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Richest Australians to take super hit

Next month’s federal budget will hit the generous superannuation tax breaks received by the very richest Australians. The target will be the highest one to two per cent of earners, with the government…

Bill Shorten aims to tackle disproportionate superannuation concessions. AAP/Dave Hunt

Next month’s federal budget will hit the generous superannuation tax breaks received by the very richest Australians.

The target will be the highest one to two per cent of earners, with the government arguing that the cutback is necessary to keep superannuation concessions sustainable over the longer term.

In 2009-10 the top one per cent of income earners received nine per cent - about $2 billion - of the total value of super concessions.

The average concession on super contributions received by the top one per cent of earners was $8600. This was seven times the tax concession received by an average Australian, which was $1200.

Minister for Financial Services and Superannuation Bill Shorten emphasised that changes were not just a savings exercise.

The budget’s needs were not driving the government’s superannuation reforms - rather they were being driven by the issue of sustainability, he said.

“Our superannuation system needs to be consistent and needs to be sustainable.”

“That is what I have been talking to the industry about during this reform process,” and would be the question focused on at a superannuation round table in Melbourne tomorrow, Shorten said.

The majority of working Australians are retiring with lump sums of just under $40,000. The average balance in super is just over $150,000 for men and $90,000 for women.

In 2009-10 the bottom 30 per cent of income earners received just 1.2 per cent of the value of super tax concessions.

The row over superannuation is dominating the pre-budget debate, with former minister Simon Crean repeatedly warning against the government hitting this area.

Crean said that “the sooner the government spelt out its intentions, the better. People need certainty, especially when it comes to retirement incomes.”

He said the system needed to be made more sustainable but again warned against any retrospectivity in what the government might do.

Opposition leader Tony Abbott continued his attack on the government over its super plans.

“Why should anyone trust a government that is raiding your savings to fund its spending? That is what this government is proposing to do,” he said.

Abbott said that the government’s proposed action was against everything the Hawke-Keating government did and against everything the Howard-Costello government did.

“It’s just a complete attack on a superannuation system which has grown up over the years and which is not perfect but which is probably just about the best retirement system in the world,” he said.

He said the money going into superannuation was “the people’s money - it’s not the government’s money. And that’s why I say to the government ‘hands off people’s savings’”.

Join the conversation

55 Comments sorted by

  1. Lee Emmett

    Guest House Manager

    Thanks for presenting the facts, Michelle:

    'In 2009-10 the top one per cent of income earners received 9 per cent – about $2 billion – of the total value of super concessions.

    The average concession ... was $8600 ... seven times the tax concession received by an average Australian, which was $1200 ... the bottom 30 per cent of income earners received just 1.2 per cent of the value of super tax concessions.'

    This is the crux of why the Budget proposes changes: so that those at the top…

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    1. Jack Bloomfield

      Retired Engineer

      In reply to Lee Emmett

      Agree with you Lee,
      Michelle, why do you uncritically repeat Abbotts disingenuous remarks? His remarks are grossly inaccurate, yet you don't query them. Do you comprehend what he said?

      Why do you think the richest Australians require a subsidy from less well off taxpayers for their superannuation?
      It's about time these superannuation inequities were addressed -the government should be praised for attempting to right this wrong.

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    2. Steve Birdsall

      Retired

      In reply to Jack Bloomfield

      I'm amazed at the traction Abbott is getting on this, not least after his carbon price predictions proved to be so inaccurate.

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    3. Peter Redshaw

      Retired

      In reply to Lee Emmett

      Lee, a very good summing up of the issue, which I agree had elements that Michelle failed to include in regard to Tony Abbott's comments and policies on this issue. The only thing that I would qualify is related to the comments made under section (3). And that is not all of the money that goes into people's super is actually government money.

      The tax concession is actually a government funded subsidy to peoples’ super. The government provides a subsidy to people super in the form of that portion of tax that they would otherwise take if that person pay was to go into their pocket rather than put into a superannuation fund. And the issue here is that the subsidy that the government is giving to people on the higher tax rates is much greater than that for those on the lower tax rates. And of course the other problem is the longer-term impact this is having on the structural integrity of the budget into the future.

