WEBVTT - Why Chalmers backtracked on big super balances 0:00:01.560 --> 0:00:09.039 I'm Ruby Jones and you're listening to seven AM. This week, 0:00:09.080 --> 0:00:11.680 the federal government dramatically rewrote. 0:00:11.200 --> 0:00:12.639 Its signature tax policy. 0:00:13.400 --> 0:00:15.840 The changes mean that a small section of people with 0:00:16.040 --> 0:00:17.759 very high superbalances will. 0:00:17.560 --> 0:00:18.439 Pay less tax. 0:00:19.400 --> 0:00:23.040 That backflip has big consequences for the government's budget and 0:00:23.079 --> 0:00:27.360 for its commitment to addressing wealth inequality This Country Today 0:00:27.520 --> 0:00:31.040 Press Gallery journalist Paul Bonjorno on why the government cave 0:00:31.120 --> 0:00:34.320 to pressure from outside and within its own ranks. 0:00:39.440 --> 0:00:48.680 It's Saturday, October eighteen, so Paul. 0:00:48.720 --> 0:00:52.400 The Treasurer Jim Chalmers had an awkward start to the 0:00:52.400 --> 0:00:55.720 week this week when he announced that he has reworked 0:00:55.840 --> 0:00:59.240 his superannuation reform to make it less ambitious. 0:01:00.000 --> 0:01:03.160 Our superannuation system is the envy of the world. It 0:01:03.280 --> 0:01:07.920 is our proud labor creation. But it has its imperfections, 0:01:08.000 --> 0:01:11.840 and today with these announcements, we are addressing at least 0:01:11.880 --> 0:01:12.400 two of them. 0:01:12.840 --> 0:01:14.920 Tell me about the announcement. What did he say? 0:01:15.120 --> 0:01:17.080 Well, first of all, we have to note that it 0:01:17.280 --> 0:01:20.720 really took everybody by surprise. Why it was a surprise, 0:01:20.800 --> 0:01:24.080 as Albaneze actually left the country on the weekend on 0:01:24.240 --> 0:01:26.800 Sunday for a bit of a holiday on a tiny 0:01:26.880 --> 0:01:31.000 Micronesian island with his fiance. No one begrudges him that, 0:01:31.319 --> 0:01:34.959 but it did look that he was leaving the Treasurer 0:01:35.040 --> 0:01:38.920 to carry the can on his own. One Cabinet minister 0:01:39.000 --> 0:01:41.240 thinks that it looked like and felt like a bit 0:01:41.280 --> 0:01:44.640 of a snub because on Monday morning a notice went 0:01:44.680 --> 0:01:46.959 out to the press gallery that the treasure would be 0:01:47.000 --> 0:01:50.400 holding a mid morning news conference. People were scratching their 0:01:50.400 --> 0:01:52.840 heads about what it would be, and of course what 0:01:52.880 --> 0:01:57.680 it was was the bombshell announcement that six significant changes 0:01:57.960 --> 0:02:00.240 to the way he was going to deal with the 0:02:00.280 --> 0:02:05.520 taxing super for the wealthiest Australians, the wealthiest savers. 0:02:04.720 --> 0:02:10.079 For super earnings on superbalances between three and ten million dollars, 0:02:10.120 --> 0:02:14.960 the rate remains thirty percent. The rate for over ten 0:02:15.000 --> 0:02:18.200 million dollars becomes forty percent. 0:02:18.639 --> 0:02:22.720 But their unrealized capital gains, that is investments they have 0:02:23.120 --> 0:02:26.720 that are growing in value but they haven't yet sold well, 0:02:26.760 --> 0:02:29.440 they will no longer be taxed. This was a big 0:02:29.480 --> 0:02:30.280 sticking point. 0:02:30.919 --> 0:02:35.000 This is a fair superannuation system from top to bottom 0:02:35.400 --> 0:02:38.480 and it's another part of us ensuring as a labor 0:02:38.520 --> 0:02:42.320 government that more Australians are earning more, keeping more of 0:02:42.360 --> 0:02:45.680 what they earn and also retiring with more and Paul. 0:02:45.760 --> 0:02:49.760 When I watched Jim Chalmers speak, my first question, which 0:02:49.760 --> 0:02:52.800 I think was similar to a lot of people's, was 0:02:53.280 --> 0:02:55.840 why is he doing this? Because, as you say, the 0:02:55.880 --> 0:02:59.600 government won the last election with this overwhelming majority. They 0:02:59.639 --> 0:03:02.200 took this policy to the election. It seems like it 0:03:02.240 --> 0:03:04.680 was settled, So why walk it back now? 0:03:05.440 --> 0:03:09.480 Yes, Well, that's the big question, and the simple answer 0:03:09.720 --> 0:03:14.160 is that Anthony Albanzi judged that he would have to 0:03:14.200 --> 0:03:19.160 spend a lot of political capital defending the original proposal, 0:03:19.560 --> 0:03:24.000 especially the non indexation, the sort of blowback that he 0:03:24.160 --> 0:03:26.880 was getting not only from the top end of town 0:03:27.240 --> 0:03:32.000 but also from a former Prime Minister and Treasurer Paul Keating. 