Credlin: Super tax confusion makes government look incompetent and dishonest

Labor’s superannuation tax increase is a case study in how not to make policy, and the result is a government that looks incompetent as well as dishonest, writes Peta Credlin.

Labor’s superannuation tax increase is a case study in how not to make policy. First, it’s a broken promise. Second, it wasn’t well thought through. And third, no one can explain it.

The result is a government that looks incompetent as well as dishonest. Ministers aren’t expected to be across every aspect of government policy, especially if there’s been no change to it. But heaven help senior ministers if the government announces a big policy change and they can’t even explain it, let alone defend it.

During the election, the Prime Minister couldn’t have been clearer. Labor, said Anthony Albanese, had no intention of making ANY change to super. It was what he HAD to say, of course, because it was Bill Shorten’s upfront commitments to increase taxes on investors and retirees that had given Scott Morrison his 2019 “miracle” win.

Fast-forward to a fortnight ago, and the Treasurer’s kite-flying speech on superannuation that sparked a week of damaging headlines; followed by the government’s formal announcement last Monday that there would, indeed, be a doubling of the tax paid on the income earned by super balances over $3 million; followed by complete confusion about what this might mean in practice.

Treasurer Jim Chalmers. Picture: AAP Image/Mick Tsikas

And I mean complete confusion. The shambles just got worse as the week wore on and the government’s ignorance of its own system became more obvious. Plainly the government always intended to hit super with more taxes, and plainly has been talking to Treasury, for months, about how to do it. But in the current Labor cabinet, there’s barely anyone who’s ever run a business, and there’s probably no one among the former party bigwigs and union officials with a self-managed super fund, nor among Treasury officials either, who helped cook up this policy.

That’s the trouble when the government announces a sudden change in a complex area; especially one that gravely concerns a small but important section of the community, who study it incessantly, worry about it constantly, and are inherently suspicious of anything government does to raid their nest egg.

Especially when it’s a blatant broken promise – that looks and smells like premeditated deception.

People are inherently suspicious of anything government does to raid their nest egg.

So here’s the still-newish government, thinking it’s got an unassailable poll lead, and that the opposition are unelectable, flying a kite on the left-wing Holy Grail of class warfare, that then has a light bulb moment. Let’s just tax the rich more. Let’s just hit income, on super balances, over $3 million. No one cares about millionaires with $3 million or more in their super, do they? So what could be politically simpler and administratively easier than that?

And in making the announcement, so it would have gone, let’s reinforce how minor this change is by telling people about all the other taxes we might collect, on franking credits, on capital gains tax concession, and even on the family home – which they did – to stress how tiny the $2 billion raised by this really is. Funny how no one had thought about the practical problems.

First, people with more than $3 million in super often have self-managed funds, including property, and, unless it’s actually just been sold, how do you know what it’s really worth? And if it hasn’t been sold, how can you say that its value takes the fund over $3 million without, in effect, taxing an unrealised capital gain? Or in simple terms, the house that hasn’t been sold? Second, every single salary earner has super, so when the politicians break their promises and make a change where they said they wouldn’t, everyone wants to know if it impacts them. Yet the government announced a policy without working out the details first; there’s no legislation yet, not even a working paper.

Prime Minister Anthony Albanese overruled Treasurer Jim Chalmers for a tax on the family home – but will anyone believe him? Picture: NCA NewsWire/Martin Ollman

Hence a series of trainwreck interviews over a week, starting with the Treasurer himself failing to rule out a tax on the family home (and having to be overruled by the PM who no-one now believes tells the truth on super anyway) and culminating with the Deputy PM on Friday, who was asked three times how to calculate unrealised capital gains – and even then, he was still stumped!

Any wonder people are angry because, even if not caught up in this now, they might be in the future because the $3 million cap isn’t indexed to go up with inflation. So while $3 million might seem like a big super balance now, if you’re a young person it’s not. Just think back what a house was worth 30 years ago and what it’s worth now and you will see my point.

Whether it is this broken promise on super, or the broken promise to cut your power bills by $275 dollars a year, or the promise to raise real wages, that can’t be met; this looks more and more like a government that just can’t be trusted.

INSANE TO THINK COST BLOWOUTS WILL BRING BILLS DOWN

If wind and solar power really is the cheapest way to generate electricity, why do our bills keep going up and up? Last week, the Grattan Institute confirmed that electrifying every Australian household, by turning all our existing gas cook tops, gas hot water and gas heating into electric appliances would cost in the order of $60bn.

This is on top of the cost to be paid by consumers of installing 22,000 new solar panels every day and 40 giant new wind turbines every month and constructing 28,000km of new transmission lines in just seven years so that Australia can get to the government’s now legislated emissions target by 2030.

Then there’s the much delayed Snowy 2.0, the giant pumped hydro “battery” that was supposed to cost just $2bn when Malcolm Turnbull first announced it, yet is now likely to cost around $20bn once all the new transmission lines are in place.

Little of this even begins to cover the cost of the new “firming” power needed to keep the lights on 24/7, when the wind doesn’t blow and the sun doesn’t shine; especially after the closure next month of the Liddell coal-fired power station in the Hunter Valley, that’s 10 per cent of NSW’s current generating capacity, and the Eraring plant on Lake Macquarie in just two years that’s a further 25 per cent.

Yes, you read that right, a third of power capacity in NSW gone in a couple of years and no reliable, baseload replacement.

Despite the energy market operator warning that NSW and Victoria face routine blackouts within two years in the absence of new despatchable power, all levels of government and both sides of politics are continuing to claim that even more unreliable renewable power will somehow fix the problem, when, in fact, unreliable renewables with no back-up have caused it.

There is only one word for this: insanity.

THUMBS UP

King Charles – Giving Harry and Meghan their marching orders from a royal home in the UK finishes the job they started by selling out their family for millions.

THUMBS DOWN

Stuart Robert MP – The former Morrison government “Robodebt” minister who gave evidence to the Royal Commission this week that he had to keep defending the failed scheme, which he’d been told was illegal, because of “cabinet solidarity”. Wrong, that’s the prison guard defence “I was just following orders”. His first duty is always to obey the law.

Watch Peta on Credlin on Sky News, weeknights at 6pm

Originally published as Credlin: Super tax confusion makes government look incompetent and dishonest