I always believed a net debt figure that assumed using public servants' superannuation savings to pay off public debt was an absurdity. Well, now the Labor-Green-independent alliance is proposing that super be used to pay off debt.
When you tax more of something you end up with less of it. Why then does the Labor government want to raise taxes on superannuation? Do we really need a lower savings rate, and therefore more consumption in Australia?
Australia has some of the highest total debt levels in the world. In net terms, from the public and private sectors, we owe more than $700 billion to overseas countries. In terms of our GDP this is the eighth-highest level of debt in the world, behind countries such as Portugal, Ireland, Greece and Spain.
Our debt is partly a consequence of a mining boom, where billions have been invested in our mining industry. Private companies need to take on debt to build these assets and we can't fund all of these investments from domestic savings. But that is no reason to unnecessarily reduce domestic savings even further, and increase our reliance on foreign debt even more. We should be doing the opposite. We should be making it easier and more attractive for Australians to save. Our tax system barely does that now, however.
Let's say you get a $1000 bonus from your boss. You have two basic choices: you can spend the money, or you can save the money. If you spend the money you will pay about 30 per cent in income tax and a 10 per cent GST. This leaves you with around $600 to spend on, say, a flat-screen TV. You pay no more taxes after that.
If you save the money by, say, putting it into a bank account, you will pay the income tax up front, and then get taxed every year on the interest you get paid in that bank account, including on the part of the interest that just compensates you for inflation.
On that basis, the "double taxation" of savings is a raw deal. That's one of the reasons we offer a lower tax rate on superannuation: to encourage people to save, not spend; to encourage individuals to make provision for their own retirement, rather than all of us having to fund pensions for everyone.
With an ageing population, that problem is only going to become worse and we should be looking to encourage more Australians to save rather than raise yet more taxes on superannuation. That's exactly what the Coalition has proposed. We have proposed a 10¢ in the dollar tax concession for those who put money into super funds that invest in nation-building infrastructure.
It's a two-birds-with-one-stone approach. We encourage more people to save and have more funds available to invest in the roads, rail and water infrastructure a growing nation desperately needs.
The reality is Labor know all this. They know that we should encourage savings not spending. There is only one reason that they are looking to raise taxes on our savings. They have run out of money and need more of your savings to pay for their debts.
Any government looking to raise taxes on you should be required to get their own spending in order first. Our government is not spending our money wisely enough to be deserving of us giving it more. The Green-Labor-independent alliance spent years promising that our debt was not a problem. If our debt is not a problem, why do they need to raise taxes on our savings?
Cleaning up after this fiasco will be an infuriating task. They create a fiasco selling mining licences without the appropriate oversight and in an inappropriate area. Somehow the Coalition is left explaining what we will do to rectify their problem.
They shut down trade with major trading partners in Indonesia and decimated the northern cattle industry and we are asked how we will fix it up.
One of the key reasons that I believe that I have a duty to stand against a key player in this Green-Labor-independent alliance, in Tony Windsor, is that you cannot possibly fix anything from opposition. That means my job is to help win seats off the government wherever they are standing. Tony Windsor is a key member of that government and it is his job to defend the record of waste, mismanagement and higher taxes of the government he chose.
- Barnaby Joyce is the Nationals' Senate leader and the opposition spokesman for regional development, local government and water.