Why The “Low Income Superannuation Scheme” Must Be Scrapped

AS MACHINATIONS over the Abbott government’s budget continue, The Guardian is reporting the Nationals and Clive Palmer’s party are being lobbied to spare the Low Income Super Contribution (LISC) from the axe; at a cost of $3.8bn and completely unfunded, this was a Labor election bribe that the Commonwealth can’t afford. The scheme should be abolished, but this new ruckus neatly illustrates the addiction to handouts that must be smashed.

I have a Twitter protagonist who sporadically engages with me in banter; she doesn’t follow me on Twitter, but simply surfaces every now and then to spar with me. She claims not to identify with the Left, although every position she has advanced in these exchanges to date are exact matches with the narrative of the ALP and the Communist Party Greens.

Most recently we argued in relation to welfare “entitlements” over what I have referred to in this column as a “handout mentality” that must be smashed, and today — right on cue — we have fresh evidence of that particular affliction to discuss.

The Guardian — no slouch when it comes to publishing content designed to encourage political hostility toward the Liberal Party — is reporting that the National Party, along with Clive Palmer’s eponymous outfit, are being heavied to block the repeal of Julia Gillard’s Low Income Super Contribution as the budget bills find their way through the Senate.

I agree there is a case to be made that abolishing this particular program will result in less money in the pockets of those who stand to benefit from it, but the mere fact money is being spent is no reason in itself to blindly continue to do so.

The LISC dates all the way back to 2012 — hardly a historical measure steeped in decades of history or tradition — and was conceived by Gillard and her snivelling, self-important Treasurer Wayne Swan as an emotional blackmail tool designed to help smooth the path of their mining tax through the Senate, and to try to buy off low-income voters in the process with a difficult election looming.

It is a matter of fact that the mining tax — as we have noted time and again — raised (in round terms) next to no revenue, poorly contrived as it was, and I still can’t believe that the party with the longest and most proficient record of tax-and-spend politics in this country actually managed to stuff up a new tax: potent proof of the incompetence of the Gillard government if it were needed, which thanks to the proliferation of such evidence, it’s probably not.

But despite the mining tax being a dud in terms of its capacity to generate any cash, the Gillard government characteristically spent the money despite never receiving it.

The so-called “Schoolkids Bonus” — also slated for abolition by the government — was one such initiative; the LISC was another; and the two measures add up to a collective drain on the federal budget of $7.8bn over a four-year period.

These measures are difficult to regard as anything more than blatant bribery.

I think the time-honoured practice of pork barrelling has become ridiculous in recent years, and it is important to see the “initiative” of the LISC in that context; don’t get me wrong, both the Liberal and Labor parties are guilty of it, and both have put similar baubles before electors in their endeavours to win votes.

Indeed, to some extent the tough budget Joe Hockey delivered last month goes a small way toward undoing some of the damage these bribes have done to the Commonwealth’s finances.

But it’s not possible to pay for everything, for everyone, irrespective of prevailing economic circumstances and especially with the books hundreds of billions of dollars in the red, and whether you agree with measures like the LISC or not, the irresponsible alternative to ruling a line under these practices is simply to run up more and more government debt.

It is now apparent that with every government cut or every electoral bribe the government now seeks to make or remove, outrage erupts in whatever section of the community is set to be affected. And if it doesn’t erupt by itself, Labor and the Greens — happily aided and abetted by the Left-leaning sections of the media, such as The Guardian — jump on the bandwagon in faux outrage that goes so over the top as to be counter-intuitive.

Still, the very fact something like the LISC — which has operated for just one full financial year, has no source of recurrent funding attached to it as pledged, and will deliver nothing to anyone until its intended recipients retire, which mightn’t be for several decades — is being fought over in the way it is serves as a timely reminder that as much as most people accept the previous government was an abysmal manager of money, many still want the cut of government largesse to which they are “entitled.”

In other words, ending the “age of entitlement” is fine — so long as it applies to someone else.

The LISC and the Schoolkids’ Bonus both deserve to be abandoned, representing as they do the 30 pieces of silver Labor under Gillard was prepared to pay in its desperate struggle to entice people to re-elect its useless, talentless government.

But I have been quite open that other measures should get the bullet as well; from the equally unfunded National Disability Insurance Scheme ($22 billion per annum when operational) right down to this little gem that serves no better purpose than to produce the ideological propaganda of the hard Left (for about $500,000 per annum); add in schemes like the First Home Owners Scheme, too, just in case anyone thinks I’m aiming only at programs initiated by Labor. I’m not.

