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Issue #1655      September 10, 2014

Stealing workers’ retirement and robbing the vulnerable

The Minerals Resource Rent Tax Repeal and Other Measures Bill 2014 was rammed through both Houses of Parliament last week. The abolition of the mining tax will save mining companies billions of dollars. The anticipated loss of revenue will be paid for (several times over) by families and those on the lowest incomes through changes to the superannuation system. The bill passed through the Senate with some amendments negotiated in secret by the government and billionaire, mining magnate MP, Clive Palmer (see Editorial). The support of the Motoring Enthusiasts and Family First along with the Palmer United Party (PUP) Senators gave the government the majority it needed.

The government claimed the mining tax was flawed and didn’t raise any income. But the popping of champagne corks in mining company board rooms told another story. Nor from the tens of billions of dollars being ripped out of the pockets and savings of those on low incomes to ostensibly compensate for the loss of this non-existent income.

The mining tax was drafted by the major mining companies and not surprisingly it had so far failed to deliver the promised billions. That is not a reason to abolish it. It is a reason to strengthen the tax so that mining companies return more of the wealth to the people of Australia, including Indigenous Australians, who own the resources that they are plundering. Some of them don’t even pay company tax.

“We could be raising billions more in revenue from mining companies, but instead the Palmer United Party has joined with Tony Abbott to abolish the mining tax altogether,” Greens leader Christine Milne said.

“Clive Palmer can no longer pretend to be an amusing sideshow who has an interest in helping families or working Australians. He has used the federal parliament to help abolish the tax which was about getting Australians a fair share from our mineral wealth.”

Palmer looked after Palmer.

He is keeping quiet about how much his mining companies stand to gain. The deal he did essentially leaves Abbott’s original measures intact, delaying them until after the next elections, rather than throwing them out.

Labor had legislated for the compulsory superannuation guarantee payment of nine percent (of a basic worker’s wage) to be increased in 0.5 percent annual increments until it reached 12 percent by July 2019. The first increment was introduced this year.

The bill freezes the payment at 9.5 percent for six years, before the incremental increases kick in, with a target of 12 percent by 2025 – providing it is not further delayed or cancelled in the years to come. For younger workers this will result in a loss of tens of thousands of dollars by retirement.

The Abbott-Palmer deal delays the abolition of the School Kids Bonus and the Income Support Bonus until January 1, 2017 and the Low Income Super Contribution (LISC) until July 1, 2017. Palmer has supported their repeal.

The Income Support Bonus is a fortnightly payment of $107.80 (singles) or $89.90 (if partnered) for recipients of certain allowances including parenting, Newstart, Youth, and Austudy. It was introduced in 2013 by Labor, under considerable pressure over the extremely low payments (eg $36 a day for unemployed) that recipients were attempting to live on. It was recognised that such low payments hinder their capacity to gain employment. It was one of a number of measures to be funded by the mining tax.

Its loss will have devastating consequences for those receiving it. Once again, Abbott, this time with the assistance of Palmer, is robbing the most disadvantaged and vulnerable.

The LISC is a government contribution (maximum $500) to the superannuation accounts of workers who earn $37,000 per annum or less. At present almost 3.7 million workers receive it – 2.2 million of them are women. They pay the flat 15 percent tax on their super contributions and on investment income in their fund. This is a higher rate than they pay on their wages. This payment is a form of compensation for this higher tax rate.

Those on higher incomes benefit from generous tax concessions on contributions and on income from investments in their fund. For those on more than $180,000 pa the highest marginal income tax rate is 45 percent, whereas in a super fund they pay 15 percent or less on investment income. The super system is one big rort for the rich.

“By supporting Tony Abbott to abolish the LISC in 2017, Clive Palmer is helping cut the retirement savings of half of Australia’s female workforce,” ACTU president Ged Kearney said.

The government should be abolishing the super rorts not robbing the savings of the most disadvantaged – the majority of them women who are already disadvantaged by lower wages and breaks from the workforce for family or carer responsibilities.

Workers cheated

Treasurer Joe Hockey claims that the deferral of the increase in super payments will see workers with more money in their pockets! What a load of hogwash!

Employers make the actual payments. The rate of payment will be frozen at 9.5 percent for the next six years instead of annual increases to 12 percent. They are celebrating over the savings while Abbott would have us believe that they would, out of the kindness of their hearts give these savings to their employees!

Well, Abbott, the government is an employer. Where’s its offer to pay its employees? The government is freezing and slashing wages, sacking workers and contracting out work on inferior non-union contracts. Capitalist employers, seeking to maximise profits, will continue to do the same.

At best some unions might be able to negotiate (or have already done so) a clause in an enterprise agreement for annual increases in super contributions.

Workers are being cheated on all fronts. Especially those who rely on the minimum wage. They have seen wage increases adjusted downwards to compensate employers for future increases in compulsory super payments. Now they are being denied those increases which they have paid for.

So their wages are lower and now they are missing out on their super increases. Many face the possibility of not having enough to live on but too much to be eligible for a shrinking age pension, if there is still one in 20 or 30 years time.

The whole superannuation system is a minefield for workers and retirees. Workers are shouldering all the risks with their savings – at times taking a big hit when stock markets crash or investments go wrong.

There is no shortage of money to fund a decent age pension for all retirees. It is a question of priorities. At present the government is on the side of the rich, the big mining corporations, private hospitals, developers and big banks. It throws them billions of dollars through such means as the fossil fuel rebate; massive tax concessions; it refuses to close company and personal tax loopholes; is pumping billions into military spending; propping up an otherwise unviable private hospital system through the private health insurance rebate; and much more.

A government on the side of the people would redirect this corporate welfare to age pensions, unemployment benefits, public health system, etc. This government and its hangers-on should be thrown out and replaced by a pro-people government that is prepared to stand up to the big corporates and act in the interests of the people.

As a step towards such a government, there is an urgent need to restore and build trade union/community organisations, build the broadest movement possible against the neo-liberal policies (not just Abbott and Co), and offer the electorate genuine alternative policies.

Next article – Full spectrum dominance, from Asia to Africa

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