Broken vows open a fresh front in class war

Treasurer Jim Chalmers. Picture: NCA NewsWire / Martin Ollman

The one election promise that Anthony Albanese has broken most clearly this week is the fundamental one that he represented “safe change”. That, and the covenant that used to exist between the political class and the voter that what was ruled out before an election remained that way through the entirety of the term.

The Prime Minister will try to argue that this broken promise on superannuation is not really a breach of faith because it won’t take effect until after the next election when voters will have the chance to validate it, but that’s a moot point given he will move to legislate it immediately.

Plainly, after losing the “unlosable” election in 2019 – perversely for being upfront with the electorate about sweeping changes to negative gearing, among other things – the hardheads inside Labor decided the Peter Garrett strategy was the way to go: promise anything and “once we get in we’ll just change it all”.

Use of the political weasel-word phrase “we have no intention” reveals this decision to change the tax rules on super was entirely premeditated – just as the government clearly always planned to make changes to workplace relations that were denied pre-election and to make much bigger constitutional changes with its Indigenous voice to parliament (and now cabinet, the broader executive, the public service and more) than were implied pre-election.

The question is: will voters regard this super change as clever politics or will they see this as a fundamental betrayal?

Of course, much will depend on how the economy is performing in mid-2025. If inflation is still high, if power prices are still skyrocketing and if real wages are still falling, a disappointed electorate will be disposed to believe the worst of the Prime Minister. But by forcing the Coalition to acquiesce in a series of “hit the rich” changes, or to promise to restore tax breaks, Albanese clearly is hoping to set up a contest where Labor supports “fairness” and the Coalition supports multi-millionaires – never mind Labor’s brazen political manoeuvre to set it up.

Going into the 1996 election, John Howard as opposition leader promised there would “never, ever” be a GST. Then, in the lead-up to the 1998 election, he and Peter Costello announced that there would indeed be a GST after all if the Coalition won.

Rather than resort to his earlier distinction between “core” and “non-core” promises, Howard said the fact there would be an intervening election allowed him to change his policy position without breaking faith.

The key difference between what Howard did then and what Albanese is set on doing now is that Labor will legislate the broken promise before the election rather than waiting until afterwards when the voters have had their say. As well, Howard was proposing an incentivising tax-mix shift rather than an incentive-sapping tax increase.

Understand what Labor wants to do with super. First, it wants higher taxes to help fund its other priorities; second, it wants to limit people getting access to their super savings via lump sums (to pay off any mortgage) rather than through self-funded annuities that reduce their reliance on the Age Pension; and third, it wants the super funds to invest in Labor’s “nation-building” priorities of renewable energy and social housing rather than in whatever fund managers think is in the best interests (and higher returns) of super savers.

Deep down, Labor thinks your superannuation is little different from the tax you pay: it’s the government’s money and it’s up to the government to determine how it’s deployed and how much of it you eventually get back.

But this is much bigger than super. It’s the beginning of a new class war designed to pit big government determining what’s rich and what’s fair against the long-held aspirational drive of Australians, for them and their children.

Pre-election, Albanese was anxious to dispel fears that a Labor government would attack the same capital gains tax concessions, negative gearing rules and franking credits that had allowed Scott Morrison to claim his “miracle win” against Bill Shorten.

Labor had learnt its lesson, Albanese insisted, and had no intention of revisiting any of them. Only that’s not true; instead, the party merely changed to a Garrett strategy of pre-election subterfuge rather than a Howard one of being prepared to lose an election over a policy change.

The proof of what’s to come was evidenced when Jim Chalmers released figures for other tax breaks for the so-called rich alongside this about-face on super. These included the 50 per cent capital gains tax discount, supposedly costing $26bn a year; and negative gearing, at about $4bn a year. Then there was the claim, also in the Treasury paper released with the super changes, that 68 per cent of the $17bn a year claimed in franking credits went to the top 10 per cent of taxpayers.

These are all the Shorten-era Labor policies that Albanese vowed would not be touched but which – if he gets away with this week’s twisting of the truth – could be justified, provided they weren’t legislated to take effect until after the next election.

Again, on Wednesday, we heard the Prime Minister and the Treasurer reverting to the phrase “we have no intention”. Now what was the point in publishing these claims if it wasn’t to soften us up for further changes – including, perhaps, changes designed to ensure that retirees have no super savings to pass on in an inheritance? So a death tax by stealth.

There is a lot of focus already on the political challenge here for Peter Dutton, but what about the teals? If they really were “of their electorates” this soak-the-rich push would be rejected. Already Allegra Spender has flagged Chalmers’ refusal to index the $3m cap as a deal-breaker for her; maybe a current lack of indexation is just a negotiating tactic for Labor? We will see.

The best indication of the fight in this Dutton-led Coalition will be how it frames this super stoush; if done well, it presents the best opportunity yet for the Liberal Party to shrug off the spending excesses of the Morrison-Frydenberg era and to reassert the Menzies values of aspiration and self-provision.

Labor will want to turn this into a battle on its “fairness” changes and accuse the opposition of backing the top end of town; anything to get the focus away from broken election promises that should dog Labor if integrity is meant to mean anything.

To win, the Coalition has to create a contest, but that inevitably means taking a clear stance: are superannuation incentives designed to reward thrift or simply to help the poor?

In the end, the Coalition will have to decide where to draw the battlelines in the coming class war. For illustrative purposes, the government’s tax expense analysis this week seemed to use the top 10 per cent of earners as the boundary between deserving and undeserving taxpayers. But that makes anyone earning over $130,000 a year officially rich.

The Opposition Leader’s job will be to persuade most people on less that the government is coming after them, too, and if you look at the evidence and Labor’s class-war rhetoric it’s hard to believe otherwise.