Speaker 1: I'm Ruby Jones and you're listening to seven AM. This week,
Speaker 1: the federal government dramatically rewrote.
Speaker 2: Its signature tax policy.
Speaker 1: The changes mean that a small section of people with
Speaker 1: very high superbalances will.
Speaker 2: Pay less tax.
Speaker 1: That backflip has big consequences for the government's budget and
Speaker 1: for its commitment to addressing wealth inequality This Country Today
Speaker 1: Press Gallery journalist Paul Bonjorno on why the government cave
Speaker 1: to pressure from outside and within its own ranks.
Speaker 2: It's Saturday, October eighteen, so Paul.
Speaker 1: The Treasurer Jim Chalmers had an awkward start to the
Speaker 1: week this week when he announced that he has reworked
Speaker 1: his superannuation reform to make it less ambitious.
Speaker 3: Our superannuation system is the envy of the world. It
Speaker 3: is our proud labor creation. But it has its imperfections,
Speaker 3: and today with these announcements, we are addressing at least
Speaker 3: two of them.
Speaker 2: Tell me about the announcement. What did he say?
Speaker 4: Well, first of all, we have to note that it
Speaker 4: really took everybody by surprise. Why it was a surprise,
Speaker 4: as Albaneze actually left the country on the weekend on
Speaker 4: Sunday for a bit of a holiday on a tiny
Speaker 4: Micronesian island with his fiance. No one begrudges him that,
Speaker 4: but it did look that he was leaving the Treasurer
Speaker 4: to carry the can on his own. One Cabinet minister
Speaker 4: thinks that it looked like and felt like a bit
Speaker 4: of a snub because on Monday morning a notice went
Speaker 4: out to the press gallery that the treasure would be
Speaker 4: holding a mid morning news conference. People were scratching their
Speaker 4: heads about what it would be, and of course what
Speaker 4: it was was the bombshell announcement that six significant changes
Speaker 4: to the way he was going to deal with the
Speaker 4: taxing super for the wealthiest Australians, the wealthiest savers.
Speaker 3: For super earnings on superbalances between three and ten million dollars,
Speaker 3: the rate remains thirty percent. The rate for over ten
Speaker 3: million dollars becomes forty percent.
Speaker 4: But their unrealized capital gains, that is investments they have
Speaker 4: that are growing in value but they haven't yet sold well,
Speaker 4: they will no longer be taxed. This was a big
Speaker 4: sticking point.
Speaker 3: This is a fair superannuation system from top to bottom
Speaker 3: and it's another part of us ensuring as a labor
Speaker 3: government that more Australians are earning more, keeping more of
Speaker 3: what they earn and also retiring with more and Paul.
Speaker 1: When I watched Jim Chalmers speak, my first question, which
Speaker 1: I think was similar to a lot of people's, was
Speaker 1: why is he doing this? Because, as you say, the
Speaker 1: government won the last election with this overwhelming majority. They
Speaker 1: took this policy to the election. It seems like it
Speaker 1: was settled, So why walk it back now?
Speaker 4: Yes, Well, that's the big question, and the simple answer
Speaker 4: is that Anthony Albanzi judged that he would have to
Speaker 4: spend a lot of political capital defending the original proposal,
Speaker 4: especially the non indexation, the sort of blowback that he
Speaker 4: was getting not only from the top end of town
Speaker 4: but also from a former Prime Minister and Treasurer Paul Keating.
Speaker 4: He thought it was badly designed policy and opened up
Speaker 4: labor for the sort of scare campaign that the finance writers,
Speaker 4: particularly in the Australian and the Financial Review, were running.
Speaker 4: One Treasury official told me that some of the scenarios painted,
Speaker 4: particularly in the Australian, talking about we're back to the
Speaker 4: absolutism of Henry the Eighth was just rubbish. But Albanezy
Speaker 4: judged that this sort of scare had merit and then
Speaker 4: there were also some in the Labor government themselves, some
Speaker 4: in the ministry and the backbench who weren't all that happy,
Speaker 4: although no one really was creating a fuss. For one
Speaker 4: reason is the Liberals didn't make anything much of it.
Speaker 4: I mean, it wasn't brought up by the Liberals at
Speaker 4: the election at all. And as we saw, Albanezi emerged
Speaker 4: the other side of the election with a landslide, a
Speaker 4: ninety four seat majority, which has people scratching their heads
Speaker 4: and certainly made the Treasurer swallow hard when he had
Speaker 4: been defending these changes and he had to backtrack so
Speaker 4: quickly on them.
Speaker 1: So Anthony Abernezi has intervened here and made Jim Chalmers
Speaker 1: change what was a signature policy of his. So take
Speaker 1: me back to when Chalmers first proposed these changes to
Speaker 1: superbalances over three million. What was his case for it.
Speaker 4: The case for it is that Treasury is worried that
Speaker 4: the budget relies over heavily on taxing income.
Speaker 3: For any objective of observer. The idea that ordinary working
Speaker 3: people subsidize incredibly generous tax breaks for people with millions
Speaker 3: and millions of dollars in superannuation doesn't stack up, and.