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    4. Peter Redshaw

      Retired

      In reply to Jack Bloomfield

      John, you would have to be expecting Michelle and the mainstream media to change their stripes. It has become a well honed tactic of the mainstream media to attack labor and then for balance doing at most a very mild criticism of Abbott. That is what is called balance in the mainstream media.

      Oh and you do have to remember that many of those who have criticised labor over this issue calling it class warfare are up in the upper income group. There is an occasional media person who does admit that this is a perk that needs to be removed and that with their income they do not need it. But they are few and far between.

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    5. Hardy Gosch

      Mr.

      In reply to Lee Emmett

      Well, let me say thanks for these explanations because Michelle Grattan seemingly can't or won't...
      Soon we are being asked to choose between:Democracy and Murdochracy!
      The public should be asked:
      Has Murdoch made up your mind how to vote?.
      Be afraid be very afraid:

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    6. Hardy Gosch

      Mr.

      In reply to Hardy Gosch

      "Murdoch" is representative for all of the MSM.

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    7. In reply to Lee Emmett

      Comment removed by moderator.

  2. Ronald Ostrowski

    logged in via Facebook

    So targeting the wealthiest gets news headlines but what the Opposition proposes to do in this area is ignored or not looked into by the MSM/ABC. Yesterday morning I noted that Fran Kelly was all frantic in trying to get Emerson to only talk about what Crean and others said, while he tried to make the following points.

    Labor had legislated to increase the compulsory superannuation guarantee from nine per cent to 12 per cent

    The Coalition's policy is to reinstate the 15 percent tax on superannuation for the low-paid.

    The Coalition is planning to slap an extra tax on the 3.6 million Australians earning up to $37,000 per year.

    Fran Kelly did not appear interested in these points. Michelle did not mention them in her article above. I seriously doubt whether the rest of the MSM/ABC journalistic class have given them any notice either in their zeal to yet run another scare campaign on behalf of their ray of sunshine, Tony Abbott.

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  3. Bruce Wallace

    Registered Nurse

    Why am I becoming increasingly paranoid about the MSM/ABC not reporting fairly.
    Here we have a Government wanting to stem a flow of taxpayers money to the well off, and being slammed for it.
    We have an opposition that wants to reinstate the 15 percent tax on superannuation for the low-paid.
    Not a word from the MSM/ABC, or yourself Ms.Gratten.
    Tony Abbott is given a gift by the MSM/ABC, no hard questions for him thank you.

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  4. Terry Mills

    lawyer retired

    Lee Emmett and Ron Ostrowski, thank you for bringing some balance to this debate as the media certainly won't be doing so on present indications.
    It is quite disturbing how the mainstream media have accepted uncritically Tony Abbott's opportunistic and inflammatory comments.

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  5. Michael Shand

    Software Tester

    I like how Michelle totally missed the point here, nice work setting up an argument to protect the rich and privilaged in society

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    1. Jack Arnold

      Polymath

      In reply to Robert McDougall

      Oh dear Robert ... I was censored off for supporting your call to "sack Michelle"... or was it for identifying the coven of Liberal Party supporters at TC?

      Still, TC has yet to rigorously question TA and the Lack of Liberal Party policies and costings.

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  6. Dianna Arthur

    Environmentalist

    Pertinent commentary from other posters on another article presented by Ms Grattan, which missed many important points made by TC readers.

    When will Ms Grattan cast her critical gaze upon Tony Abbott and his policy free Liberal Party?

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  7. Gideon Maxwell Polya

    logged in via Facebook

    Equity is great but problems arise if people are hit with retrospective legislation and this could apply not just to the super-rich but also to relatively small people who have earnedless than circa $100,000 per annum before tax. Unfortunately Michelle Grattan's article does not enlighten us about what Gillard Labor might do.

    A further serious cause for concern are high risk proposals by plans by this now militantly pro-Zionist Gillard Labor Government (see Gideon Polya, "Easter, Jesus, Betrayal…

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  8. Tony Simons

    Director at Bedlam Bay Pty Ltd

    For three years Abbott has got away with very dishonest and misleading statements. Equity is of no concern to this lout (like GW Bush). Crean, Ferguson and Fitzgibbon may be trying to destabilise the hopeless Gillard but as true Labor men they should not be defending the Howard/Costello super scams for the wealthy at the cost of low and middle income earners.

