The draft legislation is titled the Superannuation (Objective) Bill 2023. This draft legislation has, at least, the virtue of brevity: the entire bill can be read in under 10 minutes.
The effect of the bill is simply stated.
When a “superannuation related” bill is introduced into Parliament or “superannuation related” regulations are tabled, there must also (unless an exception applies) be an assessment (called a statement of compatibility) of whether the bill or regulations are compatible with the objective of superannuation.
What is the legal or constitutional consequence if the assessment is to the effect that the bill or regulations are incompatible?
Essentially, none. A negative assessment does not have the effect of making the bill (when enacted) unconstitutional or regulations to be disqualified.
There may be embarrassment for the Minister introducing the bill or regulations, but such embarrassment will be short-lived and the incompatibility justified by reference to some higher value or necessity.
There are three critical aspects of the bill:
- The proposed objective of superannuation.
- The purpose to be achieved by the bill.
- The exceptions (i.e. the situations when a statement of compatibility is not required).
Legislative objective of superannuation
The proposed objective is specified in section 5(1) of the bill; namely
“The objective of superannuation is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.”
The consultation draft of the bill used the expression “sustainable manner” for “substantial way”.
Some comments on the “objective” are:
- “Preserve savings” – presumably this is a reference to releasing super savings for non-retirement purposes such as housing, medical or dental expenses or mortgage arrears and such like or accessing super balances before “dignified” retirement
- “Deliver income” – this suggests that super balances should be accessed as (or predominately accessed as) income stream products
- “Dignified retirement” – presumably this means that the super balance at the commencement of dignified retirement should be sufficient to allow dignity. Well at least the objective did not use the qualifiers “improvised” or “shabby genteel”
- “Alongside government support” – is this an implicit upper limit on your superannuation balance – only enough to still retain an entitlement under the age pension asset test which is a more stringent test than the age pension incomes test
- “Equitable and sustainable way” – presumably not too much and at not too great a cost to the government
Does this mean that the objective of superannuation is internally inconsistent? The principal inconsistency is between the “dignified retirement” which presumably means a super nest egg of sufficient magnitude with the “equitable and sustainability” element.
Possibly a bit harsh – but one does tire of “vision” statements.
Statement of compatibility
A statement of compatibility is an assessment of whether the superannuation changes made by the bill (or regulations) are compatible with the objective of superannuation.
This statement can be positive, that the proposed bill (or regulations) is consistent with the legislative objective of superannuation (with a reasoned justification for that conclusion).
Alternatively, the statement could be that the proposed bill (or regulations) are not consistent with the legislative objective of superannuation with the various inconsistences with the stated objective highlighted and explained.
Presumably, in the case of a negative statement, the government will present a case for the bill (or regulations) probably rationalising its decision by reference to higher goals or greater public interest.
Great call-out Michael. Unfortunately we have a government that has a policy of “break through or break”. Consultation is just a process, not intended to improve the outcome.
Did you notice they ignored every single professional association and went ahead with taxing unrealised gains on >$3m. Proof positive Kym you are correct.
It is telling actually that they ignored all of those professional bodies. At the end of the day all they are concerned about is getting their hands on some of that money, and they want it in cold hard cash, not the paper gains that we will be left with. Its deplorable and egregious and unless the Senate Crossbenchers do anything, it will be passed, and quite apparently, there is little that can be done to stop them. So the government can’t squeal when assets are moved to less egregious tax vehicles.
Chalmers indicated that the “rich” shouldn’t get more concessions than everyone else. Well then, how come in our situation and many others in our situation with large paper gains, that we will have to pay more than 3 times the super tax we currently pay, and much more than we currently pay outside of super? Where are our concessions on our super, especially when all we have ever done is save within the rules of the system? The system is now on the nose and I encourage everyone to rethink what they do with their savings if this eventually passes. That is my advice to younger, aspirational Australians – keep super to a minimum if this gets through. There are plenty of other tax vehicles where only taxable income is taxed and at a maximum of 30% or less in some cases, with the added benefit of asset protection.
An election win for the Coalition will come too late for many that can’t afford to take the chance with lumpy assets that need to be moved in record time should the Labor party lose the next election, with a song and a prayer that if it passes, a winning Coalition can reverse it in time.
Oh dear just another woke piece of legislation that does what? And they forgot the most important objective being that when their budget position deteriorates they can change policy to grab a piece of the action.
That’s easy Andrew under the equitable and sustainable way piece. Oh it’s not equitable and sustainable, more taxes required.