Allegra Spender, The Financial Review -
Missed chance for real tax reform
Super cap changes
Tinkering with the concessions is no substitute for the taxation system review that we need. And there are no easy choices left.
There are no easy choices left economically to us, so let's not have another debate like the one we just had on superannuation.
On one side, the government has shown that it can walk the line between not breaking a promise but making a change. It does give a template for future reform. But on the other side, we have missed an opportunity to have a thoughtful, proper conversation about super, and it makes it harder to do that next time.
I represent Wentworth - one of the country's wealthiest electorates, where thousands of people will be affected by the government's changes. What may be surprising is that so far, most people I have consulted in Wentworth are open to these proposals, even if they are negatively affected by them personally.
It shouldn't be surprising - people don't just vote for their narrow financial interest. We care about the whole country and want everyone to be able to create a great life. We all want good government, thoughtful debate and then decisive action that sets us up for the long term. We want fairness and stability, particularly with people's retirement income.
There are legitimate concerns, such as how this affects people who are already retired, how to make sure public sector defined benefit pensions are included, the lack of indexing in the threshold, and that Labor's default approach is to focus on high-income earners. But there is also a lot of support.
Treasurer Jim Chalmers started this debate by highlighting that tax concessions available to superannuants are worth $50 billion - so if the aim was to significantly reduce that, he has missed. But we have also missed an opportunity to have thoughtful conversations about whether we should make other significant changes to super. And there's plenty to consider.
For example, the Grattan Institute recommended a few years ago that we should not increase the superannuation guarantee to 12 per cent. Their modelling showed it holds down real wages, and forces people to save more for retirement than they really need. This change would also save money in the budget. On July 1, another 0.5 per cent will be added to the super guarantee - but is that the best policy, when real wages are falling like a stone?
Unfortunately, it will be harder to have the conversation about super next time because confidence in the stability of super is eroded every time we reopen the conversation.
I respect what the treasurer has done to educate the community about the challenges of balancing the budget, and where we tax and spend. These are all important and talk to thoughtful, methodical and long-term approaches. But if we want to deal with these long-term problems, we are going to have to slow down the policy debate that follows and consider a range of outcomes, rather than immediately narrowing the debate.
I have been advocating for a tax review, and I think the past week has illustrated why. Because if we don't do it deliberately, we will do it half-heartedly, and we will tinker around the edges when we have no easy answers. The government hasn't agreed to this yet, so I am going to kick it off myself because, although there are no easy answers, there is an opportunity to build consensus on the direction of our long-term travel.
And while the treasurer is right to highlight the challenges of spending coming up, the government must also recognise that not all spending is inevitable or good. We have to focus on getting value for our spending, rather than just spending more. Education is a great example of where the federal government has spent billions more, but our outcomes are worse. There is much that can be done through the Parliamentary Budget Office and Audit Office to review our spending.
We have no easy choices left, so let's make our choices on taxing, spending, policy and reform deliberate. Allegra Spender is the independent federal member for Wentworth. The government must recognise not all spending is inevitable or good.