Government chooses politics over super fairness - Radio National Breakfast





SUBJECT/S: Superannuation fairness.

FRAN KELLY: The Prime Minister left nobody in doubt yesterday on the Coalition's position on superannuation tax concessions.

TONY ABBOTT: We aren't ever going to increase the taxes on super. We aren't ever going to increase the restrictions on super because super belongs to the people.

KELLY: That sounds like 'never ever' to me. That emphatic response from the Prime Minister follows revelations yesterday that the Government had been looking at options to change the tax treatment of super right up until 22 April. That was the day Labor released its policy on super tax changes. Shadow Assistant Treasurer Andrew Leigh obtained these letters from Treasury under Freedom of Information. Andrew Leigh is speaking with our Business Editor Sheryle Bagwell, and she began by asking him what prompted his decision to go for an FOI request.

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: The Government had been so unequivocal in saying that it would never make changes to superannuation that it occurred to us that it would be interesting to see what they were really talking about. What’s striking is that all the way up until Labor made our statement on superannuation – moving for superannuation concessions to be changed so that they were fairer and more sustainable – the Government's own Expenditure Review Committee were going forwards and backwards with Treasury looking at options for changing superannuation. The reason they backed off that was Labor's announcement.

SHERYLE BAGWELL: Were you surprised to find that the Government had been looking at options to change the tax treatment of super?

LEIGH: Not at all. There's such a long list of organisations that have said we need to look at the fairness and sustainability of those super tax concessions: the Council on the Ageing, ACOSS, the Grattan Institute, the Government's own Commission of Audit, its own tax discussion paper, its own Financial Systems Review, the Treasury Secretary – pretty much every serious commentator in Australia is aware of the fact that our superannuation tax concessions are set to double over the next few years and outstrip the total amount we spend on the pension. So it just makes sense to be looking at them.

BAGWELL: It does seem to be politics at play here. I mean, once Labor put out its position, the Government clearly changed tack. But that is politics, isn't it? I mean, the Prime Minister clearly wanted to establish a point of difference with Labor on this issue.

LEIGH: Sheryle, it doesn't have to be. Governments can pick up good ideas wherever they come from. We've seen this in the past. For example with the movement away from defined benefit to defined contribution superannuation schemes for parliamentarians. That came out of a proposal from the Labor Opposition that was picked up by John Howard. As Opposition Leader, Bill Shorten has, in many cases, supported Government proposals even when they were couched in a way in which Labor wouldn't have put them to the Parliament.

BAGWELL: But why does this particular area need bipartisan support?

LEIGH: Well it's just sensible reform. It stands to reason that you can't be jumping up and down about an age pension which according to Allianz, the life insurer, is the most sustainable in the world and whose share of national income is set to be about the same in 40 years as it is now, and yet say that superannuation concessions, which are bigger and growing faster, can just be ignored.

BAGWELL: The Prime Minister was quite definitive on the subject again yesterday. Not only would there be no adverse changes to super during this parliament, he said the Coalition 'aren't ever' going to increase taxes on super because 'super belongs to the people'. Well, the people would be in no doubt now about where the Government stands and presumably where Labor stands. That's a good thing, isn't it?

LEIGH: Well Sheryle, that hasn't been the position the Prime Minister has taken in the past. He froze the universal superannuation contribution upon coming to office, at a cost of around $23,000 for a young person on average earnings. He scrapped the Low Income Superannuation Contribution, which means less money in the superannuation accounts of the lowest-paid three million workers in Australia, two-thirds of whom are women. So he's made adverse superannuation decisions affecting the bottom, but he's not willing to look at the superannuation concessions at the top. And let's face it, the top 1 per cent get more in superannuation tax concessions than the bottom 40 per cent.

BAGWELL: Two weeks ago, the Prime Minister and the Treasurer agreed to conduct a retirement income inquiry in return for the Greens agreeing to pass $2 billion worth of pension cuts. In light of what the Prime Minister has said, again, on super, where do you think that leaves this inquiry?

LEIGH: I think the Greens were sold a pup on that one. It's pretty clear that the Government has no intention of tackling superannuation tax concessions and no willingness to join the long list of organisations who understand that our super tax concessions aren't fair and they aren't sustainable. The fact that they're willing to give the Greens that inquiry doesn't change the fact that the Prime Minister is cutting superannuation at the bottom but unwilling to look at the overly generous superannuation concessions at the top.

BAGWELL: Senator Arthur Sinodinos, Liberal Senator Arthur Sinodinos. yesterday called Tony Abbott's comments and position on super his 'Captain's call'. Is there any suggestion that maybe there is some division? From what you're picking up and in terms of what you got through your Freedom of Information request, are there any divisions on this within the Cabinet, do you think?

LEIGH: I've got a good deal of respect for Arthur Sinodinos, who I think is one of the brightest economic minds in the Coalition. Certainly we know that the Prime Minister was chairing the Expenditure Review Committee so these repeated calls for more advice from Treasury would likely have come from that committee leading up to the Budget. What's disappointing is that when Labor put a sensible plan on the table, the Government wasn't willing to look at it in a spirit of constructive bipartisanship. They couldn't put the national interest first and partisan interest second and say: it doesn't matter where an idea comes from, if it's a good idea, let's go with it.

BAGWELL: It's not the first time, though, that a Prime Minister has been at odds with Treasury on economic policy, I mean it certainly happened under Labor.

LEIGH: Indeed, and certainly this Prime Minister has been criticised by his own side on questions of economics. You only have to go back to Peter Costello's comments about Mr Abbott's economic instincts. But you do worry when you see a Prime Minister who is so willing to cut supports that go to the bottom, yet gives additional resources to the biggest multinationals – $1 billion of tax breaks he's given them – and leaving open superannuation tax concessions at the top but then wanting to cut a pension which is tightly targeted to some of the most vulnerable in Australia.

BAGWELL: Andrew Leigh, thank you very much.



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