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The Ark of the Coalition

Joe Hockey keeps insisting that he wants to “lift the tide”, but the Coalition is building an Ark that will accommodate very few of us.  This article looks at our aging tsunami and the Coalition’s history on superannuation.

The Productivity Commission warns the longevity of Australians has been underestimated and that taxes would need to rise 21 per cent unless steps are taken to pay for Australia’s extra health and aged-care costs.

The Business Council of Australia has warned that intergenerational pressures could see Australian governments collectively running deficits of $70 billion a year by 2050 and facing ballooning debt

Everald Compton, the chairman of the previous federal government’s advisory panel on positive ageing, said the greying of the population should have been a key issue in the campaign but had been ignored by the government and the Coalition.  Mr Compton said the ageing issue would render unreliable promises on future revenue and welfare spending.

Deloittee Access Economics predicts that by 2049-50, health and ageing will account for 46 per cent of federal government spending, from less than 28 per cent in 2009-10. Funding this would result in drastic cuts to spending on education, transport and other programs, or heavy tax increases, Mr Compton said.

On election, Tony Abbott sacked Mr Compton and disbanded the Advisory Panel on Positive Ageing at a saving of just over $1 million a year.

“Many of these non-statutory bodies have outlived their original purpose or are not focused on the government’s policy priorities.”

Mr Compton told ABC Radio: “We’ve only got six months work to go and we can give the government a blueprint on all the legislative and policy and financial changes that need to be progressively made over the next 25 years to make sure we turn ageing into an asset rather than a liability. And I find it a little hard to understand why, when we’re so close to finishing something that we’ve had some years of work in, that it’s chopped off and that the government does not appear to want a report on how ageing is going to hit Australia.”

Like climate change and overpopulation, an aging population is a challenge that must be planned for well in advance.  Reducing the burden on the old age pension through superannuation is one tool in this plan.

Tony Abbott has promised certainty, no surprises, guaranteeing that the Coalition will keep their word.  My question is WHICH word?

The Superannuation saga…


Compulsory national superannuation was initially proposed as part of the 1972 Whitlam initiatives but up until the 1980s superannuation was solely the privilege of predominantly male professions, clustered in the public sector or available after a long qualifying period in the private sector.


In 1985 the then Leader of the Opposition was John Howard. Howard said this:

“That superannuation deal, which represents all that is rotten with industrial relations in Australia, shows the government and the trade union movement in Australia not only playing the employers of Australia for mugs but it is also playing the Arbitration Commission for mugs”.

Howard was commenting on the deal between the government and the ACTU which saw the trade union movement forfeit a claim to 3% productivity improvement as wages to instead be paid in compulsory superannuation – endorsed by the Arbitration Commission and managed by superannuation funds with equal representation of the unions in the industry and the employers.

The Coalition has steadfastly opposed every increase in compulsory superannuation since that time, whether it be from 3% to 6%, or the 6% to the current 9%.


In the 1995 budget, Ralph Willis unveiled a scheduled increase in compulsory super from 9% to 12% and eventually to 15%. It was to be one of the Keating government’s major legacy reforms.


In its superannuation policy for the 1996 election, Super for all, the Coalition, which had hitherto been implacably opposed to Labor’s policies, promised it:

•Will provide in full the funds earmarked in the 1995 — 96 Budget to match compulsory employee contributions according to the proposed schedule;

•Will deliver this government contribution into superannuation or like savings;

•Reserves the right to vary the mechanism for delivering this contribution so as to provide the most effective and equitable delivery of the funds.


So why don’t we have 15% superannuation now? Because John Howard and Peter Costello nixed it in the 1996 budget barely six months after it released its policy, insisting it was too expensive. They didn’t “vary the mechanism” so much as halted it.


Significant changes were also made to superannuation policy in 2007. The majority of workers could now withdraw their superannuation tax-free upon reaching the age of 60. Most self-employed can claim their superannuation contributions as a tax deduction. In addition, semi-retired people can continue to work part-time, and use part of their tax-free superannuation to top up their pay.

Despite the relatively generous tax treatment of capital gains, the new superannuation tax treatment led to the selling off of some assets, particularly rental housing, as people sought to take advantage of the opportunity to add funds to their superannuation accounts and claim them back later tax-free.

People were allowed to transfer up to A$1 million into their superannuation accounts before the June 30, 2007, after which an annual maximum of A$150,000 of after-tax contributions could be made. The effect of this change in the rules was enormous. In the June quarter of 2007, A$22.4 billion was transferred to superannuation accounts by individuals. This compares with A$7.4 billion in the June quarter of 2006. June 2007 was the first time in Australia that member contributions exceeded employer contributions.


The Coalition’s superannuation policy released this week has drawn mixed reviews, with several major industry bodies expressing disappointment at the policy for being unsubstantial.

The Association of Superannuation Funds of Australia (ASFA), the Australian Institute of Superannuation Trustees (AIST) and the Financial Services Council (FSC) said in a joint statement that a failure to increase the superannuation guarantee (SG) to 12 percent, the failure to raise the concessional caps for individuals over 50 and the failure to provide a super tax contribution rebate for low-income earners would adversely impact Australian workers.

