Upping the tax concession on super earnings above $3m is “reckless”, the shadow treasurer Angus Taylor says, as the government gears up for another week of policy debate in the shadow of the Aston byelection.
But government minister Tony Burke said it would be irresponsible to avoid making changes to the super tax concessions, given the cost trajectory.
“How can we have a situation where we keep hurtling towards a time where superannuation tax concessions cost more than the age pension, which is where we’re heading,” he said in an interview with Sky News.
“If you’ve got more than $3m, good on you, you’ll still get a tax concession, it just won’t be as generous as for what it is for the 99.5% of Australian balances.”
Treasurer Jim Chalmers was even blunter.
“What we saw today from Angus Taylor is a plethora of lies, dishonesty, and increasingly ridiculous scare campaign that do not stand up to the facts,” he said.
The Coalition has ruled out any support for Chalmers’ proposed legislation, which would see earnings above $3m in super accounts taxed at 30% rather than 15% from 1 July 2025.
Taylor has been one of the Coalition’s most vocal critics calling the proposal an “attack on middle Australia” and on Sunday he doubled down on his attacks, telling ABC Insiders host David Speers the proposal was a “significant breach of trust”.
“When a government says they’re going to do one thing and does something completely different when the money is locked away and I can’t get access to it, then it is a very, very significant breach of trust,” he said.
Labor says the policy will impact 0.5% of the population, or about 88,000 people.
To have a super balance above $3m, workers would need to earn $200,000 a year, every year for their working life, with employer contributions of 12% as well as chipping in $30,000 of their own.
The current average Australian wage is closer to $90,000. Labor does not intend to index the changes, meaning more people would be captured by the changes as time went on, which is one of Taylor’s biggest issues with the policy.
“The reality is this policy is flawed, in some respects it’s reckless, and it will have a far bigger reach, much bigger reach than Labor is pretending here,” he said.
“If you’re a younger Australian in your 20s, you’re not going to be facing in real terms a $3m threshold, you’re going to be facing something closer to a third of that.”
Changes to superannuation was one of the hotbed issues of the 2019 election, with the Coalition successfully launching a fear campaign against Labor’s proposed tax concession reforms.
With the Aston byelection drawing closer and the Coalition still finding its feet following the May 2022 federal election loss, Chalmers’ proposal, which won’t come into effect until after the next election, has seen the opposition attempt to reinvigorate “class warfare” attacks.
But Taylor could not say how a future Coalition government would find budget savings, beyond “growing the economy”.
“The first thing we will do when we get back into government is to reestablish the fiscal guard rails and the discipline that comes with it for ministers, bureaucrats and everybody,” Taylor said.
“That is how you do this. We did it between 2013 and 2016. We will do it again. Tax won’t be the focus. It will be making sure the economy grows faster than ever.”
With the Coalition voting no, and promising to repeal any changes, Labor needs the Greens and support from the crossbench to pass its legislation in the senate. The Greens believe the proposal does not go far enough and want all tax concessions scrapped for balances above $1.9m, with the money raised to go towards raising welfare and commonwealth rent assistance.
But with an implementation date of more than two years away, the government does not have to rush its legislation through the parliament, giving time for further negotiations.
