Super reform?

If Labor wants to win in September it needs bold new initiatives – without ‘robbing Peter to Pay Paul’. Reforming superannuation concessions and dividend imputation may provide Labor with the ‘warchest’ it needs to ‘break through;’ to disengaged voters. Labor also needs to deliver in the immediate term as well – as voters may be sceptical of commitments only for the ‘distant future’.

Tristan Ewins, March 2013

(Now I do not believe Labor can win as Labor could have delivered – like on the popular NBN – on super reform, Gonski, NDIS, dental reform, mental health, Fair Work reform, tackling our environmental crisis, taxing the corporates and the rich, building public housing for the homeless, and indeed start to turn back Howardism etc etc etc two years ago so that working class voters could start to experience some difference and some improvement in our lives, rather than wait and ‘trust’ Gillard…however Tristan makes some points: Chris White).

As the May Federal Budget approaches and Liberal state governments increasingly move to sabotage the Federal Government’s Gonski proposals purely for political purposes – it seems increasingly likely that if Gonski is to succeed the Federal Government must ‘pick up the entire tab’. The National Disability Insurance Scheme (NDIS) will also involve a heavy cost, and Labor simply cannot deliver without progressive reform on the revenue side.

More unpopular austerity – as in the case of Sole Parents – which saw disgust and cynicism amongst parts of the electorate – is not a viable option. And in any case it simply should not be part of the Labor ethos –‘to take from Peter to pay Paul’ – seeking to spin these matters to create only an illusion of overall progress.

Richard Denniss of the Australia Institute has been one of the most determined critics of the existing system of superannuation concessions.

In August last year he put the argument that while those concessions cost the public $30 billion in late 2012, they will cost $45 billion as early as 2015.

This is well in excess of the entire Aged Pension budget – which was only $25 billion in 2012. And in 2012 $10 billion of these superannuation concessions were going only to the top 5 per cent income demographic. Denniss has argued: “We estimate, for high income earners, up to 60 per cent of their lump sum is actually the contribution of the taxpayer.”

The ACTU, meanwhile, has urged the Government to target the top 10 per cent income demographic.

And were superannuation concessions revoked for that top 10 per cent group, at an estimate it could bring in over $15 billion – enough for the government to fund Gonski and the NDIS without having to depend upon the Conservative states. (nb: though NDIS will cost more over the years as the full program is phased in)

…Another area of potential reform is Dividend Imputation – which the Henry Tax Review considered axing a few years ago. Dividend Imputation seeks to eliminate so-called “double taxation” of investments by providing credits on dividends. This is fine for small investors – but should the wealthy be receiving a massive tax break as a consequence? Especially when the Company Tax rate has been cut again and again for decades.


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