ASFA chief executive Pauline Vamos said that the majority of Australian voters would be disappointed that the Coalition’s only plan for superannuation was the promise of more reviews and delays.

AIST chief executive Fiona Reynolds said: “Australian voters are entitled to expect more than a policy document that has no concrete plans or even fresh ideas on how to address retirement income adequacy and the challenge of Australia’s ageing population.”


Opposition leader Tony Abbott has pointedly put down Victorian Liberal MP Kelly O’Dwyer after she questioned his controversial decision to keep Labor’s higher superannuation guarantee if a Coalition government inherits it.

Ms O’Dwyer asked at yesterday’s party room meeting about the process by which the Coalition’s previous position was reversed – saying it was her understanding such issues should go to the party room.

Mr Abbott said the party room had the right to change policy at any time. But there was no rule – and there should be no expectation – that every policy decision be brought to the party room.

“Mr Abbott, who several times made it clear he did not want to talk about the backflip, said the Coalition would have more to say on superannuation later, but repeated that it would not rescind the higher guarantee.”

Feb 2013


So you would cut all those initiatives?


Absolutely, you can’t afford them.

So there it was in black and white – the Coalition was cutting the increase in the super guarantee.

Except, apparently not so: a couple of hours later, Hockey was complaining on Twitter about being misrepresented. “What an MRRT debacle… Despite Govt’s failures we remain committed to not rescinding the increase in compulsory superannuation from 9-12%.” Hockey tweeted. After the Nine Network had accurately reported his remarks, he followed it up with:

Would be nice if Nine News had checked the facts…Coalition remains committed to keeping increase in compulsory superannuation from 9-12%.

Crikey understands Tony Abbott’s office moved immediately after Hockey’s doorstop to indicate there was no change in the Coalition’s support for the move from 9-12%

May 2013

Tony Abbott’s plan to delay the compulsory superannuation guarantee increase for two years and do away with top-ups for low income earners sets the tone for the Coalition’s policy on retirement savings to be announced in coming months.

The Liberal Party’s superannuation policy is likely to encourage individuals to make more voluntary contributions while scaling back government-directed super contributions.

The Coalition seems to be struggling with the concept of superannuation. The Coalition has lost a lot of their super knowledge over recent years with the retirement of many senior MPs, including Peter Costello, who was the architect of the 2007 changes that brought in tax-free super for over-60s, introduced caps on non-concessional contributions, reduced the caps on concessional contributions, and removed limits on the amount of super that you could withdraw at concessional rates. They have promised not to make any unexpected negative changes to super, but hey, a few weeks after making that promise, they announced they were freezing the Superannuation Guarantee increase for 2 years.

November 2013

Labor went to the election promising a 15 per cent tax on superannuation pension earnings over $100,000.

Treasurer Joe Hockey said on Wednesday the policy was too complex and it would be scrapped.

The Treasurer has also decided to cut superannuation co-contributions for low income earners

According to the chief executive of Industry Super Australia, David Whiteley, this would result in 3.6 million Australians on low incomes being out of pocket $500 a year, while just 16,000 of the nations top earners will benefit from the scrapping of the 15 per cent tax.

With the rise of influence of the IPA within our current government’s policy making, this article by John Roskam from 2012 should sound warning bells to us all.

“Compulsory superannuation offends practically every principle of what should be Liberal Party philosophy.

If an Abbott government does keep compulsory superannuation it must, at a minimum, make drastic changes.”

It was once said that the moral test of government is how that government treats those who are in the dawn of life, the children; those who are in the twilight of life, the elderly; and those who are in the shadows of life, the sick, the needy and the handicapped.

Hubert H. Humphrey


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  1. FSM is coming.

    I don’t know how we manged to feed ourselves before Joe came to the rescue. I didn’t realize I was supposed to be living off the streets on less that minimum wage. Now It looks like I wont be able to ever retire.
    They promise nothing and they still want half of that.

  2. antl88

    Thank you for your excellent, though depressing, summary. Accurate & insightful as always. ;->

  3. stencil

    Kaye Lee, the tocsin sounded by the Census is not lost on you regarding our aging tsunami. Unless we plan for this event it might swamp us. Is there any chance during 2014 that you could conduct a few workshops in Canberra to inculcate the message on the people masquerading as politicians?

  4. grooviechickie

    It’s all so bloody depressing. I remember when it was instigated and I had super in bits all over the place because we couldn’t go from job to job without starting up a new super account. And it’s definitely not enough to retire on. I’m 42 and I have a grand total of $9K, mainly because I took time out to raise three kids. It’s quite sickening that many parents are raising the next tax-paying generation and get slogged for doing so (and often get told it’s a ‘lifestyle’ choice to have kids).

    I just wish the taxation system in this country was equitable.

    Now I’m going to blow my own trumpet and link you to an article I wrote on women and super: http://www.dailylife.com.au/life-and-love/work-and-money/the-one-thing-smart-women-keep-putting-off-20130418-2i2aj.html

  5. Mike 1

    I wanted to add a comment but this mob of Bludgers in Govt. left me depressed. If only one of them had any idea, I would shout them to Lunch, but that is not likely as they all have their heads in the trough. Going to take 5 mogodon tablets and crawl back under my rock. Things should get better in 2.5 years time.

