Dr. David Bennett argues in this article that Australia is going ‘down under’ due to there being a dangerous potential rent-seeking nexus between the onset of regionalisation and superannuation ‘reform’.
The mooted introduction by the Treasurer Jim Chalmers of a tax (‘the Super Stupid Tax’) on the unearned (or the unrealised) value of superannuation funds of three million dollars or over is a potential disaster. Not only is this proposed tax non-indexed for inflation but the methodology of how the unrealised value will be calculated is not clearly defined. The structural flaws in the Super Stupid Tax could lead to the effective destruction of self-managed superannuation funds.
The effective destruction of self-managed superannuation funds by massively discouraging private investments via the application of the Super Stupid Tax to these private funds could serve to consolidate existing industry funds which are administered by either trade unions or big business for the intended benefit of individual contributors. The capital in these industry superannuation funds is directly derived from compulsorily acquired superannuation contributions on salary/wages for the benefit of employees when they reach retirement age.
Most Australian employees were prepared to accept the introduction in the early 1990s of a compulsory superannuation on the basis that they would eventually reap the benefits of a financially secure retirement. This social contract between Australian employees and the state would be grossly violated if industry unions and/or big business were to utilise superannuation funds to substantially control the Australian economy and in so doing gain a socio-political ascendancy. Currently, trustees of superannuation funds are legally obliged to make investments for the financial benefit of their members.
The question therefore emerges as to how such control of the economy by trade unions and big business would be gained? The answer is by constitutional recognition of local government. Should section 51 of the Australian Constitution (which refers to the legislative powers of the Commonwealth Parliament) be amended to also include powers to make laws about local government, then the potential to paradigmatically shift socio-economic power in Australia will be facilitated.
The constitutional recognition of local government in the Constitution under section 51 would potentially allow the federal government to amalgamate councils, set local government rates/levies and to legislate concerning the spending power of local councils. The process could therefore be initiated by which local councils could utilise monies from industry superannuation funds to help finance government at a regional level, thereby substantially determining the possible future political distribution of power in Australia.
Existing financial and local government laws would still have to be amended so that superannuation funds could be used by local government authorities to substantially fund a new regional tier of government. However, once section 51 of the Constitution is amended to recognise local government then this objective could eventually be realised. The realisation of this transfer of power via constitutional recognition of local government could also lead to the ultimate phasing out States which is an outcome that Social Action Australia (SAA) has long forewarned.
There is of course the seeming reassurance that the Australian voting public is too loathe to amend the Australian Constitution which will ensure that the aforementioned scenarios will never come to fruition. However, a referendum proposal to recognise local government will be presented as an innocuous change. Such a proposal therefore stands a very good chance of passing.
Another reason why a constitutional amendment to section 51 of the Constitution might pass could be due to forthcoming bi-partisan support. Whether this occurs depends on the Liberal Party, particularly as there are self-serving rent-seeking elements within this party and their coalition partner, the Nationals. It will therefore be a major test of the new federal Liberal parliamentary leader Sussan Ley to decide whether to oppose any proposed constitutional amendment to section 51 to recognise local government.
For the sake of Australia and the Liberal Party itself, Sussan Ley will hopefully oppose any move to constitutionally recognise local government. However, rent-seeking elements within the federal coalition, who have long sought the eventual phasing out of Australian States, will possibly put up a strenuous fight to ensure that section 51 is amended. This will be because they might envisage the financial dividend of expanded regional councils being able to spend the capital derived from superannuation funds.
Why The Liberals Must Avoid Splitting
The above cited scenario assumes that there will be a Liberal Party in the distant future. However, right-wing rent-seeking elements within the coalition parties might hope that the Liberal Party will survive into the future as an avowedly socially conservative party which is regionally based. This re-configured Liberal Party might also exist in major urban areas due to a rusted-on loyalist vote which could still be garnered at a local government/regional level. Such a re-modelled Liberal Party might eventually merge with the Nationals Party to help facilitate greater rent-seeking access to resources at a local government level.
As for the moderate/progressive wing of the Liberal Party, they could team up with the Teals to help form a new major political party which is socially progressive. Already there are signs of a party split being engineered in the Victorian branch of the Liberal Party.
The September 2025 State Conference of the Victorian branch of the Liberal Party could set the groundwork for this party split to occur. The ostensible issue which could lead to this split will probably be whether the State branch should lend money to former State Opposition Leader, John Pesutto to pay for defamation costs he owes.