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  9. Fred Bloggs

    Agent provocateur

    All this class-warfare stuff is fascinating and I'm sure all the comments regarding the subsidisation of high-value super are correct, but I can't help noting that I pay a considerable amount of money for the privilege of giving my super to someone else to "manage".

    I also find it hard to fail to notice that the big 4 banks consistently and reliably manage to make record profits year-on-year, in stark contrast to pretty much every other sector of the economy.

    Can anybody explain to me why this is regarded as an area of taxation reform that is exempted from consideration?

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    1. wilma western

      logged in via email @bigpond.com

      In reply to Fred Bloggs

      Interesting to note Adele Ferguson's points about the need to improve super funds management transparency- for example the fact that there's no barrier to a person being on the board of more that one super fund - as a high flying rep iof business is.

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    2. Fred Bloggs

      Agent provocateur

      In reply to wilma western

      The tangled web of interconnected ownership is a huge problem generally, it seems to me. The financial institutions are deeply incestuous in their shareholdings and as a result they are effectively, in many ways, one "supergroup" that makes a bit of a mockery of anti-monopoly rules.

      The appearance of competition exists, but genuine competition does not. They speak with one voice.

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  10. Tony Grant

    Student

    A deal of consensus so far that journalists aren't totally reporting all the facts and there is an "absolute bias" where Abbott is concerned.

    The ALP is divided and the opportunists are there for all to see....Crean/Ferguson et al.
    Therefore, where possible their seats should be challenged by all progressive groups (independents) at the next election. Note, in the seat of Dobell where local branch members are being treated like "mushrooms" an independent Labor candidate is a real possibility…

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    1. Dianna Arthur

      Environmentalist

      In reply to Tony Grant

      I agree, this is no time for the Labor party to be timid. It can achieve a lot before September, put policies into place than cannot be wrecked by the Abbott machine.

      It has nothing to lose and, maybe, a lot to gain.

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    2. Fred Bloggs

      Agent provocateur

      In reply to Dianna Arthur

      What policies would you suggest, Dianna and what would this gain the ALP?

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    3. Fred Bloggs

      Agent provocateur

      In reply to Tony Grant

      Tony, the ALP is the "workers' party", it is not the "progessive's party".

      I know the words to The Red Flag" and what they mean, so do Crean and Ferguson, I suspect. Do you?

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  11. leonie wellard

    retiree

    To all those who want to see behind the "news" from MSM, i suggest you check out the Independent Australia website. They have good journalists who do in-depth research into controversial topics such as Slipper, Ashby, Brough, Abbott and many others. They are non-partisan in intent.

    I echo all the concerns from previous posts here that the public are not getting all the information needed to make a well considered choice in Sept.

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  12. George Harley

    Retired Dogsbody

    Inside at the Dee Why roundtable Tony Abbott also said something along the lines of "when they've got you, they will go after someone else". Sorry, I can't find the exact wording and it was not repeated at the later doorstop. Once again TA shows he will make "audience appropriate" comments to scare and divide the electorate.
    Perhaps it is time for an ᗅᗺᗷᗅ revival? Anyone But Bloody Abbott.

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  13. Michael Still

    logged in via email @stillhq.com

    It would be nice to clarify who the top 1-2% of income earners actually are. There's been debate about if someone on $150,000 is struggling... Are they in the top 1%?

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    1. Henry Verberne

      Once in the fossil fuel industry but now free to speak up

      In reply to Michael Still

      According to the ATO’s tax statistics, if you earned $248 192 or more in 2008-09, you were part of the top 1%. The average income for an individual in the top 1% of taxpayers was $554 185. The median income for that year was $45 200, so the average income for someone in the top 1% was more than 12 times the median. In today's dollars that is probably about $300,000 per annum compared to the median of about $50-60,000.

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    2. George Harley

      Retired Dogsbody

      In reply to Henry Verberne

      Thks Henry
      I am long out of school and not trained in stats.
      But I do recall the difference between average and median.
      Are you always comparing apples with apples?
      Regards

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    3. Michael Shand

      Software Tester

      In reply to Michael Still

      If you are earning $150,000 and are struggling then you should be ashamed of yourself, you are obviously living above your means and are self harming. Arguments you often hear are, rent costs more in innercity and you need expensive suits or equipment - rent doesnt cost that much anywhere and your equip and suits are tax deductable but even if they werent - you got 150,000 a year and your struggling?

