by I had a piece in The Guardian a couple of days ago (it’s over the fold) looking at the was the mainstream print and electronic media (mis)handled the debate over the decision to reduce tax concessions on earnings of superannuation balances in excess of m. The weight of argument was strongly on the government’s side, and the media commentariat seemed to have conceded that. But the finance lobby has hit back with a series of utterly ludicrous arguments which have nonetheless been given headline treatment, not only by Murdoch but by Nine and the ABC. The main points are The government hasn’t yet worked out how the policy will apply to the handful of people still on defined benefits schemes (they would need to be getting a pension of at least 0000/yr to be affected). While it
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Lars Pålsson Syll writes Cutting-edge macroeconomics …
I had a piece in The Guardian a couple of days ago (it’s over the fold) looking at the was the mainstream print and electronic media (mis)handled the debate over the decision to reduce tax concessions on earnings of superannuation balances in excess of $3m. The weight of argument was strongly on the government’s side, and the media commentariat seemed to have conceded that. But the finance lobby has hit back with a series of utterly ludicrous arguments which have nonetheless been given headline treatment, not only by Murdoch but by Nine and the ABC. The main points are
- The government hasn’t yet worked out how the policy will apply to the handful of people still on defined benefits schemes (they would need to be getting a pension of at least $150000/yr to be affected).
- While it only affects 0.5 per cent of the population now, if the threshold isn’t indexed for the next 50 years, it will be five times as many (2.5 per cent)
- Some people might be taxed on assets that have appreciated in value
What explains the breathless coverage of absurd talking points like this. Sadly, it’s the same stuff bloggers have been complaining about for decades. Political journalists love conflict and don’t have a clue about policy. That hasn’t changed and isn’t likely to.
‘A lie can travel halfway around the world while the truth is still putting its boots on’. This aphorism (spuriously attributed, as usual, to Mark Twain), is equally applicable to the contrast between superficial political commentary and serious political analysis.
We’ve seen a striking example in the media coverage of the government’s recently announced plans to limit tax concessions for those with superannuation benefits in excess of $3 million, representing about 0.5 per cent of the population. The estimated budget saving from this measure is about $2 billion a year, when it comes into effect after the next election. This assumes, of course, that Labor will be re-elected.
Our current absurd system was built up over many decades by Labor and LNP governments alike. They culminated in Peter Costello’s final measures, including the abolition of tax on superannuation income for those over 60.
Ever since Costello left his parting gift of fiscal sabotage, governments of both parties have tried to rein in the worst of the rorts, in the face of ferocious opposition from a variety of lobby groups.
The initial reaction from the mass media to Labor’s suggestion of a $3 million concession cap was overwhelmingly negative. The opposition of the Murdoch press was predictable. Even so, the ferocity of the response was surprising, with slogans like ‘class warfare’, ‘socialis’ https://www.theaustralian.com.au/commentary/labor-tries-for-a-socialist-super-grab-bystealth/news-story/4b854d1955b0fdefc36b3a21c1a833f0 and even “pure communism” https://www.skynews.com.au/opinion/paul-murray/government-digging-deeper-into-superannuation-is-pure-communism/video/c7658567626b3254ddbbe0fd2afd4407. (The reflexive use of these extreme terms in response to modest changes in tax policy must be wearing out their effectiveness, but they still seem to press the right buttons for Murdoch’s core audience of well-off retirees.)
Where Murdoch led, the rest of the media (Nine newspapers, the ABC, breakfast TV and talk radio) mostly followed. In the absence of any serious analysis, most of the discussion turned on the ‘he said, she said’ debate about the LNP’s claim that the policy shift represented a broken promise. In the absence of an unambiguous statement one way or the other, there was plenty of room for the kind of detailed parsing of words in which the Press Gallery excels. A debate along these lines can only harm the government concerned.
For a while, it seemed as if media opposition might be successful in derailing the policy. Writing in the Nine papers, David Crowe observed ‘Could Labor win this row? Not with its rhetoric so far.’ https://www.smh.com.au/money/super-and-retirement/it-s-not-their-money-the-danger-for-labor-in-its-super-crusade-20230222-p5cmrw.html
But then, things changed. First, the economics profession weighed in, almost unanimously in support of the policy change. While there is plenty of disagreement about policies like the Superannuation Guarantee, it is obvious to any economist that superannuation tax concessions are far more generous than can be justified on grounds of efficiency and equity. The best defence raised by a handful of LNP partisans is that the magnitude of the ‘tax expenditures’ involved in the superannuation system has been overstated (Sloan).
Then a couple of Liberal backbenchers, Bridget Archer and Russell Broadbent, had the honesty to admit that these changes were exactly the kind of reform the previous government had pursued, with mixed success. Archer and Broadbent represent what remains of the fiction that the Liberal party, unlike Labor, does not exacting unthinking adherence to the party line.
Finally, and not for the first time, writers on social media platforms such as Twitter and Mastodon, and in online magazines like Crikey and The Conversation, presented a counterweight to the trivialities of the mass media. The economic issues aired more thoroughly and frequently. Moreover, the long-standing social media critique of Australian political journalism was applied to the way this issue was handled. There is plenty of appalling material to be found on social media, but there is also better analysis than most of what we get from the ‘quality’ media, let alone Murdoch and talk radio.
By the time Cabinet confirmed the $3 million cap on Tuesday, the debate had clearly turned around, though of course nothing changed in the Murdoch world. The Press Gallery was quick to detect the change in the wind. Only four days after pronouncing the policy a loser,
https://www.smh.com.au/politics/federal/albanese-s-super-plan-a-political-wedge-he-can-use-again-20230228-p5co9j.html, David Crowe was describing “a small change to superannuation that is cleverly designed to keep most Australians happy while driving his opponents into a conservative ditch.”
We shouldn’t overstate the magnitude of this win. Despite Angus Taylor’s denunciation of the $3 million cap, it’s entirely possible that he would have introduced something similar if the Morrison government (sans Josh Frydenberg) had scraped back. Reforms to superannuation concessions have a long way to go, but hopefully the fear that they are politically untouchable has been dispelled.