Speaker 4: Treasury is also worried that over the years there's been
Speaker 4: an accumulation of tax concessions that are getting out of hand,
Speaker 4: not only in super but on property, that is assets.
Speaker 4: We're talking about capital gains tax discounts here, we're talking
Speaker 4: about negative gearing these concessions. And a good example in
Speaker 4: the area of superannuation is the tax concessions that is,
Speaker 4: taxing savings and then earnings at a much lower rate
Speaker 4: is costing fifty five billion dollars a year.
Speaker 3: Every dollar that's spent on a tax break for people
Speaker 3: with tens of millions of dollars in super is a
Speaker 3: borrow dollar. That makes the deficit bigger. If you've got
Speaker 3: millions in super, that's impressive.
Speaker 4: Obviously there'll still.
Speaker 3: Be tax concessions for you, they just won't be quite
Speaker 3: as generous as they were before.
Speaker 4: What we've got and this is what the Treasurer wanted
Speaker 4: to address, and Treasury says as urgent is a burgeoning
Speaker 4: wealth inequality, and not surprisingly, most of that wealth is
Speaker 4: tied up in superannuation and housing.
Speaker 2: And at the.
Speaker 1: Time when Chalmers did first announce this policy, he said
Speaker 1: that he wouldn't be changing any of his policies, but
Speaker 1: obviously things have changed, the government has backtracked. You said
Speaker 1: that this really doesn't seem to have much to do
Speaker 1: with pressure from the opposition, And you mentioned Paul Keating,
Speaker 1: the former Labor Prime minister. So just how influential do
Speaker 1: you think he has been here?
Speaker 4: Two points to make here. Very influential, given who he
Speaker 4: is and given the fact that he's like a dog
Speaker 4: with a bone, and he was quietly and behind the scenes,
Speaker 4: you know, making it known, particularly to Albanizi, but not
Speaker 4: only Alberanzi, Charmers himself that he thought that it was
Speaker 4: bad design and it needed to be rethought and it
Speaker 4: made the government vulnerable to scare campaigns that, in Keating's view,
Speaker 4: had had a basis in reality, as all good scare
Speaker 4: campaigns need to have. What we have to see is
Speaker 4: strange parallels between this fight and what happened when we
Speaker 4: saw the Rudd Gillard government try to tax miners' super profits.
Speaker 4: You might remember Gina Reinhardt, the richest person in Australia.
Speaker 4: She even got on the back of a truck in
Speaker 4: Perth to scream herself literally hoarse, against having to pay
Speaker 4: any more tax, any more royalties on mining that had
Speaker 4: made her this billionaire. And the people who were screaming
Speaker 4: loudest here are the richest in the country. They can
Speaker 4: afford the best accountants in the country. In fact, one
Speaker 4: said to me, the accountants can afford better than some
Speaker 4: of the ones that Treasury have got, and they can
Speaker 4: afford to run campaigns. So all of that plays into
Speaker 4: the whole argument, will we ever get tax reform that
Speaker 4: tries to get the wealthier Australians to bear more of
Speaker 4: the bird.
Speaker 2: Coming up? The changes for low income earners Paul?
Speaker 1: The government still has to get this through the Senate.
Speaker 1: So how have the other part is reacted to the change?
Speaker 4: Well, the Liberals welcome the change. In fact, to the
Speaker 4: Shadow Treasurer Ted O'Brien, if you like, was dancing on
Speaker 4: Jim Charmers's grave.
Speaker 5: We now see a terrible tax that was going to
Speaker 5: hurt hard working, forgotten Australians all across the country dumped
Speaker 5: the government. The Treasurer has been chewed up and his
Speaker 5: tax plan has now been chucked out.
Speaker 4: And he said a coalition of common sense has had
Speaker 4: a big victory today.
Speaker 5: Again is a victory for the Coalition of common sense.
Speaker 4: The Greens, however, who will be absolutely needed in the Senate.
Speaker 4: Sarah Hanson Young, who's the tactician in the Senate for
Speaker 4: the Greens. She says that this is labor caving in
Speaker 4: to the wealthy.
Speaker 5: It does look as though the government has gone week
Speaker 5: on taxing the wealthy, and she.
Speaker 4: Said that they'll be looking very carefully at the legislation
Speaker 4: that the Treasurer does put before the Senate, and they
Speaker 4: will be hoping that the Greens will come to wave
Speaker 4: through the substantial part of these reforms.
Speaker 1: Sure, but if they do, they're likely to want something
Speaker 1: in return for their supports. So what do you think
Speaker 1: that's likely to be.
