In coming up with their latest superannuation hit Prime Minister Julia Gillard and Treasurer Wayne Swan have stolen a leaf from the Hawke/ Keating manual on political tactics. It’s the oldest trick in the book: create the expectation that something really nasty is going to happen then, at the last minute, replace the black clouds with grey ones.
Invariably this sleight of hand is greeted with a collective sigh of relief, particularly from the media, which is quick to claim credit for the about face.
And so it was with the Gillard Government’s "soak the rich” superannuation changes. While continuing to peddle the line that it would never abandon Labor’s traditional mantra of defending the interests of low-income earners, the government was clearly happy for the media to speculate that there would be a tax crackdown on the superannuation earnings of over-60 retirees. Disgruntled former minister Simon Crean’s protestations that no government should gouge battlers’superannuation nest eggs to top up its own funds added fuel to the fire.
Stop and think for a minute. Even the Gillard government, which can’t seem to get anything right, could not possibly be stupid enough to turn this grey army against it in an election year, especially with all the polls frightening Labor supporters like the rumble of an approaching tsunami.
The CEO of the Financial Services Council, John Brogden, welcomed the decision to contain the tax grab to about 20,000 retirees at the top end of the superannuation ladderm and immediately announcing that he was cancelling a nationwide advertising campaign against the anticipated Government policy.
Under the government’s announced policy, retirees who earn more than $100,000 a year from their superannuation investments will be hit with an initial 15% tax slug on the excess.
More to the point, they have been thrown to the wolves in a very Obamaesque class-warfare gesture, premised on the argument that anyone who is that well off can afford to contribute a bit more to the pub;lic coffers. Whether they can or not is hardly an acceptable measure of the success of a superannuation policy conceived and designed to take pressure off the social-welfare system.
Swan’s attempt to draw a comparision between the tax paid by low-income earners and the current tax-free status of the top enders’ superannuation is fatuous because it completely ignores that retirees pay tax throughout their working lives.
In any case, should this legislation get up, which is highly unlikely, those in this small group will probably shift their investments into negatively geared property — and still pay no tax.
Interestingly, this was the second time in a couple of weeks that the media had taken the bait, failing to hold the government to account over questionable policy. The first instance was when legislation to cut the licence fees of the commercial free-to-air networks by 50% slid through Parliament. While this was a key part of the package of media legislation announced by Communications Minister Senator Stephen Conroy, the press was blindsided by the appointment of a government-funded "public interest czar" — a move doomed to fail, but which nevertheless created a handy distraction from the licence-fee cuts, not to mention Gillard & Co.’s many other woes.
This freatherbedding is supposed to help the free-to-airs as they go through the labour pains involved in the birth of a digital-only television broadcasting in Australia. But it should not be forgotten they have already received hundreds of millions of dollars in compensation for surrendering analogue spectrum, which they didn’t own in the first place. This has, in turn been converted into a $3 billion budget forward estimate on the outcome of this month’s scheduled 4G spectrum auction, which may well collapse due to lack of interest by the big telcos.
Meanwhile, the ABC which will benefit through increased funding as a result of a Conroy-ordered upgrade in its charter, will also be guaranteed control of the country’s international television service, the Australia Network, exclusively and in perpetuity.
This increased spending on the left-wing national broadcaster, coupled with a fall off in revenue from the three free-to-air commercial services, which were given additional comfort through a gurantee that they would face no competition from a fourth network ( another potential revenue stream lost the government), does not seem to faze the Gillard administration.
No wonder the free-to-air lobby is understood to have been more than a little surprised that this legislation was generally regarded by the media as non controversial.
In reality it was probably the most controversial, but the attack on freedom of speech was more sexy.
Veteran journalist Malcolm Colless is a frequent contributor to Quadrant Online