ScoMo, please steer clear of anything to do with superannuation. Your unfortunate experience when Treasurer should have shown you that it’s not your long suit. Currently creating an unnecessary furore by slapping down economically literate backbenchers and ruling out their soundly-based objections to any further rise in the Keating government’s superannuation levy (and other needed super reforms) proves the point. And Josh and Matthias should also take a Bex and a good lie down instead of claiming a ‘conflict’ with a non-existent 2019 election policy gradually to implement 2014 legislation that belatedly increases the levy from its present 9.5 to 12 per cent. The last time the Coalition exercised its policy on the superannuation levy was five years ago when Prime Minister Abbott further deferred Keating’s timetable for fully implementing what has, over 27 years of partial implementation, become a $2.8 trillion monster. It is not only huge, but, as the Productivity Commission has shown, is out of control and in need of major reform.
There was no mention whatsoever in this year’s lengthy Liberal pre-election superannuation policy (mainly about tax) of any changes in the levy, which are not due to begin under Abbott’s deferred deal until 2021 with a 0.5 per cent lift to 10 per cent. So these backbenchers are not in conflict with any issue on which voters recently gave the Coalition a mandate; the slate is clean. Could this storm in a teacup be merely ministerial concern that political credit for whatever changes ultimately must take place will be claimed by these backbenchers? Contrary to the PM’s inference that raising this issue in public rather than privately in the party room indicated disloyalty, in fact it had already been raised officially in a public warning last year from then Minister for Revenue and Financial Services, Kelly O’Dwyer, against increasing the superannuation levy because it would ‘exacerbate sluggish wage growth’. Since then there have been The Productivity Commission, numerous academic studies and the Grattan Institute reinforcing the Henry Committee’s concerns; MPs have a duty to be involved. And the newly appointed Minister for Superannuation, Senator Jane Hume, has acknowledged the problem by stressing that the prospect of the levy rising to 12 per cent underlines the need to ensure that superannuation becomes efficient – with the inference that it would not be appropriate to raise the levy and unleash an even greater flood of money unless super did become more efficient.
So why on earth have the PM, the Treasurer and the Finance Minister all given the media an excuse for ‘Liberals Divided’ headlines by jumping on seven backbenchers who are seeking to generate informed public discussion of an important issue on which the government has no current policy – unless the PM seriously considers as his current ‘policy’ the Abbott legislation aimed at putting off for the future a problem it did not want to deal with at the time. But that ‘future’ is only a couple of years away. Action will be needed on this before the next election. Yet this year’s highly critical Productivity Commission report on superannuation strongly warns against any increases in the levy before the completion of ‘an independent inquiry into the role of compulsory superannuation in the broader retirement incomes system, including the net impact of compulsory super on private and public savings, distributional impacts across the population and over time, interactions between superannuation and other sources of retirement income, the impact of superannuation on public finances, and the economic… impacts of the non-indexed contributions threshold’. Apart from Frydenberg telling the Australian Financial Review in May that he wants to hold a Review of Retirement Income policy, the government has not formally responded to the Productivity Commission’s January report beyond those matters coincidentally covered in its February response to the report of Banking Royal Commission. If public pressure is required to get this much-needed review under way, then the backbenchers still have a job to do – and to hell with the muzzle. With Paul Keating, who fathered this fiscal behemoth, damning these ‘monkeys on the backbench’ for promoting ‘grand theft’ of retirement incomes, their virtuous cause has been further ennobled.