Super minister Bill Shorten was gratified that all of those in the superannuation industry welcomed the government’s announced changes to the superannuation system. It reminded me of the big miners being “willing” to pay the MRRT. Sure they were when faced with the prospect of something more onerous. I, for example, would “welcome” and be “willing” to accept having my big toe cut off if the alternative were my leg.
Leaving the specific superannuation changes aside for a moment, it is worth looking at Messrs Shorten and Swan’s joint press release for an insight into their redistributive mindsets. They note that the previously announced change, not yet legislated, which increased the 15% contributions tax to 30% for those earning above $300,000, “will only [my italics] affect 128,000 Australians”. So it’s alright then, we are obviously meant to infer. But it provokes the question: how many Australians does it take before they lose the group status of being “only” in number and therefore, apparently, of no account? Clearly that depends on how “fabulously” rich they are.
Later we are told that an individual with a superannuation retirement income of $100,000 “receives more government assistance than someone on the maximum rate of Single Age Pension”. No, I didn’t make that up. People who thought they were not a burden on society because of their hard work and frugality are really, it turns out, a bigger burden than those wholly dependent on a government pension.
The answer is clear: profligacy among those working now will lessen the burden on government in the future. A good time can be had in good conscience. Why didn’t someone like Bill or Wayne tell us this before?
Of course, the premise is that all money earned belongs to the collective, represented by the government. Accordingly, every dollar left untaxed is a concession; a gift. That’s why, with a straight face, Shorten and Swan can talk about people receiving concessions who pay (or who have paid) most tax. The fact that this kind of commentary passes without howls of laughter and derision shows how much the socialist infection has spread throughout the media and society generally.
As to the changes, was it a clever ploy to scare people and then let them off lightly, or was it the upcoming election and the raised voices of aging superannuants and Simon Crean that did the trick? Put money on the latter. Imposing a tax of 15% on superannuation earnings of over $100,000 in retirement is inequitable and retrospective taxation, but it is relatively inconsequential. So why do it at all, as Peter Costello said, for the sake of “two copper coins”? The answer is that we have a dysfunctional government with not the least idea how to govern. Why does a bull smash the china? Because it’s a bull.
The other principle change had the superannuation professionals – those who extract easy money from superannuants – drooling for good reason. The government had promised or threatened, depending on your point of view, to lift the concessional contribution cap for those 60-and-over from $25,000 to $50,000, provided their superannuation balances were less than $500,000. This would have produced an administration nightmare and for not much more money flowing into super. After all, how many people are there who, having reached the age of 60 with less than $500,000, are able to contribute over $25,000? There are probably few of them.
On the other hand, lifting the contribution to $35,000 without a balance limitation is both easier to administer and is likely to bring in more money on which fees can be earned. Why wouldn’t the superannuation industry be pleased? I am even prepared to say that this was a clever ploy on the part of the government. Or, I would say that if its record of serial incompetence didn’t suggest serendipity was at play. “We fell into that one; some luck at last,” Gillard and Swan were heard to sigh.
The lesson to be learnt is that spendthrift governments need taxes as vampires need blood. Their promises mean nothing. As a retired neighbour of mine said to me, “I thought the hard part was making it and saving it, but it turns out the hard part is keeping it”.
If Gillard were re-elected (amid cries of deep distress among those with a measurable IQ) superannuation “concessions’ would be attacked again. Surely that is not too hard to grasp. If Howard and Costello were brazen enough to do it in 1996 why doubt the chutzpah of Gillard and Swan, deeply mired in unfunded spending promises, in 2014.
The key, if (when) Abbott is elected, is whether he has the strength of character and conviction to reduce materially the growth in welfare spending. If not, beware! He will be scrounging for more money too.
Peter Smith, a frequent Quadrant Online contributor, is the author of Bad Economics