Paul Keating was Prime Minister of Australia from 20 December 1991 to 11 March 1996.
In that time his political party, the Labor Party considered the greatest achievement of his administration to be the Superannuation Guarantee (Administration) Act of 1992.
This law came into force on the July 1, 1992 where employers would be required to compulsorily make superannuation contributions on behalf of their employees.
The idea was to make as many working Australians as possible become self-funded retirees in their retirement or at least delay for many years the time when they were reliant on the public purse to sustain a retirement.
At the time it was calculated that in 30 years the average wage earner would receive upon retirement about $460,000 which would sustain them.
The passage of time proved that figure of $460,000 to be incorrect, so subsequent governments, in particular the Howard government, amended the Act to provide tax benefits for people to pay more into their super funds. This economic innovation was an aspirational hope that people who worked hard and paid their taxes during their working life could build savings beyond a subsistence level of income in retirement, and possibly a very comfortable level of income.
Both Howard and Keating knew the importance of the human element in an economy. John Howard said in a speech in London in 2000, ‘Running an economy well only has a purpose if it delivers a human dividend.’
Some enterprising superannuants increased their superfunds by hard work, intelligent investing, and complying with the law of the land. In other words, they adopted the free enterprise capitalist economic system that was available to them in this great country. The same system that their forefathers had forged, worked for and in many cases, died in battle for, so that their descendants could enjoy.
In the 35 years since that law was enacted and cost of living increased, no government has sought to reduce its positive impacts. In that time, according to the Association of Superannuation Funds of Australia, as of December 2024 the total amount held in Australian super funds is $4.1 trillion.
That is about to change with the recently re-instated Albanese government seeking to impose a series of super tax laws that will increase taxes on some super funds and in certain circumstances levy unrealised capital gains taxes on super funds that have real estate and businesses owned by self-managed super funds. The specifics are not yet known, but will no doubt become clearer in the fullness of time.
The main issue is why does this government now feel the need to tax superannuation?
The answer is found in their own policies.
The macroeconomic principle of a balanced budget theorem is that a government can stimulate its economy by increasing its spending and taxes simultaneously, without any net change in the budget.
In the past 30-40 years the taxes derived from the mining, farming, and meat industry both from domestic profits and the export industry was enough to balance the budget and continue spending at a high level. The GST consumption tax introduced in 2000 by the Howard government then brought in even more revenue allowing more government spending whilst still providing a balanced budget or even a surplus. In other words, there was no need to tax superannuation.
The monetarist theory of a balanced budget is that stimulating the private sector will boost profits and therefore, increasing taxation is not necessary as the current tax system would be sufficient. In fact, it could even lead to tax cuts. The Keynesian theory provides that if the private sector is struggling, find other ways to tax and you can keep spending.
This government is choosing to follow the Keynesian theory.
A $4.1 trillion cash cow, ripe for the tax picking, is a bonanza for big spending government who is not particularly interested in the middle-class private sector.
Private sector tax revenue is only available for the government when private businesses are earning profits. Taxation can only be imposed when there is something to tax.
The trouble is that most of this government’s policies are designed to prevent the private sector from making profits.
The Labor Green and Teal alliance wants to strictly adhere to Net Zero by 2050, as do many Liberal moderates. The way they plan on doing this is to gradually eliminate fossil fuel mining. Fossil fuels such as coal, gas, and other rare earth minerals have been massive revenue raisers in the past, but without the taxes raised by such thriving industries the revenue side of the budget will be massively reduced.
Enormous areas of rural, farming and grazing land are being destroyed by pillaging thousands of kilometres of land for the wind turbine industry and the solar panel industry thereby reducing profits from farming and meat industries, and with reduced profits come reduced taxes.
The renewable energy strategies of the government have increased energy prices across the production sector, which again reduces profits, which in turn reduces tax revenue.
Illogical red, green, and black tape have significantly impeded all manner of development which would increase productivity, real wage growth, and job growth which again would increase tax revenue, but in its absence the opposite effect of reducing tax revenue will occur.
The government is gearing up for a massive downturn in private sector profit in the next 4-5 years that will lead to tax revenue reduction. The Albanese government must look for other areas to balance the budget and superannuation tax is their answer.
Government officials, from the Prime Minister to senior and junior ministers, are using wording which betray their thoughts. The phrase paying their ‘fair share’ in tax is used very often. No one however is prepared to define what is a ‘fair share’.
The more parasitic governments tax profits out of existence and seek to usurp private enterprise, the more innovative individuals will seek to produce their enterprises elsewhere and not put up with it anymore in Australia.
The only way to save future generations from the inevitable demise of the private ownership capitalist society Australians have enjoyed for the past 125 years is a political reawakening of the conservative movement.
In August, the government is proposing a productivity summit inviting corporate and small business representatives. A united front by the private sector demanding the abandonment of Net Zero policies and a moratorium on all red tape, green tape, and black tape allowing for a multitude of development approvals that will stimulate growth is vital.
Endorse growth and promote investment. Utilise the great qualities Australians have as a hardworking, innovative, and inventive people.
Make Australian profits be the focus of private sector again.
Governments need to pay attention to the people of this nation and encourage the young people especially of their need to take up the challenge, for it is their superannuation at risk the most.
Conservative political parties should stand for economic policies that make sense. The private sector should not be decimated by over-regulation and crippling unnecessary overheads. Hard working citizens of Australia have a right to thrive.
Governments and government spending is here to stay and so is taxation. The private sector wants to protect superannuation from government. It must provide an alternative source of tax revenue. Profit, and a lot of it, is the only alternative.