Speaker 4: Well, that's a very good question. One of the things
Speaker 4: they did want for the threshold to be dropped from
Speaker 4: three million down to two million. They had no problem
Speaker 4: with taxing unrealized capital gains, and in fact, one of
Speaker 4: the Greens pointed out to me. They asked me a question,
Speaker 4: do you pay council rates? And I said, well, do
Speaker 4: you realize that they go up every year on unrealized
Speaker 4: capital gain? On the worth of your property. You haven't
Speaker 4: sold it, but you've been asked to pay more rates
Speaker 4: or tax on it. It's not a foreign concept. And
Speaker 4: if you're a multi millionaire, well you can afford to
Speaker 4: pay a bit more based on the fact that your
Speaker 4: wealth has increased. In fact, you can go out and
Speaker 4: borrow more money on that accrued wealth even though you
Speaker 4: haven't sold the house. These are the sorts of arguments
Speaker 4: the Greens will be putting and it'll be interesting to
Speaker 4: see how far the government will go to meet them
Speaker 4: and what the Greens do come up with, because the
Speaker 4: Greens will realize that if they reject this completely, then
Speaker 4: the status quo remains.
Speaker 5: Paul.
Speaker 1: Ultimately, where do you think this leaves lower income earners well?
Speaker 4: As the Treasurer said he was looking after the bottom
Speaker 4: end as well, so he also announced the tax off
Speaker 4: set for low income earners. It's called LISTO Low Income
Speaker 4: Superannuation Tax off Set.
Speaker 3: This will mean more superannuation for one point three million Australians,
Speaker 3: of whom sixty percent are women. It means a total
Speaker 3: number of eligible Australians for the LISTO will become three
Speaker 3: point one million, and by one realistic calculation, it means
Speaker 3: about an extra fifteen thousand dollars at retirement.
Speaker 1: So given the circumstances of all of this poll a
Speaker 1: government with a huge mandate, a policy that has already
Speaker 1: been taken to an election and ultimately only affects a
Speaker 1: very small group of wealthy Australians. What does all of
Speaker 1: that tell you about how much political appetite there is
Speaker 1: to make the kind of economic changes that are needed
Speaker 1: to deal with both the structural problems in the budget
Speaker 1: and also just the fact of rising inequality.
Speaker 4: What it tells me is that unless we can get
Speaker 4: a political leader prepared to be bolder than the Prime
Speaker 4: Minister is, then we're not going to get this sort
Speaker 4: of tax reforms that are needed. If you've got a
Speaker 4: ninety four seat majority, you have political capital to spend
Speaker 4: in the national interest. It should be remembered that when
Speaker 4: John Howard went to an election with the Goods and
Speaker 4: Services Tax, he too had an enormous majority. As a
Speaker 4: result of that election, he lost nineteen seats but still
Speaker 4: managed to bring in the reform that is the Goods
Speaker 4: and Services Tax. No one's talking about wealth inequality, not
Speaker 4: income inequality, but wealth and how has this enormous wealth
Speaker 4: been created on the backs of taxpayers. It's sort of
Speaker 4: almost a vicious So it would seem that the only
Speaker 4: safe tax reform is the tax reform that hits the poor.
Speaker 4: You know, the sort of thinking that gave us Robodebt
Speaker 4: that talks about doll bludgers, and one of Australia's most
Speaker 4: prominent economist, Chris Richardson, he's despairing. He says, look, if
Speaker 4: you get this much of a blow up over a
Speaker 4: tax reform that is hitting such a tiny cohort of taxpayers,
Speaker 4: what hope have we got? As Chris Richardson says, the
Speaker 4: way we're doing tax and spending at the moment is
Speaker 4: stupid quote unquote, So we need people to be less
Speaker 4: stupid and braver, and I wonder if we should hold
Speaker 4: our breaths on any of that.
Speaker 1: Well, it was great quote unquote, No, it was excellent
Speaker 1: talking to you.
Speaker 2: Thank you so much for Thank you Ruby Bay.
Speaker 1: Before we go, I wanted to let you know that
Speaker 1: this week Treaty legislation was introduced into the Victorian Parliament.
Speaker 1: It was a significant moment and my colleague Daniel James
Speaker 1: has written about what it means in today's edition of
Speaker 1: the seven Am Newsletter, which you can subscribe to on
Speaker 1: our website seven am podcast dot com dot au slash subscribe.
Speaker 1: As Daniel writes, it's about changing how the Victorian government
Speaker 1: works with First peoples, making sure that decisions are guided
Speaker 1: by lived experience rather than political convenience. Meanwhile, what's happening
Speaker 1: in the Northern Territory couldn't be more different. The return
Speaker 1: of heavy handed policies, tie the police powers, alcohol restrictions,
Speaker 1: and top down controls over aboriginal communities echoes the two
Speaker 1: thousand and seven intervention. Last year we made a three
Speaker 1: part series about this called This Is Alice Springs. Sadly,
Speaker 1: it's just as relevant now as it was then, so
Speaker 1: we're republishing it tomorrow. You'll see it in your feed.
Speaker 1: Seven Am is a daily show from Solstice Media. It's
Speaker 1: made by Atticus Basto, Chris en Gate, Daniel James, Sarah mcvee,
Speaker 1: Travis Evans, Sultan Petcho and me Ruby Jones. Our theme
Speaker 1: music is by Ned Beckley and Josh Hogan, Boon Void Bordeo.
Speaker 2: See you next week.