Should John Pesutto be denied a Victorian Liberal Party loan to pay for court costs and become bankrupt, he will have to resign from his State seat of Hawthorn, thereby causing a by-election which a Teal candidate will probably win. Such a scenario could consequently become a catalyst for moderate/progressive Victorian Liberals to split from the party.
A formal division within the ranks of the Victorian Liberals could well precipitate a nationwide split within the Liberal Party which would also have the probable consequence of the Australian Labor Party (ALP) winning the Victorian State election due in early November 2026. It is not beyond the realms of possibility that the ALP could win re-election in Victoria in 2026 due to preferences from a Liberal break-away party.
Therefore, the right-wing elements within the Victorian branch of the Liberal Party will hopefully not push the moderate/progressive wing of their party out because they will also be consequently cast out into the political wilderness for generations to come. A factor motivating the right-wing Liberals is that they might hope to gain complete control of the State party branch’s money and assets if there is a party split.
Should the right-wing Liberals win control of the governing Administrative Committee in elections to that executive at the party State Conference in September 2025, they might be in a position to cause a party split. To avoid such an outcome, the federal Liberals should be prepared to intervene in the Victorian branch of the Liberals to ensure that no one faction gains control of that division’s money and assets. An intervention would also ensure that resources are equitably distributed to the Liberal Party’s Victorian branch’s opposing factions at election time.
It should not be forgotten that Gough Whitlam probably would not have won the December 1972 federal election for the ALP had he not authorised intervention in the Victorian branch of the Labor Party in 1970. This bold action on Whitlam’s part re-assured the public that he had the mettle to be prime minister by standing up to the hard left of the party* which was then based in Victoria.
(*Subsequent events however demonstrated that Gough Whitlam as prime minister between 1972 and 1975 lacked the backbone to rein in the hard left of his party, but this is another story).
Similar to the right-wing Liberals in Victoria, right-wing factions within the Liberals in other States might believe that by holding onto their party brand name following a split, they will gain a rusted-on vote which can then be utilised in urban areas to win representation at a local government level. However, a presumption underlying this calculation is that section 51 of the Constitution will be amended to include powers over local government, which is an added reason as to why such a proposed constitutional change should be opposed.
Furthermore, if a new regional tier of government is later introduced, the Greens, a Teal type party (which could have Liberal breakaways within their ranks) and the ALP will always combine to keep the continuing Liberals in a minority at a local government level in urban areas.
At any rate it is a dereliction of political purpose that one of the major parties in Australian politics (i.e. the Liberal Party) should aspire to be a recipient of local government largesse in lieu of being a national contender for power in a Westminster parliamentary system. Those within the Liberal Party seeking to amend section 51 of the Constitution may believe that their party is no longer a contender for national power due to the political rise of the Teals.
Future Liberal Party Pre-Selections: The Early Bird Catches the Worm!
Indeed, the Liberal Party faces the fundamental and vexing question as to what to do about the Teals? The answer to that question is that the Liberals should pre-select their candidates on an early basis so that they (i.e. the pre-selected Liberal Party candidates) can recruit people on the ground into their campaign to retake Teal held seats. It should not be overlooked that Teal parliamentarians hold seats in mainly affluent areas so it should not be that difficult for pre-selected Liberal candidates to give their Teal opponents ‘a run for their money’.
One Liberal Party candidate who not only waged a competitive campaign against a Teal incumbent (Zoe Daniel) but actually won back the south-eastern Melbourne seat of Goldstein at the May 2025 federal election was Tim Wilson. Since losing Goldstein at the May 2022 federal election, Tim Wilson had waged a determined campaign to win back this seat against Zoe Daniel who is a prestigious former journalist. That Tim Wilson was able to win Goldstein back is demonstrative of the value of undertaking an organised campaign which harnesses local human resources and talent.
Pessimists for the Liberal Party may claim that their party had failed to win the previously blue-ribbon seats of Kooyong and Menzies in Melbourne’s eastern suburbs despite having very talented candidates. The counter to this perspective is that future socio-economic factors will eventually favour the Liberals such that they could not only win back Teal held seats but also be in contention to win safe ALP seats!
These external socio-economic factors are the underlying parlous state of the Victorian and South Australian economies. With regard to the former, the State of Victoria has accumulated over two-hundred billion dollars in debt which now threatens Victoria’s credit rating. It is no exaggeration to say that within the next eighteen months to two years, the Victorian government may not be able to finance its day-to-day operations.
