Remember a short while back when all of us had a bit of a laugh over the then latest Turnbull government slogan ‘continuity and change’? Hard not to laugh when the producers of a top US television comedy later point out that the slogan was in fact theirs, and they’d spent ages having their top writers try to dream up the most inane, meaningless bit of verbiage possible. What they were trying for was a vacuous catch-all phrase wholly without meaningful content. The Turnbull people found the exact same slogan all on their own, but they thought it a winner. Funny, right? Well, not so funny. Given what this government has done with its budget and some recent appointments, assuming ‘continuity and change’ was meaningless verbiage might have been a tad kind.
Start with ‘change’. Rather than just mindless sloganeering, there has in fact been some pretty big change coming from this Turnbull government. For instance, big changes to our superannuation. Some of them retrospective. Yes, a Liberal Party government is changing the rules of the superannuation game retrospectively. This is astounding, I know. Untold numbers of taxpayers have relied on those rules to structure their affairs and along comes not some Green Party pseudo-Marxists but Scott Morrison, Malcolm Turnbull and what pretends to pass in this country for a small government, right-of-centre Liberal Party to re-jig those tax rules retrospectively. Even Paul Keating thinks this is madness. What was good tax planning at the time it was done some five, six or more years ago is – poof! – deemed now to be no good. It’s like saying that green light back in 2008 will now be deemed to have been a red light. ‘Sorry, chaps. We’re not able to control our spending so we’re going to confiscate some of your hard earned money you’ve saved up over decades. Hope that’s okay?’ You can’t deny that that counts as change, can you? And let me be clear. I am not a libertarian-type purist who would always rule out retrospective law changes. There are extreme cases, in my view, when it is more than warranted. For example, when the top Nazis still alive after World War II were put on trial and then hanged it is plain that this was just retrospective law-making dressed up in some natural law hocus pocus clothes. But that was an extreme situation. Turnbull/Morrison’s retrospective superannuation change looks nothing like that. There are powerful long-term consequentialist reasons for almost never indulging in this sort of retrospective shenanigans. And from a Liberal government!
Then there’s the change that caps the tax free lump of super monies at $1.6 million. This is said to be enough for you to retire on. Really? Take that amount and go out into the market and try to buy an annuity with it. Remember, these are near zero interest times. What would you be able to buy with that ‘this is enough’ 1.6 million lump sum? Let’s assume the best and call it an unlikely ‘$50,000 per annum’. Wow! So imagine person A who is like the soccer player George Best (who told people before his death that he had spent 90 per cent of his monies on booze and loose women and the rest he’d wasted). That Person A therefore will go on to the Age Pension, at what? About $23,000 plus Health Card, plus various concessions, call it $35,000 to $40,000? Now imagine Person B who works hard and saves his whole life to accumulate a superannuation nest egg. According to this ‘Liberal’ government of ours 1.6 million is more than enough. That way Person B can retire with that lump sum and go and buy an annuity that pays (on generous assumptions) not much more than what the wastrel, spendthrift Person A will get from taxpayers.
What sort of incentive signal is that to send out? What anyone should take from Messrs Turnbull and Morrison is that you’re a mug to save in your super. Buy the most expensive house going, have around $300,000 in cash and get the Age Pension. Otherwise you’re super rich, or a mug. Again, you can’t deny that this Coalition government is dealing in pretty big change, at least as far as what most of us understand Liberals used to believe in.
Ah, but what of treating those with defined contribution superannuations the same as that select group of judges and some politicians and civil servants who have defined benefit ones. Mr Morrison has claimed that ‘commensurate measures’ will apply to the defined benefit crowd. That, I’m afraid, is a lie. First off, these ‘commensurate measures’ will only hit those with post-retirement defined benefit pensions of about $100,000 per annum (not the $50,000 p.a. you can buy with your $1.6 million if you’re lucky). And secondly, according to economist Judith Sloan, the hit the politicos and civil servants will take will be tiny in comparison. In situations where a contribution balance would-be pensioner will be hit with a $10,500 per year extra tax bill, his equivalent civil service/judge/politician on the defined benefit scheme will be hit with a $1,850 per year additional tax bill. Basically, it’s being economical with the vérité (to use the language of our new $50 billion subs purchase) to say the elite with their defined benefit pensions are being treated the same way – ‘commensurately’ was the term used – as the rest of us are.
But don’t think about this too long. It will make your blood boil, unless you’re Bronwyn Bishop, say, who will retire on an inflation indexed $200,000 per year pension. For those who are wondering, that works out (depending on your assumptions about interest rates and the retiree’s age) at an implied capital value of almost $5 million (or between $3 and $6 million). Why isn’t $1.6 million enough for her Mr. Morrison? Seriously, why not? Too little to charter a chopper?
And that takes us to ‘continuity’. Alas, one thing you can count on with right-of-centre Liberal governments is that they will appoint their ideological enemies to key positions. Labor never does this. But the Libs can’t help themselves. I’ve mentioned top judicial appointments in the past. This past week saw Turnbull and Brandis put someone on the Human Rights Commission (disclosure: I’ve said for years that body is irredeemable and ought to be shut down) who is a Gillian Triggs clone. Is he even on the record wanting the repeal of 18C? No. Quite the contrary. But that’s okay by our self-styled John Stuart Brandis A-G. He’s happy to appoint Mr Santow.
Then there’s the über wet Ms Hatfield-Dodds, past Green Party candidate for the ACT Senate who has just been appointed as Deputy Secretary of the Dept. of PM and Cabinet. I know. It beggars belief. I suppose no people with small government, liberal viewpoints are available anywhere in Australia. Continuity and change. Next time you hear it, don’t laugh.