0:03:32.520 --> 0:03:35.840 He thought it was badly designed policy and opened up 0:03:36.000 --> 0:03:39.280 labor for the sort of scare campaign that the finance writers, 0:03:39.320 --> 0:03:43.200 particularly in the Australian and the Financial Review, were running. 0:03:43.680 --> 0:03:47.400 One Treasury official told me that some of the scenarios painted, 0:03:47.600 --> 0:03:51.480 particularly in the Australian, talking about we're back to the 0:03:51.520 --> 0:03:56.040 absolutism of Henry the Eighth was just rubbish. But Albanezy 0:03:56.160 --> 0:03:59.960 judged that this sort of scare had merit and then 0:04:00.000 --> 0:04:04.040 there were also some in the Labor government themselves, some 0:04:04.120 --> 0:04:07.240 in the ministry and the backbench who weren't all that happy, 0:04:07.560 --> 0:04:10.600 although no one really was creating a fuss. For one 0:04:10.640 --> 0:04:14.560 reason is the Liberals didn't make anything much of it. 0:04:14.640 --> 0:04:17.880 I mean, it wasn't brought up by the Liberals at 0:04:17.920 --> 0:04:21.440 the election at all. And as we saw, Albanezi emerged 0:04:21.480 --> 0:04:24.320 the other side of the election with a landslide, a 0:04:24.400 --> 0:04:28.560 ninety four seat majority, which has people scratching their heads 0:04:28.839 --> 0:04:32.240 and certainly made the Treasurer swallow hard when he had 0:04:32.279 --> 0:04:35.960 been defending these changes and he had to backtrack so 0:04:36.120 --> 0:04:38.960 quickly on them. 0:04:39.520 --> 0:04:43.919 So Anthony Abernezi has intervened here and made Jim Chalmers 0:04:44.120 --> 0:04:48.320 change what was a signature policy of his. So take 0:04:48.360 --> 0:04:51.440 me back to when Chalmers first proposed these changes to 0:04:51.480 --> 0:04:55.279 superbalances over three million. What was his case for it. 0:04:55.839 --> 0:05:00.640 The case for it is that Treasury is worried that 0:05:00.880 --> 0:05:05.359 the budget relies over heavily on taxing income. 0:05:05.520 --> 0:05:10.000 For any objective of observer. The idea that ordinary working 0:05:10.040 --> 0:05:15.160 people subsidize incredibly generous tax breaks for people with millions 0:05:15.160 --> 0:05:19.520 and millions of dollars in superannuation doesn't stack up, and. 0:05:19.520 --> 0:05:23.160 Treasury is also worried that over the years there's been 0:05:23.200 --> 0:05:28.400 an accumulation of tax concessions that are getting out of hand, 0:05:28.520 --> 0:05:32.400 not only in super but on property, that is assets. 0:05:32.720 --> 0:05:37.000 We're talking about capital gains tax discounts here, we're talking 0:05:37.000 --> 0:05:40.520 about negative gearing these concessions. And a good example in 0:05:40.560 --> 0:05:44.720 the area of superannuation is the tax concessions that is, 0:05:45.120 --> 0:05:50.000 taxing savings and then earnings at a much lower rate 0:05:50.600 --> 0:05:54.640 is costing fifty five billion dollars a year. 0:05:55.440 --> 0:05:57.880 Every dollar that's spent on a tax break for people 0:05:57.920 --> 0:06:00.440 with tens of millions of dollars in super is a 0:06:00.480 --> 0:06:04.440 borrow dollar. That makes the deficit bigger. If you've got 0:06:04.440 --> 0:06:06.400 millions in super, that's impressive. 0:06:06.480 --> 0:06:07.840 Obviously there'll still. 0:06:07.640 --> 0:06:10.800 Be tax concessions for you, they just won't be quite 0:06:10.880 --> 0:06:12.920 as generous as they were before. 