Capitalist class squeals about 'class war' over Labor's tinkering with superannuation

Vanguard May 2013 p. 8
Max O.

(Above: a whole industry of financial advisors and consultants helps to preserve the privileges of the rich and super rich)

The Gillard government's plan to roll back some of the multi-billion dollar superannuation tax concessions from high income earners has sparked off predictable outrage from the financial and superannuation institutions, reactionary opposition political parties and opportunists within the parliamentary Labor party. Previous Labor ministers, Simon Crean, Joel Fitzgibbon and Martin Ferguson openly align themselves with the Murdoch press and Abbot's Coalition parties to warn Treasurer Swan of the danger of "class warfare" and not to increase taxes on superannuation investment earnings of the "fabulously wealthy".

Crean argued this would be, “tantamount to taxing people’s retirement surpluses to fund our surplus” and “The Labor Party has always operated most effectively when it has been inclusive, when it’s sought consensus, not when it has sought division, not when it has gone after class warfare.” Fitzgibbon declared that those earning $250,000 a year (the top 3 percent of households) were “struggling” and should not be stripped of any tax concessions. Ferguson said “the class war rhetoric that started the mining dispute of 2010 must cease." With enemies like these, the working class knows the Labor party is not much of a friend!

Opposition leader Tony Abbott backed up the Labor opportunists Crean's, Fitzgibbon's and Ferguson's position and argued that Gillard was playing the "politics of envy" and "class warfare" by seeking to take away the superannuation tax concessions from the top richest, 0.7% of the population.

The real purpose of superannuation

When compulsory superannuation was introduced by the Keating Labor government back in the early 1990s its purpose wasn't altruistic at all. The Labor party embraced the economics of neo-liberalism, where governments now withdrew from their social responsibility to provide pensions for retired citizens from government coffers. It aimed to replace the age pension by individuals themselves providing their own retirement incomes through superannuation savings.

The intention of privatising workers’ retirement savings was to offer financial institutions an enormous fund of ever-increasing capital to invest. Superannuation funds have been largely tied to the stock market, where they play a substantial role in the formation of capital investment in Australia and overseas. Currently, superannuation funds are being encouraged to buy up government utilities and so assist the march of privatisation.

Finally, the wind back of age pension costs would fund future tax cuts for the rich and the private sector e.g. mining companies, banks and insurance companies.

Consequently these superannuation institutions, with around $1.5 trillion, wield enormous power in the game of capital accumulation. Retired workers' interests are incidental to the main show of corporate greed. This is especially the case when stock-market and derivative crashes cause the superannuation earnings of retirees to fall dramatically!

Gillard pretends to be the workers' friend

Ostensibly Gillard was wanting to collect revenue to fund schemes such as the National Disability Insurance and the Gonski School Funding Reforms through changing tax breaks for superannuation contributions from the filthy rich. After the debacle of the Minerals Resource Rent Tax (MRRT) where only 1% of the planned revenue was actually collected, the Federal Labor government scrambled around for another source of revenue collection to convince working people they govern in their interests. 

The government initially signalled the option of changing the super earnings tax rate for the “fabulously wealthy”, thought to be the top 1% or 2%. Frightened by the reaction of the super industry, who threatened a campaign like the mining and gambling industries against the changes, the Gillard government (as typical class cowards) backed off. Tread on superannuation industry's toes at your peril for it’s a very profitable business. This industry reaps $20 billion a year alone in administration fees from fund members as well as the profiteering that is gained through the management of large sums of money and the manipulation of stock markets, derivatives etc.

Consequently the Government announced that from July 2014, earnings (from the pension stage) of more than $100,000 on superannuation pensions and annuities will be taxed at 15% instead of being tax free. It expects the change will apply to those with more than $2 million in superannuation assets, around 16,000 people. It is expected to raise about $900 million over the next four years and $10 billion over the coming decade.

This is a highly dubious forecast (as pointed out by the reactionary economist Judith Sloan) given the capacity of the filthy rich to reduce their tax by moving around their money to other forms of low tax investments. The Labor Party takes great pride in being the creators of compulsory superannuation and wears it as a badge of honour. However the filthy rich take even greater pride in manipulating the superannuation scheme to carry out tax avoidance! Anyway it will not raise enough revenue for all the present and future funding tasks; and will only affect a small percentage of the filthy rich.

The unfair regressive, flat superannuation tax of 15% on contributions, regardless how much an individual’s income is, has been kept at the accumulation stage. Here is where the Labor government could've introduced a progressive tax on superannuation contributions, where higher incomes pay progressively higher taxes.

It is estimated that superannuation tax concessions amount to $31 billion a year, a similar figure that the federal government spends each year on the aged pension. Interesting statistics from the Australian Council of Social Services show that 17 percent of the tax concessions on super contributions went to the wealthiest 5 percent, while nearly half, 47 percent, went to the wealthiest 12 percent.

Unfortunately Gillard's spineless tinkering with the superannuation contributions of the filthy rich is just a publicity stunt, much like her visit to Western Sydney to do something about the 457 visa rorts. For the new superannuation measure will not be legislated before the September elections, so they are unlikely to be realized with the predicted election of the Liberal-National coalition parties.

Capital's class warfare offensive vs working class struggle

As much as reactionary politicians scream about class warfare when the interests of the rich might be encroached upon, it is really the filthy rich who are actively on the alert to carry out class battles against the working class. Witness their attacks on the very mild Super Profits Mining Tax, their campaign for the exploitative 457 visa temporary foreign work scheme (Gina Rinehart's dream of paying 2 dollar a day for workers is getting closer to reality) and now the hysteria over the superannuation tax on the rich.

The Gillard Labor government's dismal attempts to gather revenue to fund the big ticket National Disability Insurance and the Gonski School Funding schemes is not genuine. It is just for electoral show. The Labor government, true to form, will twist and turn then carry out the orders of Capital when it growls.

The parliamentary Labor party is widely seen as morally and ideologically bankrupt and consequently being abandoned by the Australian working class. The union and labour movement needs to differentiate itself from the Labor Party and start the task of developing an independent working class agenda. The working class and its allies, such as small farmers and small businesses, don't see the major parties as representing their interests. Now is the time for the labour movement to independently mobilise the working class to face the next onslaught of class attacks from Capital.

It is only through class struggle that the working class ever achieved anything.