The Claim
“Increased superannuation tax for the poor, and decreased it for the rich.”
Original Sources Provided
✅ FACTUAL VERIFICATION
The claim refers to superannuation policy changes announced by the Abbott Coalition Government in November 2013. The Coalition implemented two key changes:
Scrapped the Low Income Superannuation Contribution (LISC) - This was a policy introduced by the previous Labor Government that provided a rebate of up to $500 to refund the 15% tax on super contributions for workers earning less than $37,000 per year [1]. By abolishing this measure, low-income workers would pay 15% tax on their super contributions while receiving no offset - effectively a 15% "penalty" compared to their marginal tax rate of zero [2].
Abandoned a planned 15% tax on superannuation earnings over $100,000 - The former Labor Government had proposed taxing superannuation pension earnings exceeding $100,000 at 15% [3]. The Coalition scrapped this proposal, which would have affected approximately 16,000 high-income earners [4].
According to Industry Super Australia chief executive David Whiteley, the removal of the LISC would result in 3.6 million Australians on low incomes being "out of pocket $500 a year" [5]. Analysis published in The Australian estimated this would cost affected workers up to $27,000 each in lost retirement earnings [6].
Missing Context
The claim omits several important contextual elements:
Policy Rationale: The Coalition justified the changes by arguing that the planned tax on high super earnings was "too complex" and would create uncertainty for retirees [7]. Treasurer Joe Hockey stated the government was focused on identifying inherited problems from the previous government and would address budget issues through the mid-year economic statement [8].
Revenue Context: The LISC was initially funded through the mining tax (Minerals Resource Rent Tax), which had failed to raise projected revenue. The Coalition argued the measure was unfunded [9].
Structural Nature of Superannuation Taxation: The fundamental issue is that Australia's superannuation system provides tax concessions that scale with income. All employees pay a flat 15% contributions tax, meaning high-income earners (on 45% marginal rates) receive 30% tax concessions, while low-income earners (on zero or low marginal rates) receive little to no benefit or are penalized [10].
Affected Demographics: The 3.6 million affected workers included disproportionate numbers of women (60%), young people, recent migrants from non-English speaking countries, and Indigenous people - groups already disadvantaged in retirement savings [11].
Source Credibility Assessment
MacroBusiness (Original Source):
- MacroBusiness is an Australian economics and finance blog with a center-left economic perspective
- The article author, Leith van Onselen, is Chief Economist at MB Fund and MB Super, and a co-founder of MacroBusiness. He previously worked at Australian Treasury, Victorian Treasury, and Goldman Sachs [12]
- The site generally provides analysis from an economically progressive standpoint, critical of tax concessions for high-income earners
- While the article presents factual information from reputable sources (The Australian, Industry Super Australia), the framing is critical of the Coalition's policy
- The $27,000 figure cited comes from external analysis by Industry Super Australia, not the blog itself
Cross-Verification: The key facts in the MacroBusiness article are corroborated by mainstream sources including ABC News [1], The Sydney Morning Herald [5], and The Conversation [2].
Labor Comparison
Did Labor do something similar?
Labor's approach to superannuation was markedly different, though the systemic issues existed across both governments:
Labor introduced the LISC - The Gillard/Rudd Labor Government (2010-2013) introduced the Low Income Superannuation Contribution specifically to address the inequity of low-income earners paying 15% tax on forced super contributions while paying zero income tax [2]. This was one of the few Henry Tax Review recommendations actually implemented.
Labor proposed tax on high super earnings - Labor planned to impose a 15% tax on superannuation earnings over $100,000, directly targeting high-income earners [3]. The Coalition scrapped this.
Labor's broader record on superannuation: According to a 2023 news.com.au analysis, "Labor did very little to rein in the loopholes for the rich" and "Labor did establish a super tax rebate for low-income earners, but the Abbott Government scrapped this" [13].
Comparison: Labor's policies were designed to improve equity by supporting low-income earners and limiting concessions for high-income earners. The Coalition's 2013 changes reversed this approach. However, both parties have historically struggled to fully address the fundamental regressivity of Australia's superannuation tax system, which consistently favors high-income earners [14].
Balanced Perspective
Criticisms of the Coalition changes:
- The changes were described by Labor as showing "twisted values" - giving high-income earners tax breaks while removing support for low-income earners [15]
- Industry experts noted that 3.6 million workers would pay higher taxes on their super through the removal of the LISC [5]
- The changes were seen as worsening the sustainability of the superannuation system by providing massive concessions to those least likely to need the aged pension while penalizing those most likely to need it [10]
Coalition Justifications:
- The planned tax on super earnings over $100,000 was deemed "too complex" and would create uncertainty for retirees nearing retirement [7]
- The government argued they were dealing with inherited problems and budget issues from the previous government [8]
- The LISC was tied to the underperforming mining tax, making its funding base uncertain [9]
Expert Analysis:
The superannuation tax system is inherently regressive. Treasury estimated in 2012 that 23.4% of superannuation tax concessions went to the top 5% of earners [2]. The flat 15% contributions tax means:
- Someone earning over $180,000 receives a 30% tax concession (45% marginal rate minus 15% flat tax)
- Someone earning less than $18,200 effectively gets penalized 15% for each dollar contributed [10]
The Coalition's 2013 changes moved the system further in a regressive direction by removing the primary mechanism (LISC) that partially offset this inequity for low-income workers.
Is this unique to the Coalition?
No - both major parties have struggled to reform superannuation tax concessions. The systemic bias toward high-income earners has persisted across multiple governments. However, the 2013 changes were a deliberate reversal of Labor's equity-focused reforms, making this a case where the Coalition actively moved policy in a more regressive direction rather than simply maintaining the status quo.
PARTIALLY TRUE
6.0
out of 10
The claim that the Coalition "increased superannuation tax for the poor, and decreased it for the rich" is factually accurate in direction but requires nuance. The Coalition did abolish the Low Income Superannuation Contribution (effectively increasing the tax burden on 3.6 million low-income workers earning under $37,000) and scrapped a planned tax on super earnings over $100,000 (benefiting approximately 16,000 high-income earners). However, describing this as a direct "tax increase" is somewhat misleading - the LISC was a rebate/refund mechanism rather than a tax rate change, and the high-income measure was a planned tax that was abandoned rather than an existing tax that was reduced. The fundamental accuracy is that these changes disproportionately burdened low-income earners while benefiting high-income earners.
Final Score
6.0
OUT OF 10
PARTIALLY TRUE
The claim that the Coalition "increased superannuation tax for the poor, and decreased it for the rich" is factually accurate in direction but requires nuance. The Coalition did abolish the Low Income Superannuation Contribution (effectively increasing the tax burden on 3.6 million low-income workers earning under $37,000) and scrapped a planned tax on super earnings over $100,000 (benefiting approximately 16,000 high-income earners). However, describing this as a direct "tax increase" is somewhat misleading - the LISC was a rebate/refund mechanism rather than a tax rate change, and the high-income measure was a planned tax that was abandoned rather than an existing tax that was reduced. The fundamental accuracy is that these changes disproportionately burdened low-income earners while benefiting high-income earners.
Rating Scale Methodology
1-3: FALSE
Factually incorrect or malicious fabrication.
4-6: PARTIAL
Some truth but context is missing or skewed.
7-9: MOSTLY TRUE
Minor technicalities or phrasing issues.
10: ACCURATE
Perfectly verified and contextually fair.
Methodology: Ratings are determined through cross-referencing official government records, independent fact-checking organizations, and primary source documents.