0:06:13.320 --> 0:06:16.400 What we've got and this is what the Treasurer wanted 0:06:16.400 --> 0:06:20.599 to address, and Treasury says as urgent is a burgeoning 0:06:20.880 --> 0:06:25.560 wealth inequality, and not surprisingly, most of that wealth is 0:06:25.640 --> 0:06:28.080 tied up in superannuation and housing. 0:06:29.279 --> 0:06:29.840 And at the. 0:06:29.839 --> 0:06:33.760 Time when Chalmers did first announce this policy, he said 0:06:33.800 --> 0:06:36.839 that he wouldn't be changing any of his policies, but 0:06:37.279 --> 0:06:40.880 obviously things have changed, the government has backtracked. You said 0:06:41.000 --> 0:06:43.520 that this really doesn't seem to have much to do 0:06:43.600 --> 0:06:47.080 with pressure from the opposition, And you mentioned Paul Keating, 0:06:47.120 --> 0:06:50.440 the former Labor Prime minister. So just how influential do 0:06:50.480 --> 0:06:51.640 you think he has been here? 0:06:52.279 --> 0:06:55.680 Two points to make here. Very influential, given who he 0:06:55.800 --> 0:06:59.160 is and given the fact that he's like a dog 0:06:59.240 --> 0:07:02.680 with a bone, and he was quietly and behind the scenes, 0:07:02.720 --> 0:07:05.680 you know, making it known, particularly to Albanizi, but not 0:07:05.720 --> 0:07:09.640 only Alberanzi, Charmers himself that he thought that it was 0:07:09.720 --> 0:07:12.840 bad design and it needed to be rethought and it 0:07:12.960 --> 0:07:17.280 made the government vulnerable to scare campaigns that, in Keating's view, 0:07:17.560 --> 0:07:21.320 had had a basis in reality, as all good scare 0:07:21.320 --> 0:07:25.240 campaigns need to have. What we have to see is 0:07:25.600 --> 0:07:29.880 strange parallels between this fight and what happened when we 0:07:29.960 --> 0:07:34.920 saw the Rudd Gillard government try to tax miners' super profits. 0:07:35.240 --> 0:07:38.520 You might remember Gina Reinhardt, the richest person in Australia. 0:07:38.600 --> 0:07:40.320 She even got on the back of a truck in 0:07:40.440 --> 0:07:45.040 Perth to scream herself literally hoarse, against having to pay 0:07:45.080 --> 0:07:49.040 any more tax, any more royalties on mining that had 0:07:49.080 --> 0:07:53.480 made her this billionaire. And the people who were screaming 0:07:53.520 --> 0:07:56.160 loudest here are the richest in the country. They can 0:07:56.240 --> 0:07:58.800 afford the best accountants in the country. In fact, one 0:07:58.840 --> 0:08:01.400 said to me, the accountants can afford better than some 0:08:01.480 --> 0:08:04.040 of the ones that Treasury have got, and they can 0:08:04.080 --> 0:08:11.000 afford to run campaigns. So all of that plays into 0:08:11.480 --> 0:08:14.720 the whole argument, will we ever get tax reform that 0:08:14.800 --> 0:08:18.600 tries to get the wealthier Australians to bear more of 0:08:18.680 --> 0:08:19.360 the bird. 0:08:22.560 --> 0:08:36.920 Coming up? The changes for low income earners Paul? 0:08:37.080 --> 0:08:39.520 The government still has to get this through the Senate. 0:08:39.640 --> 0:08:42.840 So how have the other part is reacted to the change? 0:08:43.160 --> 0:08:46.000 Well, the Liberals welcome the change. In fact, to the 0:08:46.000 --> 0:08:49.520 Shadow Treasurer Ted O'Brien, if you like, was dancing on 0:08:49.920 --> 0:08:51.080 Jim Charmers's grave. 0:08:51.800 --> 0:08:55.320 We now see a terrible tax that was going to 0:08:55.400 --> 0:08:59.840 hurt hard working, forgotten Australians all across the country dumped 0:09:00.160 --> 0:09:03.600 the government. The Treasurer has been chewed up and his 0:09:03.760 --> 0:09:06.160 tax plan has now been chucked out. 0:09:06.360 --> 0:09:09.760 And he said a coalition of common sense has had 0:09:09.880 --> 0:09:11.760 a big victory today. 0:09:12.000 --> 0:09:15.360 Again is a victory for the Coalition of common sense. 0:09:15.960 --> 0:09:20.280 The Greens, however, who will be absolutely needed in the Senate. 