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Commentary on the proposed changes to tax on super has created the impression that the truly needy will miss out on extra cash as politicians pander to middle class voters. This is almost entirely false. In terms of where tax dollars are allocated, Australia has definitely concentrated on lower class welfare.
Australia's business lobbies are fond of complaining that company tax is too high. Lower it, they argue, and the economy would become more dynamic and everyone would benefit. The reality isn't that simple. The combination of Australia's dividend imputation system and the compulsory super scheme greatly benefit Australia's big companies.
Business Council of Australia president Tony Shepherd justifies superannuation tax concessions for the wealthy: 'We go to work, we get paid. The money is ours.' In the USA, philanthropy is common among self-made men. There is no such tradition here, where taxes are needed to fund welfare and other projects for the common good.
Superannuation is not generally available before the age of 55. For most of the population of Australia this is scarcely a problem, as they are likely to live well into their 80s. But the average life span of Aboriginal Australians is much lower. Many will not live long enough to derive financial advantage from their super.
The demise of Gunns, Tasmania's biggest paper and pulp mill, has been greeted as a triumph of environmentalists over business. The saga encompasses much more than that. It poses some deep questions about ownership and accountability in Australia's financial system which are yet to be answered persuasively.
Paul Keating says he changed superannuation from an elite system to one which would include 'the bloke running behind the garbage truck'. But a new elite has left the garbo in the dust. Labor's core constituency and the economy would be much better off with the age pension rather than super.
A third of taxpayer-funded superannuation concessions — around $10 billion a year — are directed to the top 5 per cent of income earners. People living on or below the poverty line get no such support. This week's Tax Forum must ask: Are we proud of how we redistribute our national wealth?
Channelling people into a default superannuation fund could be compared with the indignity of income management. But MySuper is geared to protect the human dignity of Australians in retirement against their own indifference, and also commercial exploitation.
The complexity of superannuation products prompts many to choose easy options that attract high fees. Higher fees mount up over many years and significantly affect the quality of life workers are able to enjoy when they retire.
The 'trickle down' of wealth proclaimed by neo-liberalism is debatable, and hardships flowing from sub-prime activities descend on the disadvantaged with the finesse of a freight train. Some economists have demanded the GDP measure be replaced by goods and services data that promote the common good.
The problems besetting Wall Street investment banks seem a long way from life in downtown Australia. The need to know the context of the economic crisis, and to keep a clear head, has never been more important.
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