Exit polling from Saturday's election revealed 37 per cent of voters rated the Coalition's superannuation tax increases a "very important" election issue. It was the fourth most important issue behind Medicare, education and the budget. Superannuation came ahead of changes to negative gearing, and two issues that were supposedly Coalition policy strengths — building unions and company tax cuts.
The Coalition's superannuation tax increases announced on budget night in May were bad policy and bad politics. It's now obvious that Malcolm Turnbull and Scott Morrison got superannuation very, very wrong.
At a policy level, the Coalition's proposals could have the effect of in the long term putting more people on to the government age pension. Individuals will make the entirely rational assessment that if both parties are willing to change well-established rules and levy higher taxes on it, then superannuation is not a safe investment. This is particularly the case when the rules are changed retrospectively — which is what happened.
The politics of superannuation is what we saw unfold on Saturday night. The claim by its strategists that the Coalition could raise taxes on superannuation with impunity because only the "rich" were affected has exploded.
Significantly the exit polls show superannuation was regarded as a very important issue by a higher proportion of Labor supporters (38 per cent) than Coalition supporters (36 per cent). Many more people than just the "4 per cent" of account holders the government was claiming would be affected by its changes were worried about superannuation. The changes to transition-to-retirement schemes impact on hundreds of thousands of voters, many on incomes less than $100,000 a year — and many of whom live in marginal seats.
The Coalition tried to neutralise the negative politics of its superannuation tax increases by claiming the only people hurt by them were Coalition supporters — the so-called Liberal Party base. As ham-fisted political strategies go this approach of a political party attacking its own supporters took the cake. Anecdotal evidence from around the country was that large elements of the "base" declined to donate their time or money to the campaign.
The anecdotal evidence is also that the Coalition succeeded in making a bad situation worse by refusing to listen to the concerns of its supporters and dismissing out of hand any suggestion that the policy should be modified. When during the campaign the Liberals' deputy leader, Julie Bishop, hinted there could be changes to the policy after she made the sensible (and obvious) comment that the government would listen to "feedback on any unintended consequences" she was slapped down by the PM who categorically ruled out any back-down. This was despite the fact the PM was quite willing to back down on budget changes to the taxation of backpackers after complaints from regional MPs.
The political symbolism of the Liberals increasing taxes on self-funded retirees was diabolical. Ever since Menzies founded the Liberal Party, one of its fundamental tenets has been that those that work, and save, and plan for the future should be encouraged. Anyone who can afford to be a self-funded retiree has most probably been paying the punitive top marginal rate of personal tax for much of their working life. For the Liberals to burden these people with yet higher taxes on superannuation was regarded by retirees as betraying a lack of understanding of how much tax they've already paid prior to their retirement.
Breaking an election promise and raising taxes on superannuation is not what many Liberal Party members thought Turnbull would do when in September 2015 he challenged Tony Abbott for the party leadership and vowed to give the country "the economic leadership we need".
Many Coalition supporters believe the economic leadership Australia needs requires lower taxes, less red tape, and a smaller government.
After Saturday's result it remains to be seen whether Turnbull is in a position to deliver on any of those things.
We'll never know how much of the record high vote for conservative parties other than the Coalition was the product of the Coalition's superannuation policies. But it would be foolish to suggest that the Coalition's plans to impose higher taxes on superannuation had no impact on the election outcome.
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