0:09:20.720 --> 0:09:24.440 Sarah Hanson Young, who's the tactician in the Senate for 0:09:24.520 --> 0:09:28.120 the Greens. She says that this is labor caving in 0:09:28.480 --> 0:09:29.320 to the wealthy. 0:09:29.800 --> 0:09:32.800 It does look as though the government has gone week 0:09:33.080 --> 0:09:35.800 on taxing the wealthy, and she. 0:09:35.800 --> 0:09:39.160 Said that they'll be looking very carefully at the legislation 0:09:39.559 --> 0:09:43.520 that the Treasurer does put before the Senate, and they 0:09:43.559 --> 0:09:47.200 will be hoping that the Greens will come to wave 0:09:47.360 --> 0:09:50.400 through the substantial part of these reforms. 0:09:50.800 --> 0:09:53.160 Sure, but if they do, they're likely to want something 0:09:53.200 --> 0:09:55.760 in return for their supports. So what do you think 0:09:55.800 --> 0:09:56.680 that's likely to be. 0:09:57.120 --> 0:09:59.240 Well, that's a very good question. One of the things 0:09:59.240 --> 0:10:01.680 they did want for the threshold to be dropped from 0:10:01.679 --> 0:10:05.080 three million down to two million. They had no problem 0:10:05.160 --> 0:10:09.800 with taxing unrealized capital gains, and in fact, one of 0:10:09.800 --> 0:10:12.480 the Greens pointed out to me. They asked me a question, 0:10:12.559 --> 0:10:15.520 do you pay council rates? And I said, well, do 0:10:15.520 --> 0:10:19.360 you realize that they go up every year on unrealized 0:10:19.480 --> 0:10:23.040 capital gain? On the worth of your property. You haven't 0:10:23.080 --> 0:10:25.800 sold it, but you've been asked to pay more rates 0:10:25.880 --> 0:10:29.480 or tax on it. It's not a foreign concept. And 0:10:29.559 --> 0:10:33.040 if you're a multi millionaire, well you can afford to 0:10:33.040 --> 0:10:35.560 pay a bit more based on the fact that your 0:10:35.600 --> 0:10:38.080 wealth has increased. In fact, you can go out and 0:10:38.120 --> 0:10:41.720 borrow more money on that accrued wealth even though you 0:10:41.720 --> 0:10:44.160 haven't sold the house. These are the sorts of arguments 0:10:44.240 --> 0:10:46.520 the Greens will be putting and it'll be interesting to 0:10:46.559 --> 0:10:49.840 see how far the government will go to meet them 0:10:50.000 --> 0:10:52.760 and what the Greens do come up with, because the 0:10:52.800 --> 0:10:56.280 Greens will realize that if they reject this completely, then 0:10:56.320 --> 0:10:57.720 the status quo remains. 0:10:58.760 --> 0:10:59.000 Paul. 0:10:59.120 --> 0:11:02.719 Ultimately, where do you think this leaves lower income earners well? 0:11:02.720 --> 0:11:05.000 As the Treasurer said he was looking after the bottom 0:11:05.200 --> 0:11:08.880 end as well, so he also announced the tax off 0:11:08.960 --> 0:11:12.480 set for low income earners. It's called LISTO Low Income 0:11:12.760 --> 0:11:14.480 Superannuation Tax off Set. 0:11:15.200 --> 0:11:19.400 This will mean more superannuation for one point three million Australians, 0:11:19.480 --> 0:11:22.960 of whom sixty percent are women. It means a total 0:11:23.080 --> 0:11:26.400 number of eligible Australians for the LISTO will become three 0:11:26.440 --> 0:11:32.280 point one million, and by one realistic calculation, it means 0:11:32.320 --> 0:11:36.040 about an extra fifteen thousand dollars at retirement. 0:11:37.280 --> 0:11:40.800 So given the circumstances of all of this poll a 0:11:40.840 --> 0:11:44.600 government with a huge mandate, a policy that has already 0:11:44.640 --> 0:11:48.520 been taken to an election and ultimately only affects a 0:11:48.600 --> 0:11:52.160 very small group of wealthy Australians. What does all of 0:11:52.160 --> 0:11:55.760 that tell you about how much political appetite there is 0:11:55.800 --> 0:11:59.440 to make the kind of economic changes that are needed 0:11:59.480 --> 0:12:02.319 to deal with both the structural problems in the budget 0:12:02.360 --> 0:12:05.080 and also just the fact of rising inequality. 