It is highly unusual for a Federal Budget to be brought down only days before the Parliament is prorogued ahead of what amounts to a two-month Federal Election and it seems probable the Government will come to rue the timetable it has imposed upon itself.
Looked at objectively, the 2016 Federal Budget was not an election Budget. Rather, it was arguably a mid-term Budget; one which accommodated a number of policy decisions which, while mostly sensible, are already proving problematic with respect to political saleability.
The Budget superannuation changes announced by the Federal Treasurer, Scott Morrison, fall squarely into this category. The $1.6 million cap for those already in excess of that, and the retrospective nature of the $500,000 non-concessional contributions are already causing angst not only among superannuation fund members but their advisers.
A number of advisers have written strongly-worded letters to Liberal/National Party members threatening to withdraw their support over the super changes, while recent Roy Morgan Research analysis has pointed to the changes having the potential to alienate a significant segment of traditional Coalition voters.
The Roy Morgan analysis said that nearly two-thirds of voters (65.5 per cent) holding more than $1 million in superannuation were L/NP voters, as were almost half (46.8 per cent) with $150,000 to under $1 million.
“The proposed changes to superannuation in the budget have the potential to negatively impact these two groups which together comprise more than one in three (37.2 per cent) L/NP voters with superannuation,” the analysis said.
This seemed to be confirmed by seminars held by industry fund Equipsuper which, according to the analysis of its executive officer, Geoff Brooks, found that most of the fund’s members were “unaffected and pretty unconcerned” about the 2016 Budget proposal to limit superannuation transfers into pension at $1.6 million.
Brooks said that the general feeling was that members wished they had such a problem.
The only positive for the Government with respect to superannuation policy is that the Australian Labor Party’s approach, premised around taxing income from super above $75,000 per annum, is arguably worse for L/NP voters with superannuation.
Perhaps ironically, in the absence of a Federal Election the criticism of the Government’s superannuation Budget approach was likely to have been decidedly more muted with a broad cross-section of the superannuation industry having signalled that it was not particularly uncomfortable with the targeting of upper income earners with high account balances.
For superannuation fund executives, the major area of disappointment was the reduction in the concessional contribution cap to $25,000, while there was a broad welcome of the decision to look after low income earners via a Low Incomes Super Tax Offset.
With more than a month to go before the Federal poll and with other significant policy issues also in play, it seems doubtful that superannuation will rise above being more than a mid-range election issue, but you can bet that Liberal Party strategists will be keeping a weather eye on its ultimate impact on heartland voting intentions.
