The Albanese government’s $3 million tax cap on superannuation – whereby earnings on the first $3 million in a saver’s super fund will be taxed at the current concessional rate of 15 per cent, and anything above that at 30 per cent – makes sensible progress on the problem of how generous super tax breaks contribute to Australia’s structural budget deficit.

The introduction of a retrospective hard cap, where savers with more than $3 million in super may have been forced to dump assets, could have had serious repercussions for both individuals and financial markets, raising issues including liquidity, valuation and tax risks. The tiered approach is far more sensible, and will be generally welcomed by the super sector.