Victoria’s Big Build Con
Furthermore, when the Victorian government’s public works program comes to an end and with it the accompanying economic stimulus, Victoria could be in an economic position which is even worse than during the Cain-Kirner era of the 1990s. A potential escape route for the ALP in Victoria and South Australia could be to co-operate with the ALP federal government to introduce regionalisation by amending section 51 of the Constitution.
The ‘benefit’ of the onset of regionalisation will be that a new tier of government can take over from and eventually help phase out bankrupted States. These new regional authorities could attempt to access superannuation monies by union and big-business superannuation funds making investments into and on behalf of new regional councils. For this to occur, local government will have to be added as a responsibility of the Commonwealth by the aforementioned amendment to section 51 of the Constitution.
Because rent-seekers within the ALP and the coalition parties have not been transparent about the future regionalisation process, the technical legislative aspect as to how laws governing the administrative functioning of industry superannuation funds will be changed cannot be revealed or detailed by SAA. However, with billions of dollars currently being held by industry superannuation funds, the nexus between regionalisation and government de facto appropriating superannuation monies cannot, alas, be ruled out.
The Liberal Party Cannot Advance by Retreating
If the Liberal Party is to disrupt this rent-seeking agenda on the part of nation’s hard left, then the first step that the Liberals can take is not to split! It is rare that there are any winners when a political party splits and this will particularly be the case in regard to the Liberal Party. Accordingly, delegates to the Liberal Party’s Victorian State Council in September 2025 should not allow the controversy over the payment of court costs concerning the Moira Deeming defamation case to be manipulated by party faction leaders so that a party split can be engineered.
As previously cited, the Victorian Liberals have a lot to lose by splitting, particularly because the underlying fundamentals of the Victorian economy are so bad. The real question therefore is whether the terrible condition of Victoria’s economy becomes apparent to the voting public before or after the next State election which is due in November 2026. Should the Liberal Party begin the process of splitting then the Victorian ALP will almost certainly win the 2026 State election so that the continuing ruling Labor Party could proceed to introduce regionalisation.
Surely, a far better scenario for the Liberals would be that their party remains united so that the next Victorian State election is won by them. Even if the Liberals lose the 2026 Victorian State election - because the voting public is currently so disenchanted with them and are not yet aware as to how disastrously bad the economy is - the Liberal Party will most probably win the 2030 State election with possibly the biggest landslide in Victorian history. Similarly, the chronically divided South Australian Liberal Party can also win an historic landslide election victory by 2030 at the latest because the economy in that State is possibly worse than Victoria’s!
How and Why the Liberal Party can Federally Revive
The voting resurgence that the Victorian and South Australian Liberals will inevitably experience in the future is predicated on them not splitting but also on the federal Liberals strenuously opposing regionalisation by dint of amending section 51 of the constitution. The Australian economy by the time of the next federal election due in 2028 will be in such a deplorable situation due to the disastrous conditions of the South Australian and Victorian economies. This could prompt the Albanese government to try to possibly try to amend section 51 of the Constitution to facilitate regionalisation.
Sussan Ley will therefore have to be the strongest person she can be to oppose any proposed amendment to section 51 to recognise local government because there are very powerful rent-seeking elements within the coalition parties. The potency of these rent-seeking forces was previously apparent when they manipulated climate/energy policy to twice bring down the courageous Malcolm Turnbull as Liberal leader.
The Liberals Should Utilize the Lynton Link
If Sussan Ley is to successfully counter these rent-seekers within her party, then she will have to place nominees of former Liberal Party Federal Director Lynton Crosby within the Liberal Party’s State and federal secretariats. Lynton Crosby has the superlative political skill to ensure that effective operatives are inserted into the party machinery to secure election victory.
Even if reform of Liberal Party secretariats is not undertaken, the Liberal Party in the next election cycle (or the election after that, at the latest) is bound to win landslide election victories due to the disastrous conditions of the South Australian and Victorian State economies. The only factor which could prevent this outcome from occurring is for the Liberal Party to split.
Concerning the dynamic of splits, the federal Liberals must be prepared to split with the Nationals should this political party insist upon the coalition supporting an amendment to section 51 to recognise local government in the Commonwealth Constitution There is a strong rent-seeking orientation within the Nationals which makes them inclined toward helping to engineer regionalisation in the future.
Already, the federal Nationals have announced their opposition to the goal of achieving the target of net zero carbon emissions by 2050. This opposition by the Nationals may have less to do with climate change scepticism than a desire by them to ensure that the coalition loses the next federal election as part of the process of later facilitating regionalisation.
