Jeff Kennett: Anthony Albanese must overrule Jim Chalmers’ super tax changes
Anthony Albanese promised he would govern for all Australians but already hubris is appearing through Treasurer Jim Chalmers’ decision to change the laws relating to superannuation.
Opinion
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Dear Prime Minister.
Congratulations on your massive win in the federal election, greatly assisted by the Liberal Party’s numerous policy mistakes during the campaign.
On election night you said you would govern for all Australians.
But with only 35 per cent of the primary vote, already hubris is appearing through Treasurer Jim Chalmers’ decision to change the laws relating to superannuation.
He is not listening to the many voices from the community including many within the Labor Party.
First, continued changes to superannuation by successive governments should not occur. It causes confusion as people from a young age prepare for retirement.
We have no choice about contributing to superannuation because it is compulsory. I support this as it has produced one of, if not the best superannuation systems in the world.
It also saves the government and taxpayers billions of dollars every year by reducing the financial commitment the federal government has in supporting retirees.
I understand the concept of there being a figure above which superannuants will pay more than 15 per cent on the revenue their super fund earns.
If that figure is $3m, it must in fairness be indexed, otherwise young Australians starting their 40-year career now will be penalised having built their fund to in excess of $3m as they work through their lives.
That the figure above $3m, should attract a higher tax rate of 30 per cent I understand, although we should remember Australians have already paid tax on their earnings as money is added to their super fund.
This extra 15 per cent tax is in stark terms a wealth tax, which is increasingly being used by governments to address liabilities they have created. The most outlandish being the increase in Land Tax being rendered by the Victorian government on its citizens and businesses.
The suggestion of a tax on unrealised profits is repugnant, and administratively costly to superannuants. It operates in one direction only, an improvement in the value of the assets in superannuation funds.
It makes no allowances or offsets where the asset values fall, nor the fact that many funds have assets that cannot easily be realised to prove up the uplift in the value of the asset as agreed by accountants and auditors.
Sadly, many will have to sell assets to pay for any uplift in the value of the asset.
This element of the changes proposed by Chalmers must in fairness be removed from the proposed changes.
As the Chalmers’ changes are designed to stop some superannuants abusing the system, I would like to propose another change.
Accepting that a tax rate of 30 per cent apply to super funds over $3m, I propose there be a total cap on personal superannuation funds. That might be $20m or $30m or a figure agreed after consultation.
Assuming $30m, any funds excluding those held by farmers operating productive farms, funds that exceeds $30m pay the top marginal taxation rate of 47 per cent. And that those funds do not have access to any of the current advantages operating for superannuation funds.
I make these suggestions for the operation of individual, and family superannuation self-managed funds.
What rules you apply for the larger industry funds will be in your hands.
You must ensure all funds are able to invest in start-ups here in Australia which the introduction of the tax on unrealised profits would certainly heavily curtail.
The reality is we need a simple superannuation regime, that is easy to understand, as cheap as possible to operate, addresses abuse of the current system and while delivering greater income to the government of the day will not continually change.
There is one other aspect of the proposed changes that deeply worries me. It is reported politicians and other public servants, past and present, will be able to defer their payments of the new superannuation tax.
Prime Minister, this is morally wrong. It is an expression of the hubris I mentioned at the beginning of this letter.
If your government is going to make changes, and potentially costly changes, to the lives of millions of Australians, any changes must be applied equitably to all, including politicians and public officers in whatever role they are employed.
Do as I do not do as I say!
Changes to our superannuation scheme must not be seen as yet another distraction from enterprise, aspiration and growth. We should be encouraging our young to aspire, be successful and save, so in later life they are not a financial burden on the state.
Prime Minister, in your first term you overrode a minister who you thought was considering unfair and discriminatory changes to laws and regulations.
Please do so again now. It is your obligation. We all support a fair system of superannuation to build one’s life’s savings.
Stay well.
Yours sincerely, Jeff.
Jeff Kennett is a former Premier of Victoria
Originally published as Jeff Kennett: Anthony Albanese must overrule Jim Chalmers’ super tax changes
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