Before they introduce an unfair tax on people struggling to fund their own retirement via superannuation, Prime Minister Julia Gillard and Treasurer Wayne Swan should study the lessons of history.
And, if they will listen to him, Resources Minister Martin Ferguson can explain to Gillard and Swan what happened in 1998 when the Labor Party made a similar mistake.
I remember talking to Martin a few weeks after the 1998 election, which saw a huge swing to the ALP as Kim Beazley ran against Prime Minister John Howard on the issue of the GST. Howard won and we now have a GST.
But Ferguson explained that when the ALP researched the results of the many very close seats that they lost, the party officials found they would have won them – and the 1998 election – but for a savings policy they took to the election. Kim Beazley declared that if the ALP won they would scrap the grandfathering of the "no capital gains tax” on assets acquired prior to 1985.
When Bob Hawke and Paul Keating introduced a capital gains tax in 1985 they solemnly declared that assets acquired prior to the tax would be a tax free. There were a lot of ALP supporters with pre-1985 assets in those marginal seats who felt betrayed.
After losing that 1998 election the Labor Party never regained power until 2007.
Treasury and the politicians are canvassing the taxing of those with superannuation fund balances of over $1 million, forgetting that the $1 million, if invested in bank deposits, would yield only $38,000 in income (Gillard's super plan is far too rich, February 4).
Retiring Attorney General Nicola Roxon’s parliamentary superannuation is worth at least $10 million but she would not be taxed under the proposal being canvassed because her pension (like that of senior public servants) is virtually free so it is not declared "middle class welfare”.
To tax unfortunates who receive no 'free' money but set hard earned cash aside to fund their retirement via superannuation, but are now struggling, is simply grossly unfair.
Stating that they are receiving middle class welfare is simply nonsense and undermines the whole basis of the superannuation plan Paul Keating set up. As it happens that plan is not working as Paul Keating envisaged because people can’t get enough money into superannuation to finance retirement. So, as I explained yesterday, when they turn 60 or 65 they use it to fund other means of savings or leisure spending and then link to the aged pension.
Accordingly the Gillard/ Swan proposed attack on superannuation will not raise huge sums because the financial planning industry already knows how to 'farm' lesser sums and will extend its net to those with $1 million and above.
They are already looking with glee at the income they will receive.
John Howard went to the polls advocating a GST because he said it was essential to fund the nation. If Julia Gillard believes that to fund the nation we have to have a savings tax then she must tell us and put the plan before the public for a vote.
But it must cover all savings, not just target a group of unfortunates who tried to fund their retirement with $1 million to $2 million in superannuation only to find it was a struggle.
If as a reward for savings diligence they too are classed as receiving middle class welfare, it undermines the whole superannuation system.
Finally, thanks to all the contributors who have written in. And to Pete Cavanagh: If the life insurance money goes into your superannuation fund I think your estate will be hit with the proposed tax. If it goes to your spouse she should be OK – but no one can be sure. And if Tony Abbott wins there will be no superannuation tax.