‘Easy wins’: Crossbench senators swing behind superannuation tax overhaul

Key crossbenchers are open to backing Treasurer Jim Chalmers’ ambitions to roll back superannuation tax concessions, with independent senator David Pocock saying there were easy wins in reforming the retirement saving system.

Senator Tammy Tyrrell of the Jacqui Lambie Network expressed interest in changes to superannuation concessions while the Greens said they would look at what the government suggested after the Treasurer said on Monday that he had roughly $50 billion worth of concessions in his sights ahead of the May budget.

Jim Chalmers said the government’s proposed definition for super was uncontroversial.Credit: Alex Ellinghausen

The crossbenchers’ qualified support for retirement tax reform would boost the government’s chances to push through legislation that would also enshrine a definition for superannuation that restricts its use to retirement income.

The opposition has seized on plans to change the tax concessions, pointing out that Anthony Albanese promised just before last year’s election that Labor “had no intention of making any super changes”.

Assistant Treasurer Stephen Jones claimed the early release of super for compassionate grounds was being gamed by some doctors to fund non-essential cosmetic procedures as figures from the Australian Tax Office showed $573 million was approved for early release in the last financial year - $544 million of which was for medical purposes.

The government does not want to wind back access in cases of genuine hardship, a spokesman for the assistant treasurer said.

On Tuesday, Chalmers said the government’s proposal was not controversial.

“We also recognise, as previous Liberal governments have, that we need to make sure we can afford all of the various concessions in the system,” he said.

Tyrrell said the point of super contribution concessions was to encourage people to save for retirement, and so long as people paid less tax on those contributions than their income, they would keep putting money away.

“You could change that amount of tax paid on super contributions and raise a fair chunk of money without stopping people doing what they’re already doing,” she said.

Senators Tammy Tyrrell and David Pocock are both open to supporting superannuation tax reform. Credit: Alex Ellinghausen

“At a time when we’re struggling to pay for things like aged care and the NDIS, and the public health system is under more strain than ever before, I’d think it’d be smart for the government to take a look at ways to collect tax without stopping people doing what they want to do. This would be a good place to start.”

Independent senator David Pocock said he was interested to see the detail of potential changes.

“I think there’s some easy wins for people who don’t have millions and millions in their super,” he told ABC’s Afternoon Briefing on Tuesday.

Greens financial justice spokesman Nick McKim said the party would look at what the government puts forward on super, but if the government could move on super tax concessions, it could also change its mind on the stage three tax cuts.

While the opposition has said it would support a legislated superannuation definition, it wanted a definition that allowed super to be used before retirement for housing.

Shadow assistant treasurer Stuart Robert said the fact Labor was even floating changes to super should set off alarm bells for Australians.

“Ahead of the last election, Anthony Albanese and Jim Chalmers ruled out any changes to tax on super. Labor has no mandate to change tax on super,” he said.

But Chalmers pointed out the Liberal government announced a range of changes to superannuation in the 2016-17 budget, including taxing them more when they earned over $250,000.

“The last government to increase taxes on super was a Liberal government in which Peter Dutton was a senior cabinet minister,” he said.

Grattan Institute’s economic policy program director Brendan Coates said raising the tax on superannuation retirement earnings over $2 million from 15 to 30 per cent would raise an additional $1.5 billion a year, and would be a better alternative to introducing a cap on contributions.

“A government that introduced a higher tax rate on super above $2 million dollars, I think that is very politically feasible. Because by definition, you’re not affecting the more than 99 per cent of Australians that have less than $2 million in super.”

Coates said reducing the pre-tax contribution threshold from $27,500 to $20,000 would raise another $1.6 billion a year. Lowering the division 293 tax threshold to $220,000, so people earning above $200,000 pay a higher tax, and raising that tax rate from 30 to 35 per cent would bring in another $1.1 billion.

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