So now it’s NIMSA – the Not In My Superannuation Account. The same commentators and dissident conservatives who have been highly critical of the Turnbull government’s inadequate efforts to curb continuing federal deficits, find no logical inconsistency in their campaign against a $3 billion budget saving that may disadvantage some of them – but benefit many more superannuees while helping to improve the budget. Through an effective scare agenda, the more than 90 per cent of superannuees not hit in any way (a third of whom actually stand to benefit by $3 billion –- most of them women) have been made to worry that they too may be at risk. So the great bulk of media cover has been totally negative, submerging the infrequent reports of private sector experts supporting ‘much-needed reform’. This, along with the government’s remarkable inability to sell what is, in reality, a good news story (along with ministerial gaffes), has resulted in commentators crediting this ill-founded negative campaign with posing a serious threat to the government’s re-election.
Contrary to the concerted media attacks, ‘the budget does not wreck the super system’; it makes it ‘stronger and fairer’, according to superannuation industry icon Jeremy Cooper, who describes the changes as a ‘political imperative that had to be done’. And superannuation expert KPMG commends the government for the ‘equity and fairness’ of its changes in reducing the ‘inappropriate levels of tax subsidies… and removing unfair tax advantages’. Business leader Gerry Harvey has joined industry experts like the Association of Super Funds of Australian, Deloitte Access Economics and SuperRatings to support cutting back the tax breaks at the top end of super. Even some media critics are beginning to acknowledge some positives, with Robert Gottliebsen at last recognising that the Coalition’s changes are more generous than Labor’s, while the Australian’s Glenda Korporaal admits that the peripheral and widely rorted Transition to Retirement system that was subject to a confected media furore last week, was far too generous and needed to be cut back.
The justification by dissident conservatives for the triumph of self-interest over principle, as displayed in the hundreds of blog comments under newspaper reports on super, is the self-evidently false claim that the changes suffer from the unpardonable political sin of retrospectivity. This enables those Liberals (justifiably) unhappy with the manner of the change in leadership, to cling to the retrospectivity furphy to self-justify the integrity of their intention to vote against the Coalition in the Senate – or even for Bill Shorten and his genuinely damaging attack on high-income superannuation.
The retrospective myth emerges from the inclusion of 2007 in the arrangements about the new cap of $500,000 on what can be held in the ‘tax-paid’ element of a super fund. It is not a matter of retrospectively ‘going back to 2007’; it is a question of what amount exists, whenever contributed, on the cut-off day. If 2007 were removed, the only effect would be to disadvantage those superannuees who had made contributions before 2007, which would then no longer be excluded from being counted in the cap. This new cap operates entirely prospectively from budget night – with no penalty or disposal requirement for those over that limit on that date – an effective grandfathering. But in future, no amounts may be added over the $500,000 limit. There is nothing improper about a government, prospectively, limiting a tax benefit, especially when it had been advised by a lengthy public enquiry and by the Productivity Commission that these superannuation tax breaks were being unfairly misused to the tune of billions of dollars to provide well-off taxpayers with far more than was required for retirement purposes. The argument that people who had previously expected to be able to take advantage of the tax break in the future were ‘retrospectively’ robbed of their expectation, would prevent any tax changes from ever taking place and is patently absurd. Every prospective tax change has the potential to affect expectations; singling this one out is so ridiculous as to call into question the political motives for the vehemence of the attack on the government’s reform of this proven tax rort.
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