And I should remind readers, lest I be accused of a cavalier and disinterested attitude to these matters, that my family will lose out thanks to the budget too: we’ll lose most or all of the money we receive in Family Tax Benefit (along with higher taxes on tobacco — remembering that I smoke — and a sizeable weekly fuel bill that’s set to get incrementally bigger). I don’t like “losing” money either. But come the next election, I’ll still vote Liberal.

The point that really needs to be emphasised is that even with the abolition of measures like the LISC, there are still hundreds of billions of dollars shovelled out by government in the form of one handout or another, and that whether the Left cares to admit it or not, the overwhelming bulk of this money is (and will remain) extremely heavily skewed to those who earn the least.

And whilst Labor and the Greens will never admit it, the suggestion that the poorest members of the community are somehow being “targeted” to carry “the brunt” of budget cuts is patently false: to do so is callous, malicious and an outright lie. But the ALP and the Greens don’t worry about lying in politics, and their accusations that others do it is a case of the pot calling the kettle black.

The real target of the abolition of the LISC — like so many other expenditure items either doomed to extinction or set for a hefty pruning — is the practice of pork barrelling that has been allowed to run out of control, and the unjustifiable enticements this practice has increasingly seen dreamed up into existence on the specious pretext of “helping” people.

People need to take more responsibility for their own lives, and stop expecting the government — which really means those of us who pay tax — to hand them everything on a silver platter.

Australia is not a socialist nirvana. It is not a communist utopia, despite the most dogged intentions of the Greens. And it is not some populist plaything, which the likes of Clive Palmer ought to recognise as the damage wrought by past practitioners of the pork barrel is slowly, and painfully, unwound.

This is why the LISC must be abolished. And not to put too fine a point on it, I reiterate that it’s a shame Hockey failed to properly grasp the nettle and abolish a slew of other, similarly election-oriented inducements along with it.



ALP Campaign Supremo Is Wrong: There’s No Good News About Gillard

AS LABOR people go, Bruce Hawker is OK; I disagree with his politics, of course, and he has caused my beloved Liberal Party a lot of grief. But credit where it’s due: he’s a smart guy, and pretty decent, but when I see him trying to defend the Gillard government over superannuation, I know he’s lost it.

Everyone connected to politics in any way — and many others who aren’t — know Bruce Hawker’s name; he’s one of the sharpest, shrewdest tacticians Labor has ever produced, and his reputation as a master political spin doctor is legendary.

Which is why I had to look twice at an article he has published to defend changes to superannuation being considered by the Gillard government, in which he begins his case with a movie anecdote about prison guards belting a prisoner senseless for insubordination.

According to Hawker, Gillard’s government faces the “same problem” as the prison guards.

I’m going to cover, very broadly, the proposed superannuation reforms tonight, but it’s Hawker’s defence of them — indeed, his entire convoluted, perverted logic in seeking to justify them — that I want to look at.

Readers will be aware that the inefficient, high-taxing, debt-addled federal Labor government is desperately casting around for ways to plug a budget deficit that is likely to top $20 billion in the current financial year.

Such a deficit flies in the face of solemn assurances from the Prime Minister and her glib, pious, smug, smarmy, conceited little know-it-all of a Treasurer that have been made on hundreds of occasions in the past few years that all but guaranteed a surplus, and which were quietly abandoned at the height of the last Christmas holidays.

Now, one of the cash cows Swan seems to have decided to plunder, in order to begin to redress the fruits of his own government’s economic ineptitude, is superannuation.

This is where Hawker enters the fray; The Australian today is carrying an opinion piece he has written, which is a blatant (and fatuous) attempt to spin the emerging politics of superannuation changes in Labor’s favour.

He also misses the mark completely.

Hawker’s gripe, on face value — and this is where the prison wardens laying into a disrespectful prisoner come in — is based on the refusal of the Australian public to take stock of all the good things Gillard and her government is doing for them.

Just like the prisoner who refuses to show respect to some thug who beats him half to death, so too does the voting Australian refuse to give Gillard any credit for her benevolent gestures of magnanimity.

Drawing this parallel at all is enough to make you question whether it’s even worth Hawker’s time to do so, but undaunted, he continues.

He seems to play a cat-and-mouse game around what is and isn’t going into the budget; this in itself is bizarre coming from an ALP insider, given the present Labor regime has made an artform of testing budget measures before the event, in the focus group of public opinion, for most of the time it has held office.