  6. Mike 1

    I feel for You grooviechickie, It is damn hard bringing up Kids, juggling Bills, School fees and rates etc. Maybe You don’t qualify as a woman of calibre. Heck this Abbott is unreal, all women and men are equal for goodness sake, Just because they are not born with a silver spoon in their gobs, does not make them any less equal. The sooner this spooner is gone , the better off we will all be.

  7. Kaye Lee

    stencil, there are people far better qualified than me to inform us all. like the Advisory Panel on Positive Ageing who had already put in 2 and a half years work on a crucial paper advising what we should be doing. 6 months out from completion, Tony sacks them all. What a waste 🙁

    Great article grooviechickie. Thanks.

  8. grooviechickie

    I am proud NOT to be a woman of calibre as judged by Abbott and Co. 🙂

  9. grooviechickie

    No wuckers.

    I am so upset by Abbott and Co. It’s a really miserable time (not that Labor was much better, mind you, but at least they gave the illusion of trying).

  10. Mike 1

    As you say Kaye Lee, most of the hard work was done for that Idiot Abbott. On a whim he disregards the report, Only fools carry one like that. Methinks the Mad Monk has a hidden agenda and smells from here in Perth.
    grooviechickie, You have have a big heart and intestinal fortitude, I would proud to call you my friend.

  11. grooviechickie

    Thank you Mike! 🙂 🙂 🙂

  12. horatio

    Having worked for many years as an accountant and financial planner I think the problem with super is that most people feel it is too complicated. The financial services industry uses this as a smokescreen for their dodgy dealings and the announcement by Abbott and coy that they will reverse the 2007 changes regarding planner commissions is evidence that the lobbying by banks and insurance companies(as owners of financial planning companies) leading up to the 2013 was worth every penny.

  13. Kaye Lee

    Very interesting horatio. I was unaware of that change. it’s all about the banks and the mining companies, and polly pedal sponsoring pharmaceutical firms with the odd chocolate company sprinkled on top.

  14. jasonblog

    Great article.

    Kaye Lee wrote “With the rise of influence of the IPA within our current government’s policy making, this article by John Roskam from 2012 should sound warning bells to us all.”

    Roskam writes within his own article “If an Abbott government does keep compulsory superannuation it must, at a minimum, make drastic changes…For a start, it should impose the same regulatory requirements on union-dominated industry funds as are applied to retail funds. Next, it should liberalise the list of assets in which superannuation can be invested.”

    Roskam is your basic run-of-the-mill mediocrity. Like most of the try-hards at the IPA he bluffs his way through. They were in the right place at the right time when the mining boom sent a windfall of cash the IPA way. When Roskam talks about the need to liberalise the list of assets in which superannuation can be invested, he of course means TOBACCO.

    Who funds the IPA? Who owns our present Federal government?

    The link between the IPA and the so-called Liberal Party has always been difficult. The IPA – i.e. Kemp, Murdoch, the big Industrialists and Capitalists of the early 1940s – created the Liberal Party out of the putrid remains of the United Australia Party. The original UAP imploded due to corruption. The Abbott led Liberal Party looks like repeating history. The IPA was a tool of the Melbourne Establishment to maintain hegemony. A hierarchy. Something that starts at the top and trickles down. Long time supporters of the IPA have been AMP and (if memory serves correct) Colonial Mutual.

    Hmmm… I suspect that this story is just starting to play itself out. Hopefully people are better informed these days as to how their fees and charges are applied to their super & actively seel out reputable Planners.

    Overall, Abbott is fast running out of time to implement the IPA agenda. It will be interesting to see if the Liberal Party seeks to reclaim any integrity or if it has completely forsaken itself to the interests of trans-national corporations.

  15. Carol Taylor

    Yet at the same time the coalition will keep on rewarding those who are already able to retire, and comfortably so. The rest of us, and especially women who have had to take substantial time out of the workforce need to be “punished” for not trying harder to save.

    Groovie chickie, Abbott’s “women of calibre” clearly do not include those with disabilities, Abbott having only recently sacked 3 women from one department – one lady is deaf, one is pregnant and one has chronic injuries. Deaf, pregnant and injured women do not come under Tony’s definition. Proviso, pregnant yes as long as you’re earning over $150,000pa.

  16. Mike 1

    Carol great to hear from you, I am new here yet follow Politics in all forms. Most of my working life was spent overseas, working as an engineer in oil and gas. I am also one of the dreaded “Baby Boomers”, yet put a little bit of money away in Super. I have just turned 62 today and have no prospects of any future job. Most of my money went to provide for my Family and to pay off a mortgage. I know where you are coming from. I have about $30,000:00 in the Bank (I am luckier than some), yet when that runs out, I will have to sell our house, or go on the Dole. The Dole is not an option for me, as there are people more worthy than me at this present time. I hope things improve for You, Take care and we wish You all the Best.

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