Recently Bill Shorten announced projected reform of superannuation concessions affecting around 180,000 Australians. ‘The Age’ in particular observed that the two key reforms concerned
would see retirees lose tax-free status on annual superannuation earnings above $75,000, and more people paying 30 per cent tax on contributions.
Certainly Bill Shorten’s announcement is “a step in the right direction”, bringing in $14 billion over ten years.
But it is a very modest intake when considered in perspective.
The problem is that Shorten appears to be ruling out further action on top of this on superannuation concessions AHEAD of the ALP's 2015 July National Conference.
And more alarmingly: arguably $15 billion out of a total of $50 billion will soon be going to 'the top 10 per cent' income demographic.
Former Australian Tax Office public servant, John Passant has explained that this means “the top ten percent of income earners get 30% of the tax concessions on super.” (discussion with John Passant, 22/4/15)
And ACOSS has argued that the top 20% income demographic receives half of all superannuation concessions. (ie: that will soon be over $25 billion annually!)
To get that in perspective, the Australia Institute observed in 2014 that: “The [entire] age pension currently costs [only] $39 billion”.
Is this really the best possible use of taxpayers’ money? Does it fulfil the ‘distributive justice’ test? And given the scale of the gain to only the top 10 per cent income demographic is it even politically wise when we consider what else might be done with the money?
A more decisive policy here could fund a suite of progressive reforms: National Aged Care Insurance; NDIS and Gonski; build the National Broadband Network Fiber-To-The-Premises; Medicare Dental; address life expectancy crisis for indigenous and mentally ill; expand mental health services; crisis accommodation for cases of domestic violence; welfare reform; build transport infrastructure publicly; invest in public housing to put downwards pressure on property prices and rental costs... Many of these policies have been suggested in the ‘For an Equal and Democratic Australia’ document which points the way to the kind of policy a reforming Labor government could potentially introduce.
Labor needs to think of policies in terms of tens of billions – not just ‘token policies’ which attempt to win over voters on appearances only. Further reform of Superannuation Concessions is essential. As is reform of the broader tax mix – ideally to bring in new revenue in the vicinity of $40-$50 billion. (about 2.5%-3% of GDP) (modest in the context of an economy valued at $1.6 Trillion)
Right now, with the mining boom over – Labor is 'on track' to capitalize politically from the Abbott government’s austerity . And yet Labor is also ‘on track’ to again introduce austerity of its own in government should it maintain its inflexible commitment in its National Platform to ‘small government’. (though probably less severe, and less cynically targeted - you would hope!)
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