      Jesus the rich and privilaged in society have it tough, they can barely afford the drinks at the pub....meanwhile some mother is trying to scrap together food for her kids for dinner but no, no, you in the upper middle class, you really have it tough. its pathetic

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  14. Robert McDougall

    Small Business Owner

    Funny, I thought that Tony Abbott was planning to axe the low income super contribution.

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    1. wilma western

      logged in via email @bigpond.com

      In reply to Robert McDougall

      But that's because it's being funded by that awful mining tax - and that might just be somewhat higher at next report.

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  15. wilma western

    logged in via email @bigpond.com

    Good to get a basic outline of super facts from Michelle.It would have been even better if she had pointed out last year's changes to super concessions that apparently went almost unnoticed by the MSM and T Abbott. Reading today's Age I discover some of the mooted changes were first put in place by Peter Costello but later when mining boom bonanza bloated the revenue, Howard and Costello decided tax cuts for the well- off would be a good vote catcher, and don't worry about infrastructure needs etc.

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  16. Chris Weir

    Analyst

    As a side issue the super tax concession is already the largest tax expenditure and the Treasury forecast for it in 2015/16 will be more than the cost of the Age pension.

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  17. Michel Syna Rahme

    logged in via email @hotmail.com

    What a strange article! And not one mention about Tony Abbotts proposals to cut super for the people struggling to properly feed their children! It seems I haven't been missing much not reading her articles. I gave this one a go to look for any insight - and the answer to myself is - I'm surprised people are still reading and commenting under her articles.

    All I recieved there was a regurgitation of front page newspapers and repeat repeat repeat scaremongering generic australian zombie nightly…

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  18. Peter Ormonde
    Peter Ormonde is a Friend of The Conversation.

    Farmer

    "Richest Australians to take super hit".... Nah not really... the richest don't bother with the petty change available via superanntuation and tax concessions. They don't pay tax at all.

    "A study by James S Henry, former chief economist at McKinsey & Company, estimates that wealthy individuals have $21-$32tn tucked away in offshore havens – roughly equivalent to the size of the US and Japanese economies combined."

    Not sure what it looks like now but I remember the Packer family seemed to do…

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    1. alfred venison

      records manager (public sector)

      In reply to Peter Ormonde

      here's some investigative journalism for you, or a report on some investigative journalism.

      from the cbc:- "An unprecedented leak of documents [ 2.5 million documents to 37 media outlets in 35 countries ] is revealing the closely guarded investment information of more than 100,000 people around the world".

      "In what is believed to be one of the largest ever leaks of financial data [ 162 times larger than the U.S. State Department cables published by WikiLeaks in 2010 ] the Washington, D.C.-based…

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    2. Peter Ormonde
      Peter Ormonde is a Friend of The Conversation.

      Farmer

      In reply to alfred venison

      Yes Alfred - one of the biggest industries on the planet this tax avoidance business - and it is directly proportional to economic inequality and financial instability - have a look at Greece and Cyprus for a working example.

      The quote I included was meant to have a link to the UK Guardian article where I plundered it ... they have some excellent articles on this whole thing today. Nothing about Rupert Mordoch though. Yet.

      [ http://www.guardian.co.uk/uk/2013/apr/04/secrets-offshore-hideaways-laid-bare ]

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    3. Peter Ormonde
      Peter Ormonde is a Friend of The Conversation.

      Farmer

      In reply to Peter Ormonde

      Found him: Rupert gets a mention in the Independent:

      "Rupert Murdoch's News Corp, with 152 subsidiaries in tax havens according to the US government, paid no net UK corporation tax between 1988 and 1999."

      [ http://www.independent.co.uk/voices/commentators/paul-vallely-there-is-no-moral-case-for-tax-havens-2345096.html ]

      I look forward to a detailed expose in the Tele and Sun Herald by the champions of press freedom.

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    4. Peter Ormonde
      Peter Ormonde is a Friend of The Conversation.

      Farmer

      In reply to Dianna Arthur

      Truer than we might think Ms A... and just in case you think I'd dragging the conversation off topic there is indeed a close relationship between tax avoidance ans superannuation as it is currently structured for the rich.

