The previous week, former Prime Minister Tony Abbott stormed the Coalition party room demanding that superannuation reform lay-off the wealthy, whilst demanding that the low-income superannuation offset be abandoned.
And on Friday, Abbott continued the superannuation reform white anting, speaking on 2GB’s Alan Jones to lobby against placing caps on contributions. From The Australian:
“My own view, as you know, is that superannuation is not the government’s money, it’s our money, it’s your money, it’s money that we’ve saved up over time.
“In many cases it’s money that we have invested, it’s not concessional money, it’s after tax money that people have put in and governments should be very careful about changing the rules once the game has started.
…there are lots of members of parliament right now who are saying on behalf of their constituents, let’s think carefully about these things, particularly this issue of the $500,000 cap on non-concessional contributions”.
In pursuing this line of reasoning, Abbott has taken ideological spin to a whole new level.
There is no difference to the Budget in the Government giving someone $1,000 in cash or giving them an extra $1,000 via a tax concession. And yet, here we have Tony Abbott attempting to argue that it is somehow virtuous to allow wealthy, older Australians with huge superannuation balances to pay less tax (or zero tax in the case of those aged over-60).
Tony Abbott seems to honestly believe that tax loopholes are good and virtuous. Of course, it is no coincidence that those benefiting the most from superannuation concessions are also high income earners.
The below Grattan Institute chart shows that the top 10% of income earners perversely receive far more generous taxpayer assistance than the other 90% of income earners under the current superannuation arrangements (see left pane):
Moreover, even if the Coalition’s superannuation reforms are implemented in full, the highest income earners would continue to receive the lion’s share of taxpayer assistance (right pane above). As noted by Grattan:
Before the changes, someone in the top 1 per cent of income earners could expect to receive two and a half times as much in tax breaks from super over their lifetime as a retiree with no assets receives in pension. This is also two and a half times as much as the average income earner receives in pension and super tax breaks combined. The Budget changes merely trim the worst of these excesses: the top one per cent now receives just twice as much as low or average income earners.
Hardly unreasonable, is it?
Blind Freddy (but not Abbott) can see that current superannuation settings are sub-optimal. They cost the Budget huge sums of money, overwhelmingly benefit the rich, and will do little to relieve pressure on the Aged Pension.
That Mr Abbott can argue against these no-brainer reforms beggars belief and highlights exactly why he was deposed as Prime Minister: he was simply unfit to lead.
Indeed, the key reason why Tony Abbott crashed in the opinion polls (see below chart), leading to his axing as leader, was because his approach to Budget repair was perceived as being fundamentally unfair. Instead of following his mentor, John Howard’s, lead and remembering the “Howard Battlers”, Tony Abbott instead remade the Coalition as the party of the elite that looks after the interests of wealthy constituents.
The sad irony in all of this is that after achieving nothing of substance, Tony Abbott will receive a massive pension from the Australian public once he retires from politics (hopefully sooner rather than later).
In the meantime, the Coalition would do well to ignore entirely the pleadings from Tony Abbott and his conservative supporters and instead 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 only hope 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. Low and middle income-earners simply will not vote for the Coalition in sufficient numbers if they suspect the party does not represent their interests.
Australia needs more policy along the lines of the proposed superannuation reform package, not less.
