The absurdity of the Liberal Party’s outrage over superannuation concessions for the most wealthy in our society knows no bounds.
A cursory look back at their positions over time reveals a stunning level of hypocrisy, even by their vastly diminished standards. For example, there were no cries of CLASS WAR! when Peter Costello described the system of super concessions as unfair. What it reveals is not a class war between two income groups; but instead a war between facts and furphies.
Still, this current debate about the tax treatment of super, and in particular the inequities in a system that provides disproportionate tax breaks for the highest-income Australians, is a welcome respite from the usual Canberra echo-chamber of polls and personalities. Because with government revenues down and limited appetite for higher taxes, it is right and proper that the commonwealth budget prioritise those who need the most help, not those who need it least.
Labor’s record on super is a proud one; invented and implemented by Paul Keating during the last ALP term of Government and expanded, advanced, increased in this one by Kevin Rudd, Julia Gillard, Wayne Swan, Chris Bowen and Bill Shorten. Super isn’t just providing security and dignity in retirement, as important as that is, it has also created a massive pool of capital that helped Australia through the global crisis. This is economic policy at its very finest. A monument to the labour movement at its best.
The Liberal Party opposed the introduction of superannuation and every single increase since. Tony Abbott once described it as a “con”. Now he wants to reintroduce a 15 percent tax on 3.6 million low-paid Australians, 2.1 million of which are women. You haven’t read that wrong: he wants more tax on the lowest incomes so that he can give Gina Rinehart a tax cut on her mining profits. Those are Liberal priorities under Abbott, always the few at the expense of the many. Says it all.
Tony Abbott and Peter Costello sat in John Howard’s cabinet when it agreed to make the system less fair and less equitable. Decisions taken in 2005 and 2006 alone cost the Budget approximately $10 billion in superannuation concessions. For this and other reasons, by 2009 the top 1 percent of earners were receiving 9 percent of concessions. These are facts and they are fairly well-known.
But not so many people recall what Abbott and his colleagues were saying about superannuation fairness, further back in 1996. Because while the Liberal Party put in place the inequities and unsustainable measures above, that the current Government or a future successor will have to fix, it is also true that their one attempt at injecting a little bit of fairness came with the introduction of the super surcharge in 1996 (before they unwound it again a decade later!).
Recalling what Abbott, Costello and other Liberals said about this at the time blows out of the water their hypocritical approach today. Let’s start with Costello, who said in the House of Representatives in September 1996 that the “superannuation surcharge will apply to people with incomes phasing in from $70,000 to $75,000. Whether you would call that modest or low is up to you but I would have thought that somebody who was on $70,000—including employer contributions, up to $85,000—was in the upper ranges of an income earner… I think it’s fair, I think the Australian community think it’s fair”. The RBA’s inflation calculator tells us that this Costello ‘threshold’ is equivalent to somewhere around $106,000 to $128,000 in 2013.
Today the Liberals not only refuse to concede the current superannuation concessions are unfair, one after another their friends appear on Sky News to refuse to concede they are ‘concessions’ at all. But if that’s true why in September 1996 did Costello tell the House that “a superannuation system that delivered 33 per cent concessions to upper income earners but did not deliver anything like that benefit to lower income earners was not a fair concession”?
And why, one month earlier, did he describe a “fairness measure … to deal with a tax concession which distributed overwhelming advantage to those at the higher end of the income scale” and “was overwhelmingly regressive and overwhelmingly delivered tax benefits to high income earners”? Costello could easily describe parts of today’s system.
In selling his 1996 reforms Costello was at pains to explain that the super surcharge would “only affect those earning around 175 per cent of average weekly ordinary time earnings”. By my calculations that is a bit less than $130,000 a year in today’s terms.
How absurd and hypocritical, then, that today’s Liberals scream CLASS WAR! when the Labor Government begins a debate on super concessions for those earning much more than the benchmarks Costello outlined. Worse that Abbott himself has forgotten his own words 1996, that “we have been very careful to ensure that the burdens have been placed only on people who are able to bear them” – a more admirable and responsible position. Like so much else, that principle has been thrown overboard. Another victim of today’s reckless negativity.