It should be pointed out at this juncture that SAA is opposed to the setting of carbon emissions targets because this is a prescriptive top-down process and as such is an inherently flawed. However, SAA still agrees with the media tycoon Rupert Murdoch that the climate should be given the benefit of the doubt by promoting de-carbonisation. The rapid onset of technological change is having the effect of facilitating de-carbonisation and is therefore to be encouraged within a public policy context.
Sussan Ley Must Not Forget Australia’s ‘Forgotten People’
Whatever policy stance the federal Liberal leader Sussan Ley takes in relation to setting carbon emissions targets she will have to stand up to the rent-seekers within the coalition and the media. To do so would constitute an upholding of the Menzies’ Tradition of supporting the ‘forgotten people’ which Robert Menzies identified in his 1942 radio broadcast as those in society who were neither supported by big business or trade unions, such as small businessmen and housewives.
Sir Robet Menzies fought for the ‘forgotten people’ during the immediate post-war period by opposing the Chifley socialist government’s attempt to nationalise the banks and its unnecessary and economically detrimental maintenance of petrol rationing.
Today’s ‘forgotten people’ are Australia’s everyday superannuants whose funds could be mis-directed in the future via investments being made by local government authorities under a new regionalised regime. These regional councils (should section 51 of the Constitution be amended) will be able to make politically motivated investments which ultimately benefit their self-seeking interests as Australia reconfigures to ultimately become a rent-seeking economy.
Therefore, Sussan Ley, who has a had a varied and interesting working life, will hopefully have the courage and foresight to strenuously oppose both the proposed Stupid Super Tax and any future attempts to amend section 51 of the Constitution to recognise local government. Should the Liberal Party leader follow these courageous courses of action then her party’s future will be virtually assured.
In Defence of Australian Social Democracy
For a social democratic organisation such as SAA, it may seem unusual and contradictory to be temporarily supporting a centre-right political party such as the Liberal Party of Australia. However, SAA is social democratic as opposed to being socialist. The distinction between these two concepts is that the former (i.e. social democracy) supports private property rights and a market economy. Socialism by contrast advocates state economic controls to the extent that private property rights are not necessarily respected.
Social democracy is however still different from market liberalism due its support for state intervention in the employment relationship between employers and employees. This state intervention can take the form of state industrial tribunals promoting and/or protecting labour rights such as enforcing the minimum wage and the right of employees to undertake collective bargaining.
Therefore, integral to SAA’s advocacy of social democracy is an endorsement of trade unionism. For SAA, trade unions fulfil a vital role in a market economy of safeguarding labour rights by helping to ensure that employees receive just remuneration and that the human dignity of all employees is safeguarded within their employment relationship.
It should not be forgotten that Marxism is ideologically hostile to trade unions on the basis that they accept and therefore legitimize the operation of a market economy. From a Marxist perspective, trade unions should only exist as vanguard organisations which are agents of class struggle seeking the ultimate attainment of power by the working class.
It is therefore of historical interest and pride that it can be said that Australia led the world in promoting a social democratic approach to trade unionism at the turn of the nineteenth and twentieth centuries. Indeed, the ALP’s first federal leader, John Christian ‘Chris’ Watson (1867 to 1941) led the world’s first social democratic government when he served as prime minister of Australia between April and August of 1904.
Mr. Watson’s tenure as prime minister was too brief to detail any significant governmental achievements. However, Mr. Watson brilliantly utilised his party’s balance of power position between the Protectionists Party of Alfred Deakin and George Reid’s Free Traders’ Party to advance Australian social democracy.
Ironically and amazingly, the landmark Conciliation and Arbitration 1904 Act (the 1904 Act) was passed by Reid’s anti-union Free Traders Party in return for ALP support. However, the co-operation between Reid and Mr. Watson was short-lived due to their personal and ideological aversion for each other so that the ALP resumed its alliance with the Protectionists. Indeed, the national joke at the time was that Deakin’s most used phrase was, ‘Yes, Mr. Watson’.
SAA is still saying ‘Yes, Mr. Watson’.
SAA is still saying ‘yes’ to the Watson Tradition because this provides a practical model by which Australian social democracy can be facilitated. For the 1904 Act ushered in an Australian industrial relations system with the creation in 1907 of the Commonwealth Court of Conciliation and Arbitration Court (The 1907 Court) which after 1956 became the Commonwealth Conciliation and Arbitration Commission (The Commission).