0:12:05.800 --> 0:12:10.080 What it tells me is that unless we can get 0:12:10.120 --> 0:12:15.080 a political leader prepared to be bolder than the Prime 0:12:15.080 --> 0:12:18.400 Minister is, then we're not going to get this sort 0:12:18.440 --> 0:12:21.400 of tax reforms that are needed. If you've got a 0:12:21.480 --> 0:12:26.680 ninety four seat majority, you have political capital to spend 0:12:27.160 --> 0:12:30.880 in the national interest. It should be remembered that when 0:12:31.040 --> 0:12:33.360 John Howard went to an election with the Goods and 0:12:33.400 --> 0:12:38.440 Services Tax, he too had an enormous majority. As a 0:12:38.480 --> 0:12:42.480 result of that election, he lost nineteen seats but still 0:12:42.520 --> 0:12:45.160 managed to bring in the reform that is the Goods 0:12:45.240 --> 0:12:51.440 and Services Tax. No one's talking about wealth inequality, not 0:12:51.520 --> 0:12:55.199 income inequality, but wealth and how has this enormous wealth 0:12:55.240 --> 0:12:58.440 been created on the backs of taxpayers. It's sort of 0:12:58.880 --> 0:13:03.000 almost a vicious So it would seem that the only 0:13:03.160 --> 0:13:07.160 safe tax reform is the tax reform that hits the poor. 0:13:07.880 --> 0:13:10.400 You know, the sort of thinking that gave us Robodebt 0:13:10.640 --> 0:13:14.439 that talks about doll bludgers, and one of Australia's most 0:13:14.440 --> 0:13:18.959 prominent economist, Chris Richardson, he's despairing. He says, look, if 0:13:18.960 --> 0:13:22.040 you get this much of a blow up over a 0:13:22.080 --> 0:13:26.520 tax reform that is hitting such a tiny cohort of taxpayers, 0:13:26.720 --> 0:13:30.560 what hope have we got? As Chris Richardson says, the 0:13:30.600 --> 0:13:33.080 way we're doing tax and spending at the moment is 0:13:33.160 --> 0:13:37.440 stupid quote unquote, So we need people to be less 0:13:37.520 --> 0:13:43.880 stupid and braver, and I wonder if we should hold 0:13:43.880 --> 0:13:45.440 our breaths on any of that. 0:13:47.360 --> 0:13:52.480 Well, it was great quote unquote, No, it was excellent 0:13:52.520 --> 0:13:53.040 talking to you. 0:13:53.080 --> 0:13:55.320 Thank you so much for Thank you Ruby Bay. 0:14:04.760 --> 0:14:06.560 Before we go, I wanted to let you know that 0:14:06.600 --> 0:14:10.280 this week Treaty legislation was introduced into the Victorian Parliament. 0:14:10.679 --> 0:14:13.440 It was a significant moment and my colleague Daniel James 0:14:13.480 --> 0:14:15.800 has written about what it means in today's edition of 0:14:15.840 --> 0:14:18.640 the seven Am Newsletter, which you can subscribe to on 0:14:18.679 --> 0:14:23.680 our website seven am podcast dot com dot au slash subscribe. 0:14:23.720 --> 0:14:26.720 As Daniel writes, it's about changing how the Victorian government 0:14:26.760 --> 0:14:30.040 works with First peoples, making sure that decisions are guided 0:14:30.080 --> 0:14:35.080 by lived experience rather than political convenience. Meanwhile, what's happening 0:14:35.080 --> 0:14:37.840 in the Northern Territory couldn't be more different. The return 0:14:37.920 --> 0:14:42.040 of heavy handed policies, tie the police powers, alcohol restrictions, 0:14:42.080 --> 0:14:45.640 and top down controls over aboriginal communities echoes the two 0:14:45.680 --> 0:14:48.880 thousand and seven intervention. Last year we made a three 0:14:48.880 --> 0:14:52.720 part series about this called This Is Alice Springs. Sadly, 0:14:52.800 --> 0:14:55.360 it's just as relevant now as it was then, so 0:14:55.400 --> 0:14:57.760 we're republishing it tomorrow. You'll see it in your feed. 0:14:58.760 --> 0:15:01.760 Seven Am is a daily show from Solstice Media. It's 0:15:01.800 --> 0:15:05.680 made by Atticus Basto, Chris en Gate, Daniel James, Sarah mcvee, 0:15:05.920 --> 0:15:09.680 Travis Evans, Sultan Petcho and me Ruby Jones. Our theme 0:15:09.760 --> 0:15:12.680 music is by Ned Beckley and Josh Hogan, Boon Void Bordeo. 0:15:13.200 --> 0:15:13.880 See you next week.