- by Jay
- The Guardian
- Issue #2168
The Communist Party of Australia completely rejects the Labor government’s watering down of the proposed reforms to the superannuation tax system.
On the 13 October treasury announced a substantial reform of its previous plans to tax accounts with higher balances at a higher rate. The initial reforms proposed in 2023 sought to impose a tax rate of 30% for superannuation balances in excess of $3,000,000. The bill for this was stagnant in the lower house for two years, with the ALP capitulating to the concerns of the Liberal Party, their donors and the Australian business community as a whole.
Whilst the new reforms maintain a $3,000,000 threshold – a further 40% rate for balances in excess of $10,000,000 has been proposed, alongside a meagre amendment to the low income superannuation tax offset. The thresholds will be indexed. The government has also proposed that this rate will only affect future contributions – meaning that all balances as they stand presently (and any contributions made between now and whenever the proposals come in) will not be touched.
Treasury has also recalibrated the reforms to remove taxation on ‘unrealised gains.’ These are speculative increases in value that happen in the abstract, and are not cashed out immediately. This is problematic when you consider that super accounts which contain assets whose gains are based on market speculation (primarily property), will be untaxed. This gives the option for wealthier Australians to place larger assets that grow in value over time into their superfunds, have it grow in value and eventually cash them out later at a potentially lower tax rate.
SHORT SIGHTED
If passed, these reforms will have adverse effects both immediately and systemically.
In the first place, the Labor party’s targeting of super balances is short-sighted as there are many other methods which wealthier Australians are using to hoard. Vehicles such as trust and offshore accounts have far higher amounts of capital concentrated in them, and are able to continuously prosper due to lack of government oversight. It’s clear that the lack of taxation will encourage higher income earners to utilise their superfunds to hoard more capital in them. Even with the Low Income Super Tax Offset changes, this will take more money out of circulation in the economy and particularly out of workers’ pockets, placing that money into what Marx called a “petrified hoard” which prolongs the dominion of the class that has most of the assets. The Australian system of wealth has increasingly prioritised larger holdings in speculative markets such as property and equity markets; areas that the working class have less capacity to engage in.
As the value of these assets goes up and remains untaxed, the relative value of the means of subsistence working people have; wages, will correspondingly go down. This will be further exacerbated by the inclusion of threshold indexation – which follows not the increasing of wages over time but of inflation in general. Inflation has always outstripped wages due to how much control the bourgeoisie have over the prices of labour and consumer goods. Even in the event that higher wages are won through both the arbitration and enterprise bargaining systems, nothing is stopping employers from raising prices. This, coupled with the relaxed regulations, could lead to even less capacity for workers to survive in the present and makes the future for the working class all the more bleak.
FAIRER – REALLY?
Speaking to the ABC, wealth manager and lobbyist Geoff Wilson noted that it would be “bad policy” for the wealthier to be taxed on these gains, yet maintains that such reforms in general will be “fairer.” To this we ask, fairer to whom? Naturally, the more relaxed threshold would incentivise larger contributions to retail funds. Without a deterrence for such a form of wealth concentration, their revenue to invest increases – allowing them to charge higher fees for investment managers.
The reforms are also misguided in that they do not address one of the fastest-growing issues facing the superannuation sector, the systemic underpayment of superannuation. Although illegal, non-payment by employers is endemic across all industries, and grounds to recover unpaid super (either through the courts or the ATO) are drawn-out and costly. Workers may be far worse off in their retirement due to negligent employers and funds not possessing a fairer and easier way for contributions to be recovered.
Ultimately, these proposed reforms indicate Labor’s willingness to capitulate at even the slightest criticism from the rich. These compromises have potentially disastrous effects for the working class in the present and in future, with a further transfer of wealth towards Australia’s most wealthy to occur.
The Communist Party of Australia asserts that it’s only through the organisation of the working class and through strong working class power can these concessions stop, so that the Australian economy be re-arranged for the benefit of the working class.
