‘Appalling, dishonest’: critics round on Labor over defined benefit super tax deferral

Labor’s admission that politicians including the Prime Minister will be treated differently to others who won’t escape the proposed new super tax has critics fired up.

Geoff Wilson, chairman of Wilson Asset Management, says the government has been deceptive about how politicians on defined benefit schemes won’t be impacted by the looming new super tax until they retire. Picture: Britta Campion/The Australian

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Labor’s admission that politicians including Prime Minister Anthony Albanese will be treated differently to others who have to pay the proposed new tax on superannuation balances above $3m has sparked outrage as critics round on the government for not being honest with the public over the contentious revenue-raising move.

Workplace Relations Minister Amanda Rishworth on Sunday admitted on Sky TV that defined benefit super schemes would be “treated differently” to the defined contribution funds most Australians pay into.

But Ms Rishworth failed to clarify exactly when politicians on defined benefit schemes, such as Mr Albanese, would pay the new tax due to kick in for everyone else next financial year.

It is widely assumed those on legacy defined benefit schemes will not have to pay the tax until they retire.

Wilson Asset Management founder Geoff Wilson, who has launched a petition against the proposed tax, said he was appalled by what he regards as the government’s dishonesty and that Australians should expect better from the people running the country.

“It’s incredibly disappointing that the government hasn’t been honest with the Australian people all the way along. The government has actually lied about how various politicians will (or won’t) be impacted by this tax,” Mr Wilson told The Australian.

“They’ve got to come clean here. They’ve tried to make this into a class war when everyone knows it’s a flawed, illogical policy. And now you’ve got a situation where the impact of this legislation on the Prime Minister will be grossly different to the impact on almost every other Australian.

“If he’s only impacted by this when he retires, then he gets the benefit of compounding for all those years he’s still working’’, while others in the net were liable for the tax from July 1, 2026.

Politicians and public servants enrolled in defined benefit schemes before 2005 will likely be able to defer tax payments until retirement, unlike the vast majority of Australians captured by the new policy, which begins in fiscal 2026 and will see the tax on earnings over $3m doubled to 30 per cent.

The most controversial elements of the new policy are that it will tax unrealised gains, or paper profits, and will not be indexed, meaning more Australians will be caught by the tax in time.

Opposition finance spokesman James Paterson, speaking on Sky after Ms Rishworth, said the admission that the Prime Minister’s pension would be treated differently to others raised a number of questions around how the rules were written and the Prime Minister’s input into the process.

“They’re proposing to tax paper profits that may never actually materialise, but people will nonetheless be assessed on that and have to pay a tax on that, and they’ll have to do it during their working life. So to do that for some category of superannuation, but not for others, is a really important and significant thing,” Mr Paterson said.

“I think the government has to be open and transparent, much more transparent than the minister just was and I think the Prime Minister should stand up today and explain his understanding of this different treatment between different categories of retirees, and in fact working people, and why he benefits from it and whether he participated in that decision.”

Clime Investment Management founder John Abernethy said the government was putting the focus and blame on self-managed superannuation funds when legacy defined benefit schemes were the real problem.

“If you’re going to target large super fund balances then you’ve also got to target excessive defined benefits concurrently. And the government isn’t doing that,” Mr Abernethy said.

“The government and Treasury are deliberately playing a small picture here because they don’t want to open it up to a bigger debate and a realistic debate about how to fix Australia’s retirement policy for the benefit of everyone (because) they’re holding on to legacy benefits of defined benefit schemes.”

Mr Abernethy said all legacy defined benefit schemes should be paid out, with a $3m cap, and any working Australians still on these schemes should have their payout moved to an industry fund.

“Let’s cash in these benefits; they’re a disaster. They’re a liability on the public, which current and future generations should not be asked to pay for,” he said.

Originally published as ‘Appalling, dishonest’: critics round on Labor over defined benefit super tax deferral