Superannuation has become the ultimate trip-up for politicians

IT’S the issue so complex it’s become the kiss of death for politicians that go near it. Now the Government is facing an internal revolt over it.

• Politicians can’t explain their own policies

• Arthur Sinodinos says there will be consultation

• MPs say there is “white hot rage” about changes

• Changes to super explained

IT IS the government policy so complicated it’s become the kiss of death for politicians that dare to go near it.

The issue of superannuation has become humiliation central for politicians racking up trainwreck interviews and some are now warning the government could face an internal revolt over it.

On Tuesday it was Foreign Minister Julie Bishop who was brought low, the next day Greens Senator Sarah Hanson-Young set a new bar for ignorance.

In an interview with the ABC Senator Hanson-Young appeared to have no idea about the Green’s super policy and claimed the party wanted to abolish its concessional tax treatment.

Hanson-Young: “Look we’re saying in order to make it fair you should be paying the same tax rate on income as you do for what you’re earning on your super. Why not? Why shouldn’t it be the same?”

She only corrected herself after getting a text from her chief of staff.

The embarrassing slip-up comes after Ms Bishop confessed to a “gotcha moment” during an interview on 3AW on Tuesday, when she admitted she could not explain planned changes to the Coalition’s transition to retirement scheme.

The radio host also had a “frustrating exchange” with Assistant Treasurer Josh Frydenberg earlier last month who struggled with questions about the same policy.

Cabinet secretary Arthur Sinodinos said on Wednesday afternoon the coalition’s plan had been to get a mandate for the policy at the July 2 election, then issue an exposure draft of legislation for consultation.

He conceded “not all individual measures” were discussed in the coalition party room as part of the briefing before the budget was handed down last month.

“I’m just leaving it open,” he told Sky News when asked about the prospects of further changes being made.

Labor has yet to make its position on superannuation clear, but says parts of the policy are retrospective and could hit middle income earners rather than just the rich.

Earlier on Wednesday SkyNews reported there was ”white hot rage” among Coalition MPs over the super changes, and the reforms never went to the government’s party room for consideration.

Some branch members have quit in protest and donors have withdrawn funding, it reported.

It’s believed a number of MPs have vowed to fight the changes if the Coalition is re-elected.

But others played down the issue, saying only a few voters and party members had raised superannuation as an issue.

Anger over the changes has been bubbling ever since the government announced the changes to the scheme as part of its May budget.

Peta Credlin, Tony Abbott’s former chief of staff, said superannuation was a big “sleeper issue” with Coalition supporters.

“The government, if it’s got a policy has to defend it, or it has to fix it, but it can’t be in this limbo land where it’s not able to explain it,” she said.

Ms Credlin cited statistics from media monitors Isentia, showing superannuation was the top issue being discussed on talkback radio. “There’s no good burying your head in the sand on this issue, she said.

“It is going to bite the coalition if it does not deal with it promptly.”

Finance Minister Mathias Cormann insisted the changes were fair and designed to make the system more sustainable.

“Over time, we’d like to think the majority of people will come to accept what we are doing here is the right thing,” he told reporters in Canberra.

WHAT ARE THE CHANGES?

There were a number of changes made to superannuation in the Federal Budget, including allowing low income earners to rollover super balances and making it easier for people to put money into a spouse’s account.

But one thing that has caught people’s attention is the changes to the transition-to-retirement rules.

It will impact about 115,000 people — aged between 55 and 64 — who are not yet retired but are allowed to keep working while also drawing down money from their superannuation fund.

If they do draw a pension from their super fund, they will have to pay 15 per cent tax on the earnings of the money they are drawing from.

From July 2017, the government will also stop people from holding more than $1.6 million in tax-free super accounts. People will either need to withdraw the money from their super account or transfer it into a separate accumulation account, where the earnings will be taxed at 15 per cent.

The changes will apply to everyone, including current retirees, which has left the government open to claims of “retrospective” changes.

But the super perks have previously been described as “outrageous” by the Grattan Institute as they allow older Australians to live tax-free by putting all their money into super even if they are not retired.

“Young Australians should be furious about this,” Grattan’s public policy expert John Daley said.

The government has estimated only four per cent of Australians will be adversely affected by changes to super.

Assistant Treasurer Kelly O’Dwyer said paying 15 per cent on earnings, rather than the marginal tax rate, meant those affected would still have more money in their pocket at the end of the day, she told ABC radio on Wednesday.

But Labor frontbencher Richard Marles said if the Foreign Minister couldn’t explain how the system worked then the government needed to look at changes.

“Explain to the Australian people why this is fair,” he told Sky News.

Originally published as Superannuation has become the ultimate trip-up for politicians