As the nation embarks on a critical federal election, both sides of politics have decided to launch a brutal assault upon superannuation. Inspired by, but going even further than Labor’s recent proposals, the Turnbull government in its rushed May 3 Budget chose to mug not only self funded retirees, but every Australian who pays taxes to keep the country going and takes pride in never being a burden on the state.
Understandably, this issue has dominated and seriously damaged the first week of the Coalition’s ‘positive’ election campaign, with irate voters up in arms. In turning on their conservative heartland, the Turnbull government demonstrates how prescient was John Stone’s warning in our 5 December issue last year that the treachery and betrayal shown in the coup against Tony Abbott would only beget ‘more such treachery and betrayal’. In this instance, the victims are those retirees who played by the rules yet are now penalised retrospectively, despite having scrimped and saved over a lifetime and paid every last cent of tax.
Under the Turnbull-Morrison changes, retirees can no longer keep more than $1.6 million of their own money in their super fund. Placed in a bank term deposit today at 3.2 per cent, this sum produces $51,200 p.a. A riskier deposit, one attracting 5 per cent, earns $80,000. In addition, this supposedly conservative government has stuck the boot into the many middle-aged par- ents who’d planned for years that, as their children became independent, they would increase what they could put into superannuation. The annual limit on pre-tax income paid into superannuation at concessional rates has been reduced to $25,000. And to twist the screw into the heartland, there’s to be a new lifetime cap of $500,000 on putting already taxed money into superannuation. Once again it’s retrospective. It’s alright for the politicians; most of their superannuation is paid by the taxpayers, not themselves.
Labor has adopted all these imposts including those worse than their own original proposal. But even Labor – who began the process of destroying confidence in superannuation – balks at the idea of retrospectivity.
Worse, these new measures seriously damage confidence in the credibility and long-term viability of the superannuation system. They also raise eyebrows: in what other ways will the now rebadged ‘Turnbull Coalition Team’ (formerly the Liberal Party) lurch to the left and ditch promises that the Liberals won a landslide victory with in 2013? (It is unlikely an Abbott budget would have risked so betraying conservatives. To do so during an election is, as they say, ‘courageous’.)
Our politicians, it’s worth noting, will be unaffected by the changes, able to carry on drawing over two or three times as much post-tax superannuation as we mere mortals, along with a range of other benefits including ‘jobs for the boys’, lobbying without the ethical restraints imposed in, say, the US, and being free to retire earlier than most. As our new out-of-touch privileged class, how different they are from Prime Minister Chifley, who shared the bathroom at the Hotel Kurrajong, or Prime Minister Menzies, whose staff you could count on your fingers, and who, when he retired, couldn’t afford to buy a house.
Speaking of which, in its rush to steal Labor’s ‘progressive’ touch, the government overlooked dealing with the greatest weakness in our superannuation scheme; namely, that while the principal purpose should be to get people off the pension, there’s an incentive to spend the funds immediately on retirement and many do just that. Because current immigration sees 200,000 people flood into Sydney and Melbourne each year, house prices have risen to stratospheric levels, and many parents use their super to help their children buy a home. Instead of understanding the problem, the government will still force retirees to draw down a minimum pension to stop them leaving too much to their kids. The system should work the other way: encourage retirees to make their super last longer.
Apart from commendably widening Abbott’s small business tax concession, much of the Turnbull-Morrison budget doesn’t seem to belong to that proud party once committed to the principles founder Sir Robert Menzies espoused.
The Coalition deserves to win this election. But at what cost to its values and supporters remains to be seen.
Subscribe to The Spectator Australia today for a quality of argument not found in any other publication. Get more Spectator Australia for less – just $20 for 10 issues