In yesterday’s National Press Club Address, Opposition leader, Bill Shorten, stated that Labor would only support superannuation reform if the proposed caps on post-tax contributions are implemented from Budget night rather than “retrospectively” from 2007. From The AFR:
Opposition Leader Bill Shorten has announced to the National Press Club that Labor will support the government making the $500,000 lifetime cap on non-concessional contributions prospective but he will not agree to backdate it by 10 years…
At the moment, Treasurer Scott Morrison is negotiating with backbenchers who fiercely oppose the $500,000 lifetime cap because they believe it is retrospective.
Here we go again: Shorten wheeling out the good ole “retrospective” claim.
ABC Fact Check has already conducted an extensive examination of this claim and found that it was false. Why? Because 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.
If the $500,000 cap on non-concessional contributions was applied to Budget night rather than 2007, as demanded by Labor, then many wealthy people already with significant superannuation savings would contribute another $500,000 and accumulate an even larger superannuation balance. This would be unfair to younger generations on the wrong side of the drawbridge who would lose out having paid higher taxes to fund concessions for older generations that they themselves won’t receive.
To be fair to Shorten, he did also offer some significant offsets to more than make up the lost revenue arising from making the super caps “progressive”, which would also disadvantage higher income earners. Also from The AFR:
Labor will support lowering from $250,000 to $200,000 the income threshold at which a person’s contributions are taxed at 30 per cent rather than 15 per cent…
He has announced that Labor will oppose three smaller components of the package announced on budget day, claiming they overly benefit high income earners.
These are: firstly, allowing catch-up concessional contributions so unused concessional contribution caps can be carried forward on a rolling basis for up to five years for those with account balances of $500,000 or less; secondly harmonising contribution rules for people aged between 65 and 74 so they are the same as those under 65; thirdly allowing tax deductions for personal superannuation contributions for those under 75…
Labor said if all of its ideas were adopted it would improve the budget bottom line by $1.7 billion over four years.
So there are swings and roundabouts here on super. But overall, Labor’s proposed amendments go further than the Coalition’s, are better targeted to those in need of the concessions, and would save the Budget more money.
Shorten also continued to pressure the Government to undertake reforms to negative gearing and the capital gains tax discount. From The ABC:
Mr Shorten also outlined eight pre-election Labor commitments he said the Turnbull Government should adopt, including a severe curbing of negative gearing tax deductions and the capital gains tax discount — measures the Coalition fiercely rejected during the election campaign.
To which Prime Minister Malcolm Turnbull predictably rejected with the usual lies about crushing “investment”:
“The reason we’ve oppose them is because they are additional taxes on investment and if you increase the taxes on investment, you will get less investment. You know what happens with less investment? You get less economic growth. You know what happens when you get less economic growth? You get fewer jobs.”
Of course, Turnbull once again ignored the fact that the Government supports restricting foreign buyers to new dwellings to boost the economy – exactly the same policy proposed by Labor with regards to negative gearing. Once again, here’s the chair of the foreign investment inquiry, Liberal MP Kelly O’Dwyer, explaining the benefits of this ‘new homes only’ policy for foreign investment:
“Currently the framework seeks to channel foreign investment in residential real estate into new dwellings in order to increase the housing stock for Australians to build, buy or rent. Foreign investment is encouraged in new dwellings whether they be apartments, units or homes because in addition to creating more supply, it also creates more jobs for the building and construction sector – all of which helps to grow our economy”.
Modifying the above statement slightly to include Labor’s negative gearing policy and you get the following, which rings just as true:
“Labor’s negative gearing policy seeks to channel investment in residential real estate into new dwellings in order to increase the housing stock for Australians to build, buy or rent. Investment is encouraged in new dwellings whether they be apartments, units or homes because in addition to creating more supply, it also creates more jobs for the building and construction sector – all of which helps to grow our economy”.
That the Coalition can support restricting foreign investment into new dwellings, but vigorously oppose Labor’s negative gearing policy, is the height of hypocrisy.