The 1907 Court issued its famous decision by the great Justice Henry Bourne Higgins (a onetime Protectionist Party member) known as The Harvester Judgement which established a minimum wage based on an employee’s capacity to support a family. This judgement also facilitated an instrument known as an award. Awards were institutional instruments issued by the 1907 Court on an industry basis stipulating minimum wages and employment conditions.
There was however a Marxist perspective (which the Russian totalitarian Vladimir Lenin articulated) which was negatively critical of Australia’s system of conciliation and arbitration. From this Marxist perspective, arbitration supposedly made Australian trade unions ‘dependent’ upon external state institutional supports thereby diluting working class militancy by conferring legitimacy upon the capitalist system.
It should be pointed out that even though the Marxist Left has often decried trade unions as bureaucratic organisations which neglect their members’ interests, Australian trade unions up until the early 1990s thrived due to external arbitral supports which they accessed. This was because trade unions, regardless of their size and industrial strength, were able to effectively represent their members by utilising external arbitral supports.
Because craft based Australian trade unions were relatively smaller, they were inherently more democratic because rank and file union members did not become lost in a morass of large-scale union bureaucracy. Therefore, Australian trade unions were amongst the most successful in the more or less free world up until the early 1990s. This was reflected by high rates of union membership density with the 1976 Australian Bureau of Statistics (ABS) census showing that 51% of the workforce was unionised!
The high rate of union membership was achieved despite years of non-ALP rule with the Liberal Party holding continuous federal office between 1949 and 1972. Actually, the then Liberal Party was not hostile toward trade unions per se as this party was previously generally supportive of Australia’s system of arbitration and conciliation.
Ironically, it was under the ALP with Bob Hawke as prime minister (1983 to 1991) and Paul Keating (who served as prime minister from 1991 to 1996) that economic rationalist (or neo-liberal) policies were pursued. These ALP federal government policies had the effect of lowering Australian trade union membership by engineering a transition from an economically protected national economy toward a free trade one in which tariffs and industry support were wound back.
Superannuation and The Australian Union Movement
That is not to say that the hard Left of the trade union movement did not gain a dividend for their acquiescence of neo-liberal reform during this era. This dividend took the form of the introduction of compulsory superannuation in the early 1990s with unions initially administering employees’ industry superannuation funds. Furthermore, with the introduction of the Industrial Relations Act 1988 (the 1988 Act)-which unfortunately replaced the 1904 Act- the profoundly de-unionising process of trade union amalgamation was inaugurated.
Employee disenchantment with union amalgamation, which really took off in the 1990s, was reflected by steeply falling Australian union membership with union density now hovering at around 15% of the workforce. Many union rank and file union members, who had felt a psychological attachment to their craft-based unions as part of their work identity, departed the Australian union movement because they no longer felt a sense of belonging to the new amalgamated industry unions.
However, the hard left of the union movement was probably not that distressed by this steep fall in Australian union membership, because there was an accompanying decline in union democracy. Furthermore, for the Australian union movement’s hard left, the gauge of success is eventual control of Australian superannuation monies, which are now valued at approximately one trillion dollars!!
The proposed Super Stupid Tax might therefore be seen as part of the process by which non-industry superannuation funds are discriminated against so that a transition to a rent-seeking Australian economy can be facilitated. The final form that this rent-seeking model will take cannot be identified by SAA due to the lack of transparency inherent in this socio-economic reconfiguration process.
However, with regard to regionalisation there is bound to be some form of nexus between the onset of this political restructure and industry superannuation funds’ monies being diverted to help underpin the future funding of new regional councils should section 51 of the Constitution be amended to include local government.
Why the Liberals Must Avoid Rent-Seeking
It is consequently incumbent on the federal Liberal Party to oppose any move to amend section 51 of the Constitution. The Liberal Party can also help its cause by its State branches not splitting. This is particularly the case in Victoria where tensions within the Liberal Party in that State will hopefully not be manipulated by rent-seekers within the competing factions to engineer a split at that branch’s State Council to be held in September 2025.
For even if the Victorian Liberal Party loses the November 2026 State election, this State party branch will sweep all before it at the time of the late 2030 State election providing that Victoria as a State is not dismembered by regionalisation. This will be because the effects of the economic stimulus of the so-called ‘Big Build’ will by then have well and truly worn off.
Due to the ALP-run States of Victoria and South Australia inevitably facing credit downgrades because these two States are effectively bankrupt, the Albanese Labor federal government might very possibly try to introduce regionalisation by amending section 51 during this term of office. For this reason, Australia which is known as the land ‘down under’ could actually go under!