WITH one mighty leap, Julia was ? not free after all. Still stuck fast in the same old mess, in fact. The Prime Minister says she realised as she returned from Gallipoli that a line had been crossed, and that the public's respect for Parliament was threatened by the continuing Thomson and Slipper affairs. Something had to be done, so she did it. Two phone calls and Craig Thomson has stood aside from the Labor Party, Peter Slipper from the speakership. That is as it should be in the circumstances. Why then won't it work?
WITH one mighty leap, Julia was ? not free after all. Still stuck fast in the same old mess, in fact. The Prime Minister says she realised as she returned from Gallipoli that a line had been crossed, and that the public's respect for Parliament was threatened by the continuing Thomson and Slipper affairs. Something had to be done, so she did it. Two phone calls and Craig Thomson has stood aside from the Labor Party, Peter Slipper from the speakership. That is as it should be in the circumstances. Why then won't it work?
First, because it is late in the day to be doing what should be done. Gillard explains her delay as the result of dealing with conflicting principles - respect for the sanctity of Parliament, respect for individual rights and the presumption of innocence, the undesirability of forcing parliamentarians to stand aside on the basis of unproved accusations, and so on - which pull in different directions. Voters, being more cynical, will notice Labor's interest in going slow. Labor depends on Thomson's vote. Labor also enjoyed a period of calm when it made Peter Slipper Speaker. And since it enjoyed the advantages of ignoring the two problems as long as it has, voters will quite reasonably say Labor cannot now claim any credit for supposedly fixing them. Talk of principles is just another excuse, just more talk.
Second, not much has changed. Thomson will support Labor from the crossbenches. The Coalition remains deprived of Slipper's vote. Gillard still has the numbers - just - in Parliament. Voters may see through her claims but they were not Gillard's primary audience: she was really out to reassure despairing Labor MPs that she could see how bad things were getting, and could fix them. But in this hall of mirrors, where the leader looks to see if her image finds favour with her backers, and her backers look at the reflection in the eyes of voters, nothing reflects well on the Prime Minister. After so many broken promises and so much deal-making to stay in power, Gillard is losing credibility. She may have some residual credit as a policymaker and a doer of deals, but this latest episode demonstrates yet again that she has no understanding of what people want from a leader of the country.
Leadership is not about mere talk of principles, any more than it is about wrapping oneself in the flag on Anzac Day, or wearing hard hats for the television news. It is about doing the right thing, and belief in a set of values. Things which Labor under Gillard displays too rarely.
The super fiddleFOR a government desperate for budget savings, increasing the tax that very high income earners pay on their superannuation contributions must have looked like an easy option. The changes proposed by the Superannuation Minister, Bill Shorten, will reap the government $1 billion but sympathy for those targeted is unlikely to be widespread - they all earn more than $300,000 a year.
Shorten says the changes are necessary because the very well paid are getting a better deal out of superannuation than "millions of Australians on average incomes". Concessional super contributions are now taxed at a flat rate of 15 per cent regardless of a person's income. Under the government's proposed changes that will rise to 30 per cent for high income earners.
But fiddling with the superannuation system is dangerous. Constant tinkering chips away at its credibility and undermines the confidence of those wanting to provide for themselves when they are old. These changes have been limited to about 130,000 people on high incomes but what's to stop the threshold being lowered in future? Shorten's plans also threaten to make the superannuation system more complex, never a good thing.
This is not to say superannuation reforms should never be made. The current system can be questioned on the grounds of equity. But any changes must be carefully thought through and done with discussion and consultation. Sadly, the latest policy shift has the hallmarks of policymaking on the run. The need for budget savings seems to be the driving motivation rather than the quest for a better superannuation system. The timing of the change makes it look like an ad hoc change to help the government with a short-term political problem: the need to deliver a budget surplus, come what may.
What rationale is there, for example, for making the threshold $300,000? That will still leave those earning between $180,000 and $300,000 getting a bigger tax break than the middle- and low-income earners Shorten says are not being fairly treated.
In 1996 the Howard government introduced a measure similar to Shorten's plan called the super surcharge. At the time it also helped fulfil a promise to return the budget to surplus. But the surcharge was eventually dumped, in part because of the complexity it created.
The superannuation system is too important to be altered for a short-term political fix. Those planning for retirement should be able to do so with certainty.
Frequently Asked Questions about this Article…
What did Prime Minister Julia Gillard do about the Craig Thomson and Peter Slipper affairs, and will it restore public trust?
Gillard rang two MPs so Craig Thomson stood aside from the Labor Party and Peter Slipper relinquished the speakership. The article argues this move may not restore public trust because it was late, looks politically calculated, leaves parliamentary numbers unchanged, and follows a record of broken promises that has dented the Prime Minister’s credibility.
How do the Thomson and Slipper matters affect parliamentary numbers and government stability?
According to the article, the practical effect is limited: Thomson will still support Labor from the crossbenches and the Coalition remains deprived of Slipper’s vote, so Gillard ‘still has the numbers — just — in Parliament.’ The piece says voters may view the action as cosmetic rather than a real fix to instability.
What superannuation tax changes did Superannuation Minister Bill Shorten propose?
The article reports Shorten proposed increasing the tax on concessional superannuation contributions for very high income earners from the current flat 15% to 30% for those above a proposed threshold (reported as $300,000), a move estimated to raise about $1 billion.
Who would be affected by the proposed superannuation changes and how many people are targeted?
The changes are aimed at very high income earners — the article says those earning more than $300,000 a year — and would affect roughly 130,000 people. The piece also questions the fairness of the $300,000 threshold, noting it still leaves those earning $180,000–$300,000 with a larger tax break than many middle‑ and low‑income earners.
Why do commentators say tinkering with superannuation is risky for everyday investors?
The article warns that frequent changes undermine the credibility of the superannuation system and can erode confidence for those saving for retirement. It also says complexity is a problem — past measures have created administrative and fairness issues — and argues reforms should be carefully thought through with proper consultation.
Is there a historical example of a similar superannuation surcharge?
Yes. The article cites the 1996 Howard government’s super surcharge, which was introduced to help return the budget to surplus but was eventually abandoned in part because it created complexity.
Are the proposed super changes mainly about fairness or budget savings?
The article suggests the driving motivation looks like budget savings: Shorten’s changes are expected to raise about $1 billion and the piece argues the timing and scope make the shift appear to be an ad hoc measure to help the government’s short‑term fiscal position rather than a carefully designed fairness reform.
What does the article say everyday investors should expect from superannuation policy?
The article’s takeaway is that the superannuation system is too important to be altered for short‑term political fixes. People planning for retirement should be able to rely on certainty, so any changes should be well considered, subject to discussion and consultation, and not driven solely by immediate budgetary needs.
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