Wry & Dry

Superannuation shambles a stone in Turnbull's right John Lobb*

Barely a day goes by without 'superannuation reforms' taking up column-centimetres in the more serious media.  And even the Melbourne Age has noticed.

Walk with W&D a little while on this.

Readers will remember that the first Morrison budget had in it, essentially, three superannuation reforms.  Each was seen as low-hanging fiscal fruit by the government, ready to be picked.

The reforms were:

  1. Cap the tax-free capital amount in pension phase in a person's superannuation account at $1.6m
  2. Reduce the annual concessional (i.e. tax deductible) contribution to $25,000
  3. Cap the the lifetime non-concessional contribution amount at $500,000; with 'lifetime' starting from 2007

There is, more-or-less, broad agreement about the reforms one and two.  Number three is the most controversial.

The problems with Policy Number 3 are three-fold:

  • the backdating of the contribution counting to 2007
  • the backdating of the reform from when legislated (October?) to budget night
  • the amount is seen as too small

Additionally, W&D knows of grossly unfair anomalous situations, such as a super-splitting arrangement that might leave one divorced partner without superannuation assets late in life and no opportunity to rebuild.

W&D's aim is not to rehash old ground about the ludicrousness, stupidity, illogicality and administrative labyrinthinity of this proposed reform, both as to timing and content. 

Except to point out that this is now an opportunity for Prime Minister Turnbull to show some political nouse and remove a stone from his shoe.

Firstly, the backbench of the coalition hate the policy.  Many don't understand it.  Including that evolutionary throwback from Tasmania, Senator Abbetz, who referred to the $500,000 concessional cap.  The good Senator, the leading Liberal from Tasmania, and who presided over the loss of 100% of the Tasmanian Liberal seats (i.e. three) in the election, should perhaps ponder his own failings.  

Secondly, even if the policy survives the party room, the Senate will reject it.  Labor already announced that it will pass the policy but not backdated to 2007.

Thirdly, the policy was devised without any consultation with industry.  Assistant Treasurer Kelly O'Dwyer, who W&D hitherto thought was a smart person, went up to the top of the mountain and came down with a tablet inscribed by public servants, whose own munificent superannuation arrangements are not affected.

Moses Moses-like, Kelly O'Dwyer came down from the public service mountain top with superannuation reforms

Like Moses, O'Dwyer dare not challenge the inscriptions given from a higher power.  

Well, it's time she did.  And listened.

Otherwise PM Turnbull will still have the stone in his right John Lobb* at the time of the next election. 

* John Lobb Bootmaker is a UK company founded in 1866 that manufactures and retails a very exclusive range of bespoke and ready-to-wear shoes for men.  W&D is sure that the John Lobb shoes would be found on PM Turnbull's feet.