Dr Chalmers said superannuation plays an “indispensable role” in a number of important policy initiatives including energy transition, the shift to services, care economy, or how to harness technology.
He outlined the government’s three-part super agenda including firstly, “nailing down the objective” of superannuation reinforcing that there is currently a consultation process in place and encouraged industry feedback.
“Secondly, we want to try and make the tax concessions in superannuation a bit more sustainable, not by eliminating those tax concessions, but by making them a little bit less generous for people who have balances of more than $3 million,” he said.
“Making those tax concessions more affordable, more sustainable. It’s a modest change but it’s a meaningful change, I think when you consider the structural position of the budget.”
Finally, Dr Chalmers said the government is aiming to maximise super investment opportunities, “particularly in areas where we know we have big advantages” such as energy transition, social and affordable housing, and data or digital technology growth.
“All of these vast opportunities in our economy, there are big chances for superannuation to get the kind of returns for your members that we all want to see,” he said.
Dr Chalmers also said that despite inflation looking like it peaked in December 2022, the cost of living crisis will continue to affect millions of Australians.
“As well as being optimistic. I’m also realistic about some of the difficulties that we’ll need to navigate together over the course of the next year or two,” he said.
“Interest rate rises are really tightening the screws on a lot of families and small businesses right around the country. Combine that with a fair bit of global uncertainty that we’re seeing right now whether it’s in the financial system, or in the major economies around the world and you can see why Treasury, the Reserve Bank and others, including a number of you in the room there, are expecting our economy to slow considerably through the course of the next little while.”
It would be helpful for the Treasurer to explain why he is seeking consultation on the proposed legislation for an objective of superannuation. This is not for the industry, which is mature and, in any case, operates from the guardrail of the now 30 year old sole purpose test. The “need” to legislate an objective for super is likely primarily political as it would remove the need for an ‘electoral mandate’ to make the already decided agenda actionable. And the cat was let out of the bag for the first on that agenda action list as the Prime Minister had to quell the rising speculation caused by the Treasurer’s ‘not ruling anything in or out’ statements regarding superannuation capping. This is very political, make no mistake. The proposed non-indexed cap of $3m as the threshold for eligibility for an earnings surcharge is not sound policy making and, the excuse that it affects a low number of individuals does not excuse it. Going forward, this earnings surcharge will scoop up many more member balances and will provide a political windfall when future parliaments have to amend it to make it fit for purpose. If superannuation tax concessions need to be clipped, re-introduce the end benefits tax and provide adjustments through the tax systems for the lower end. The tax system is set-up for this bifurcated tax imposition, the super system isn’t.
No government should get away with taxing unrealised gains and if you want to play along with assessing legislation in accordance with a legislated objective for super, how can this aspect be justified as being equitable?