The Abbotalypse came back with a bang late last week, with The Australian revealing that former Prime Minister Tony Abbott stormed the party room on Thursday demanding that superannuation reform lay-off the wealthy, whilst demanding that the low-income superannuation offset be abandoned:
In a “tetchy” private meeting with a group of Liberal and Nationals MPs in Parliament House on Thursday, Mr Abbott confronted Mr Morrison and Minister for Revenue Kelly O’Dwyer about their proposed $6 billion super package. He argued the government was wrong to offer super concessions to low-income earners.
He also argued for the government to abandon its proposed cap on post-tax contributions…
MPs at the meeting said they were “aghast” that Mr Abbott had proposed hitting low-income earners — particularly working mothers — to benefit the wealthy, whom the former leader accused Mr Morrison and Ms O’Dwyer of abandoning.
“He went in there looking for a fight; he wasn’t interested in information, he wasn’t interested in listening to his colleagues, he wanted to have a fight,” said one MP present at the meeting.
“He kept interrupting and he wanted to derail the discussion.”
Mr Abbott is understood to have argued that the Coalition should represent lower taxes and smaller government…
Astonishing. Let me remind Mr Abbott that the current superannuation system is highly inequitable, with the lion’s share of benefits flowing to the top 10% of income earners, who are perversely receiving more generous taxpayer assistance than the other 90% of income earners (see below AIST and Mercer chart).
How is this in any way optimal from either a Budget sustainability or an equity perspective?
Moreover, the proposed superannuation reforms announced in the May Budget were projected to save some $2.9 billion over four years, in addition to funding the low income superannuation tax offset, which means those earning less than $37,000 would not have to pay more tax on their super than they do on their income.
Hence, the Coalition’s announced policy is not only sound from a public finances perspective, but is also equitable as it would help those people most at risk of becoming dependent on the Aged Pension in their retirement.
That Mr Abbott can argue against these no-brainer reforms beggars belief and highlights exactly why he was deposed as Prime Minister: he was simply unfit to lead.
Indeed, the key reason why Tony Abbott crashed in the opinion polls (see below chart), leading to his axing as leader, was because his approach to Budget repair was perceived as being fundamentally unfair. Instead of following his mentor, John Howard’s, lead and remembering the “Howard Battlers”, Tony Abbott instead remade the Coalition as the party of the elite that looks after the interests of wealthy constituents.
The sad irony in all of this is that after achieving nothing of substance, Tony Abbott will receive a massive pension from the Australian public once he retires from politics (hopefully sooner rather than later).
In the meantime, the Coalition would do well to ignore entirely the pleadings from Tony Abbott and his conservative supporters and instead focus on developing good policy in the national interest – reforms that blend Budget restraint with fairness, as well as combine efficiency with equity.
The Coalition’s only hope of holding on to government rest with it capturing the ‘middle ground’, not lurching to the right and governing in the interests of the wealthy elite. Low and middle income-earners simply will not vote for the Coalition in sufficient numbers if they suspect the party does not represent their interests.
Australia needs more policy along the lines of the proposed superannuation reform package, not less.
