The Albanese government has ramped up the defence of its planned overhaul of superannuation tax concessions, accusing the Coalition of hypocrisy over its own reforms to the sector that will leave 30 per cent of people worse off in three decades’ time.
Treasurer Jim Chalmers said new Treasury modelling revealed the previous government’s failure to index the threshold of its own superannuation tax changes, passed in 2016, would affect triple the number of Australians as the changes it is proposing.
Treasurer Jim Chalmers says new projections show the Coalition’s own superannuation changes will affect 30 per cent of people.Credit:Alex Ellinghausen
Labor plans to increase the tax on the earnings of super balances of more than $3 million from 15 per cent to 30 per cent from mid-2025, affecting about 80,000 or 0.5 per cent of account holders. In its first full year of operation, the change is forecast to raise $2.3 billion.
It has come under fire for not planning to index the $3 million threshold. That criticism has increased since Chalmers and Finance Minister Katy Gallagher revealed that by the early 2050s about 10 per cent of people will be affected by the change.
Shadow treasurer Angus Taylor accused Chalmers of being “very, very tricky” by not admitting more people would be affected because of the lack of threshold indexation.
But Chalmers said Coalition superannuation changes would affect a substantially larger number of people as it had failed to index its own reforms.
In 2017, despite strong resistance from within the Liberal Party, the Coalition government introduced a string of changes aimed at reducing the cost of superannuation concessions.
This included a $1.6 million super transfer balance cap that, due to indexation, will reach $1.9 million with the start of the 2023-24 financial year.
But it also reduced the income threshold at which additional tax is paid on super contributions. That Division 293 tax threshold was not indexed to inflation or wages growth and was cut to $250,000 from $300,000 with the 2017-18 financial year.
When put in place, the Coalition estimated it would affect just 1 per cent of super accounts, or 160,000 people.
Chalmers said Treasury now projected that by 2052, 30 per cent of people with super would be affected by the Coalition’s changes.
He said the figures revealed the Coalition’s “dishonesty and deception” towards the government’s planned superannuation changes.
“All their hypocrisy and hyperventilating is to distract from the fact that they want to add to the trillion dollars of Liberal Party debt to fund bigger tax breaks for people who already have tens of millions in super,” he said.
“The reason why our policy has received such deep and broad support from the Australian public is because it’s a modest and sensible change that helps clean up some of the mess that the former government left behind.”
Federal parliament resumes on Monday, with Chalmers yet to respond to a demand from the Senate to make public the modelling showing 10 per cent of super accounts would be affected by his proposed changes by the 2050s.
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