Why Sinodinos is hanging his job on super

Arthur Sinodinos knows his role is to protect the current superannuation benefits. He also knows the ATO needs to be straightened out on the rules for independent contractors.

The Arthur Sinodinos KGB interview is full of key revelations for both business and those with self-managed funds. Particularly in superannuation, Sinodinos takes the rare step of virtually putting his job on the line to protect the current superannuation benefits.

It is one of the few interviews of substance given by a minister in the new government outside matters concerning refugees and carbon.

For business the key strategic revelation is right at the end of the interview. Remember that Tony Abbott vowed in the election campaign not to make significant changes to the Fair Work Act outside the commercial building area.

Large companies can scream all they like but non-commercial building industrial relations legislation is not going to change dramatically in this parliament. Tony Abbott will not repeat Julia Gillard’s carbon tax “lie” in industrial relations. But Sinodinos shows how to boost productivity by indicating that enterprises will be able to use independent contracting much more widely.

You should read or view the full transcript but let me give you a simplified version of the independent contracting exchange:

Gottliebsen: “The Taxation Department has been incorrectly interpreting independent contracts and doing some pretty bad things… The Howard rules for independent contracting were very good. They were not the rules the Taxation Department were using in dealing with independent contractors – how do you change that, so that they (tax officials) obey the law?”

Sinodinos: “Look, Bruce Billson and I are going to look at all of that. Bruce, as you know, has a job as minister for small business and so, in consultation with him, we’re happy to have a look at all of that philosophically. We don’t want a situation where people are being pushed, who wants to be independent contractors, into just being employees. Nothing wrong with being an employee, but if you want to be an independent contractor; the government shouldn’t be trying to change your status. I’m not accusing the tax office or anybody of anything. We’ll have a look at that.

One little story. When we were in government I remember spending one Sunday morning at the Lodge with John Howard when he was going through the personal services income rules himself and he called over the tax office because we were concerned about the implications of some changes to those rules at the time, so I mean it’s a bit in the DNA I think of the Liberal Party to want to try and make sure independent contractors are looked after, so happy to take that up with my colleague, Bruce.”

The key to that exchange is that Arthur Sinodinos is going to work with Bruce Billson. For three years as the Opposition shadow minister for small business Billson has been critical of the way tax officials have been interpreting the law.

While Sinodinos chose his words carefully, his underlying message is clear: Independent contacting will not apply to all situations but it is set to boom and is the way many Australian enterprises can lift their productivity.

On superannuation Sinodinos pledges that he will to honour Tony Abbott’s promise to make no substantial adverse changes to superannuation in this first term of government.

Sinodinos: “Let me give you a big secret, my job relies on me delivering on that promise”.

Sinodinos then sets out how he will try to simplify the Shorten taxes on superannuation funds in pension mode. But he did not undertake to abolish the taxes. Sinodinos does not plan to change the real estate gearing provisions in the Superannuation Act but warns against the dangers of ‘spruikers’. Indeed he can’t make significant changes because it would break he Abbott promise.

On the media Sinodinos gives a sneak preview of Tony Abbott’s long-term policy.

Sinodinos: “ I think the lesson Tony has learned is from the last few years is there’s been so much hype around feeding the media beast and what’s come with that is a certain amount of spin, if I can be charitable about it, and people just want you to slow down… In the Howard era what happened is John Howard decided to go over the heads of the press gallery in Canberra by going straight to people through talkback radio and not only talking to the shock jocks, he was talking directly to people. He was answering their questions on radio and I think that was a very important medium for him to keep in touch. And I think you’ll find on things like that, Tony Abbott will be quite similar. I think he wants to get what people out there are really thinking as opposed to how it’s mediated through other people.”

My guess is that after a long bonanza, that means lean government pickings for the Canberra press gallery. Of course they will turn to the opposition and Clive Palmer.