      To wit: from Initiative Accounting:

      "Australia, a new tax haven?
      Thursday, October 04, 2012

      "I attended a seminar recently where the presenter suggested (on more than one occasion), that a new tax haven had revealed itself. Now, normally 'tax haven' are words used to…

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    5. alfred venison

      records manager (public sector)

      In reply to Peter Ormonde

      top of the evening, Peter. i'm loving this story so far. no holds barred, i say, name names & let the chips fall where they will, mix metaphors, whatever it takes.

      french president's campaign manager, canadian senator's husband, speaker of the mongolian parliament, prime minister of georgia, wife of russian deputy prime minister, wife of tax evader pardoned by clinton on his last day & song writer for celine dion (among others).

      this story has legs.

      i like this one:-
      "James S. Mellon, heir to the Mellon oil and banking empire, who said he has liquidated all of his offshore holdings."

      oh, and banks are involved. and, yes indeed, there's rupert ! (thanks for the tip off). -a.v.

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    6. Michel Syna Rahme

      logged in via email @hotmail.com

      In reply to Peter Ormonde

      "You are going off Mate" - that is beach lingo meaning "you are on a roll Pete". Is Michelle in the list somewhere?

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    7. Jack Bloomfield

      Retired Engineer

      In reply to Peter Ormonde

      Thanks for a (series of) great post\s Peter,

      Michelle's pro conservative alarmist heading is looking a bit lame in the light of the Initiative Accounting article you linked to.
      We have many experienced journalists in MSM, yet not one can report honestly on the elephant in the superannuation room- overgenerous provisions for the wealthy.
      It's very depressing that so many journalists have apparently lost the ability to report with objective integrity.

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    8. Peter Ormonde
      Peter Ormonde is a Friend of The Conversation.

      Farmer

      In reply to Michel Syna Rahme

      No sadly I don't think meeja minions and PR flaks get a mention yet ... nowhere near enough dough just for turning blind eyes and reporting tweets.

      Wouldn't it be good to know how Gina's empire is structured - where the dough turns up ... but we never will because private trust operations are beyond public scrutiny. Unless her kids get serious in the courts. Such are the rights to privacy of the rich.

      I remember the Packer family's network of family tusts beggared belief - and yet the ATO does not regard such contrivance as tax evasion - but the far more demur "avoidance" or "minimisation".

      When does privacy become secrecy?

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    9. alfred venison

      records manager (public sector)

      In reply to Peter Ormonde

      the amount of money involved is said to be the size of the japanese & american economies combined. -a.v.

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    10. Dianna Arthur

      Environmentalist

      In reply to Peter Ormonde

      I hadn't considered international opportunism of the current super set-up. Makes complete sense. If the Gillard Government is successful in getting its changes to super through, would this put a stop to such farnarkling?

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    11. Dianna Arthur

      Environmentalist

      In reply to Peter Ormonde

      It was ever thus - the powerful waging war on the vulnerable, the trick that has been pulled of in the 21st C is one of Alice in Wonderland proportions - making the public believe it is the poor waging war on the rich. I think the only time that ever occurred was called the French Revolution. An excellent fictionalised version remains George Orwell's "Animal Farm' - where he illustrated 'class' reasserting itself yet again. The players may change but the game remains the same.

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    12. Dianna Arthur

      Environmentalist

      In reply to Peter Ormonde

      Mr O

      "When does privacy become secrecy? "

      I do believe that is a part of Julian Assange's bete noir - and look at the attempts to silence the messenger?

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    13. alfred venison

      records manager (public sector)

      In reply to Peter Ormonde

      the story about the offshore banking leak - 2.5 million documents - hidden (private) assets the size of japan & america's economies combined - was reported in the sydney morning herald on-line last night, complete with a photo of one of the washington based organisation's journalists at a desk in the herald workroom on an unspecified date. i can't find this story in the herald on-line this morning. its not on abc or the australian.
      this tool is from the cbc:- http://www.cbc.ca/news/interactives/offshore-tax-havens/ -a.v.

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  19. Geoff Taylor

    Consultant

    So the Catholic top end of the Liberal Party has decided to wave the flag for the 16000 richest superannuants.

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