five Coalition MPs increased their vote at the election and five experienced swings against them. Given that there was an overall 3.5% swing against the Liberal Party, and that all of the seats above performed better than the average, this could just as easily suggest that the super reform package was actually a vote winner.
Dutton’s concern about “retrospectivity” is also ridiculous, since the policy would only impact future superannuation earnings only, not past earnings. ABC Fact Check conducted an extensive examination of the “restrospective” claim and found that it was false. Moreover, if it was true, then virtually every change to the tax/welfare system could also be deemed “retrospective”, meaning almost nothing could ever be changed.
Another potential fly-in-the-ointment of the reform process is the Labor Party. Over the weekend it signalled that it might oppose elements in the Coalition’s super policy considered by some to be “retrospective”, despite it too releasing an equally “retrospective” policy in the lead-up to the election.
Hopefully, Labor will put political point scoring to the side, take the high ground and offer bipartisan support to the Coalition’s superannuation changes, which are similar to its own. Labor’s bipartisan support would help suck the oxygen from the wealthy rent-seekers and Liberal representatives opposing change, thus ensuring this vital reform eventuates.
