Tag: grandfathering

The motion means the issue will be debated at the Liberal Party’s state conference in August and will put pressure on Curtin MP and Liberal deputy leader Julie Bishop to defend the unpopular changes against claims by party members that they are unfair.

Liberal members in Curtin hope the motion will form part of a backlash against the moves that will ultimately force the Turnbull government to back down before the changes come into effect in July next year.

It is understood that Ms Bishop and other Liberal candidates are regularly receiving complaints on the campaign trail from traditional Liberal voters about the issue.

Some supporters are so angered by the measures — including a $1.6 million cap on accounts — they are refusing to donate to the Coalition’s re-election campaign.

Ms Bishop told The Australian yesterday that the superannuation changes had been raised at an “ideas night” for the Curtin division.

She said only 4 per cent of super account holders across Australia would be affected.

“I look forward to reassuring branch members that the Coalition’s proposed changes to superannuation will mean 96 per cent of Australians will be unaffected or better off as a result,” she said.

The Foreign Minister struggled to explain the detail of the plans when she appeared on Melbourne radio earlier this month.

The Institute of Public Affairs think tank has claimed the number of people affected would be far higher than 4 per cent of the population and has criticised the government for being unable to explain its policy.

Liberal members who attended the Curtin meeting this month said superannuation was nominated as the most important of three issues the division decided to take to the state conference.

They said the division included scores of members who were nearing retirement and now faced a changed financial landscape.

The Curtin division is the most influential in WA and boasts about 1000 members across Perth’s wealthy western suburbs, including Claremont, Cottesloe, Dalkeith, Nedlands, Peppermint Grove and Subiaco.

Under the super changes, the government will cap tax-free retirement accounts at $1.6m and introduce a $500,000 lifetime cap on non-concessional contributions as well as cutbacks to the Transition to Retirement Scheme.

Ms Bishop holds Curtin with a margin of 18.2 per cent, making it the state’s safest seat.

Costing guidelines and budget practice require policy be spelt out in detail before it is included in budget estimates.

Former deputy secretary in the Department of Finance, Stephen Bartos, said Treasury and Finance would have difficulty incorporating savings from the Coalition’s superannuation plan if a newly elected Labor government put it up for review.

“Unless they have a plan they haven’t revealed to do something equivalent, I think that they are in a difficult spot,” he said. “If things are put up for review and not formal policy decisions, then they have to be taken out of the estimates and that would make the ­estimates worse.”

At the National Press Club yesterday, Bill Shorten emphasised his concern with the claimed retrospectivity in the Coalition’s plan to cap non-concessional contributions to superannuation at $500,000, backdated to 2007, but was unable to say how a Labor government would deal with a funding shortfall if it decided not to go ahead with that.

“I think that the mess that this government’s thrown the whole superannuation system into can be best resolved when Labor forms a government and we talk to ­people.”

Labor Treasury spokesman Chris Bowen and superannuation spokesman Jim Chalmers have said a Labor government would conduct a review in the second half of this year to report in early 2017, for next year’s budget preparation.

However, Mr Bowen has also promised to bring forward the traditional end of year budget review to September, which would force Labor to crystallise its budget position on the Coalition’s budget proposals.

An added difficulty is that the proposal to which Labor objects most strongly — the cap on non-concessional contributions — ­actually took effect on budget night, May 3. Excess contributions after that date have to be withdrawn or incur penalty tax.

Deferring the measure would invite wealthy superannuation fund members to maximise contributions before it took effect.

The uncertainty left by Labor’s superannuation retreat is drawing fire from self-managed superannuation funds, with a lobby group saying people needs to know how Labor would affect retirement savings before voting.

“The government estimated its superannuation measures in the budget would result in a net gain to revenue of $2.9 billion. Labor is now proposing to tax superannuation savings to the same extent but is not saying how this will be done,” said executive director of the SMSF Owners ­Alliance, Duncan Fairweather.

Mr Bowen said he believed the superannuation sector would sit down with a Labor government to come up with a solution “quickly”, to ease the uncertainty.

Whether Labor wins or not, the Parliamentary Budget Office must conduct a review of all party policy costings within 30 days of the election. It might reject Labor’s claim to the budget savings on superannuation but not the policy that ­delivered them.

The Australian

12.00am June 28 2016

Judith Sloan -Contributing Economics Editor Melbourne

Superannuation is one policy area that means a lot to certain people, particularly those in retirement and those heading for retirement. It is a potential vote-changer.

Until Labor’s release of its costings on Sunday, many people would have taken the view that Labor’s superannuation policy had more to commend itself than the government’s raft of superannuation changes announced in this year’s budget.

After all, Labor’s policy, which was released some 18 months ago, had fewer moving parts and there was no intention to make any change to the annual concessional cap or to introduce a backdated, lifetime non-concessional cap.

To be sure, there was the 15 per cent tax on retirement superannuation earnings over $75,000 a year, although there are serious question marks over the workability of this proposal. But it is not too different from the government’s policy of limiting tax-free superannuation accounts to $1.6 million.