On the one hand, there’s “another six weeks of speculation, anxiety and growing resentment” before the budget is delivered; on the other, “ministers can’t even go out and lay the groundwork to justify the new superannuation arrangements because they’re worried about flagging what may be in the budget.”

Sorry Bruce, but you can’t have it both ways.

Anyone who has read/watched/listened to the news in the past few days knows that the ALP is seriously looking at doubling the rate of tax on superannuation contributions to 30% for those people earning upwards of $300,000 per year in the coming budget.

It is the latest in a long list of fiddles the Labor Party has made to superannuation; this time, higher income earners have been fingered to tip several billion dollars into Wayne Swan’s budget black hole by slugging them with double the rate of contributions tax.

Such income earners are presumably the people Trade minister Craig Emerson had in mind when he said such changes to superannuation should be considered for the “fabulously wealthy,” although he did decline to specify who the “fabulously wealthy” people are when questioned on the issue at the weekend.

But even this noble-sounding Robin Hood act is disingenuous; as Hawker himself says in his article, “those of us who follow these things closely know (any changes)…will be restricted to the wealthiest Australians. But most voters don’t follow politics that closely.”

And he goes on to say that “in Liberal Land” the Opposition has a policy that “would see three million lower-income Australians lose $500 a year in superannuation benefits they will receive from the mining tax, even with the lower than expected revenue raised from that tax.”

So here is Realities of Economics 101, just for the benefit of Messrs Hawker, Swan and Emerson, Ms Gillard, and alleged Superannuation minister Bill Shorten who refuses to participate in debate on changes to superannuation.

One (and this is an old story), yet another attack on those elements of Australian society that create wealth isn’t going to do anything to help lower income earners; those who subsist on meaningless jobs are dependent on wealth to provide them. It is another classic case of attempting to kill the goose that laid the golden egg.

Two, it won’t do much for the budget deficit, either; if anything, it will simply encourage those with money to find other, more tax-effective ways to invest it, bypassing superannuation.

Three, the removal of monies from the superannuation system by virtue of wealthier folk investing their cash in other places will actually hurt the low-income people Hawker et al claim to want to help; a superannuation fund isn’t some personal savings passbook, it’s dependent on the sheer weight and volume of money in it to deliver investment returns to the fund as a whole, from which all members benefit.

The more money available for fund managers to invest, the more (and better-quality) options there are for investment; if you push the people with the most money away from the system, the rest might as well make do with term deposits earning bank interest.

And whilst that may be strongly put, it’s effectively the end result of what would happen if the rumoured changes (that the government clearly is attempting to sell) were enacted.

Four, people are astute enough to know the mining tax has raised, in round terms, no money; voters have their faults but are by no means as economically illiterate as they once were, and consequently they understand that promises intended to be funded by taxes that don’t raise any revenue are likely to be doomed to extinction anyway.

And finally, there’s a really nasty undercurrent to all of this.

Labor is more than happy to identify sliding scales of wealth (“rich” households earning above $150,000 per annum, “fabulously wealthy” people earning over $300,000 per annum, etc) and declare open slather on them for tax purposes, but should a Liberal figure flag the abolition of an unfunded and unaffordable bribe, based on a false premise and Labor’s own incompetence, the ALP accuses the Coalition of running a “class war.”

Or in other words, the pot is calling the kettle black.

And remember, the earning potential of the superannuation dollars of the “rich” can do far more to lift the balances of the superannuation accounts of the “poor” than some $500 tax break that the government can’t even afford to pay for in the first place.

(As an aside, perhaps a better idea would be to take an axe to the bloated senior executive levels of the Commonwealth Public Service, which have ballooned by 42% since Labor took office and now cost the taxpayer $6 billion each year to pick up the tab for the payroll. Then again, public service job cuts that might put its own hand-picked people on the street explicitly contravene ALP policy, so the taxpayer will have to keep paying them. For now).

I don’t know what “good news story” Hawker sees in all of this; when reduced to its core, the putative direction Labor is taking on superannuation amounts to another half-arsed idea that would only ever do more harm than any intended good.

It speaks yet again to the utter incompetence of this government, and someone of the calibre of Bruce Hawker does himself no credit in stooping to attempt to defend it.

In the final analysis, any government initiative that is suitable for comparison with prison guards beating inmates brainless — irrespective of context — is a dubious initiative indeed.

Sorry Bruce, but you’re wrong.