After Sunday, however, Labor’s superannuation policy is completely up in the air. It wants to take the budget savings of the government’s superannuation changes — close to $3 billion a year — but won’t be bothering to release any details of its policy before the election.

Opposition Treasury spokesman Chris Bowen could only make this weak statement: “Given Labor’s concerns about the government’s superannuation changes, including retrospective elements, Labor would consult with stakeholders and take a broader examination of all these measures on coming to government.”

This is as clear as mud. Labor won’t be telling anyone what the superannuation measures will be, leaving it to some vague examination and stakeholder consultation, were Labor to win government. So much for the positive policy on superannuation released more than 18 months ago — voters are being told to ignore that and just hang on to their hats.

But there’s more. Under pressure from public sector unions, Labor has also ditched the government’s efficiency dividend announced in the budget. But again, it wants to count the savings, which are around $1.4bn over the forward estimates.

Evidently, removing public sector waste and reducing the use of outside consultants will get Labor there without the loss of a single public sector job. Again, pull the other one. Counting the savings and making vague references about how you might get there just doesn’t cut it.

Labor is really plumbing new depths when it comes to putting up policies for voters’ consideration — assume the same budget savings but don’t worry about outlining any of the details.

For those with a keen interest in superannuation, it really now boils down to the devil and the deep blue sea when it comes to choosing between the Coalition and Labor.

Australians will go to the polls without any certainty over the Opposition Leader’s plans for superannuation, as he claims the $3bn saving included in last month’s budget, but at the same time vows to “revisit” the changes by consulting experts after the election.

The cloud over retirement savings deepened the dispute over election policy costings after Labor also claimed a $1.9bn saving from Coalition cuts to the public service, while rejecting the specific “efficiency dividend” meant to produce the gain.

With only four days until the election, Labor and the Coalition are in an escalating dispute over the budget as Mr Shorten prom­ises to reduce the deficit without “smashing household budgets”, while Scott Morrison warns of higher deficits, debt and taxes if Labor takes power on Saturday.

The row has extended to health as Mr Shorten fends off questions about whether Labor would restore all the state hospital funding that was removed in the Coalition’s 2014 budget — a cut he has campaigned against ever since. While the Opposition Leader denounced the Abbott government’s $57bn cut to state hospital funding over a decade as “brutal and cruel” when it was unveiled, he conceded yesterday he could not return the spending to its old trajectory. This was despite Labor Treasury spokesman Chris Bowen telling the ABC in November 2014: “We want to see the $80bn cut to health and education scrapped.”

Labor’s election costings confirm it will offer about $2bn in hospital funding over four years on top of the $2.9bn boost outlined by Malcolm Turnbull in last month’s budget, making it clear that Mr Shorten’s commitment falls short of restoring all the lost funding over a decade.

“I can go to every hospital in Australia and say vote Labor ­because we’ll provide for more funding for hospitals,” Mr Shorten said yesterday.

“I can go to every Australian who is currently on an elective surgery waiting list for hip ­replacements, for knee reconstructions and say vote Labor because we’re actually going to make it more possible for you to have your surgery more quickly.”

Labor financial services spokesman Jim Chalmers vowed on May 26 to reveal the opposition’s policy on super before July 2 in response to the budget changes, which raise $6bn but use about half of this by funding more generous rules while using the ­remainder to improve the budget bottom line. “People will know by the time they go into the polling booth where we stand on superannuation,” Dr Chalmers said four weeks ago.

Mr Shorten stared down ­requests for detail yesterday, ­arguing Labor would need to consult industry experts and senior officials before deciding which of the Coalition’s policies it would adopt. “When we form a government, if we win the election, we will revisit these measures to see their workability, to fully understand if they can actually be done,” he said. “There’s plenty of people who are saying that these changes will be very hard to implement.”

The Labor stance throws doubt over changes including a $1.6 million transfer cap that imposes an earnings tax on super accounts over that limit, a cut in the concessional contribution cap to $25,000 and controversial changes to the Transition to Retirement Income Stream rules.

Mr Bowen said he had “grave concerns” about another change, a $500,000 “lifetime cap” that is backdated to 2007 and is at the centre of a dispute about whether it is retrospective, while Labor ­assistant Treasury spokesman ­Andrew Leigh said the Coalition’s policies were a “dog’s breakfast” and needed to be fixed.

“We’ve committed, if we win office, to using the resources of Treasury, consulting quickly on that, coming up with a measure which achieves the same impact on the budget bottom line, but ­ideally without the retrospectivity of the government’s changes,” Mr Leigh told Sky News.

Labor’s approach has frustrated industry experts who want certainty over the competing policies before polling day, particularly after Mr Shorten and Mr Bowen had launched a broadside against the Coalition earlier in the election campaign.

“We have urged Labor to adopt the same or similar measures as the government, which would achieve the same savings or more,” said Ian Yates, chief executive of the Council of the Ageing.

“There are other measures that you could take to make super more effective.”

Others said voters deserved to know the detail of Labor’s changes to super rather than being told they would be decided after the election.