Plan to overhaul superannuation lashed as ‘distraction’

A plan to overhaul superannuation has been lashed, with one MP raising concerns the Treasurer is using it as an excuse to not talk about the cost of living.

A plan to overhaul superannuation has been lashed as a “distraction”, with the crossbench undecided on whether it will support plans to wind back tax breaks for some workers.

The federal government has flagged a cap on tax concessions for superannuation accounts with balances of over $3m in a bid to repair the budget bottom line.

Prime Minister Anthony Albanese on Sunday night insisted the debate remained “hypothetical”, stressing the government had not yet come to a decision.

But independent MP Dai Le has accused the government of using the so-called super wars as a “distraction” from talking about the cost of living.

The Fowler MP told Nine’s Today the first she heard about the proposed changes was in the media.

Dai Le said the government had yet to brief the crossbench about the proposal. Picture: NCA NewsWire / Gary Ramage

“We in the crossbench, we do get a briefing from the government in terms of the bills that will be coming up throughout the year … and from my memory … there was no mention of the superannuation bill coming forward,” she said.

“When it came into the news, I was looking at my notes thinking, hang on, this wasn’t part of the discussion.

“So from my perspective, I don’t know if there is a distraction from something else that is bigger – definitely cost of living … a distraction away from that.”

Currently, a person earning under $250,000 can make a contribution to their super before tax at a rate of 15 per cent. That contribution is capped at $27,500 for this financial year.

The government also applies a 15 per cent tax on the earnings within super funds, much lower than the 45 per cent marginal rate taxed on high -income earners.

Treasurer Jim Chalmers said the cap on $3m balances was a ‘good example’. Picture: NCA NewsWire / Gary Ramage

This financial year alone, the concessions are expected to cost the budget close to $53bn, bringing it close to the cost of the aged care pension.

On Sunday, Treasurer Jim Chalmers said the $3m cap was a “good example” of the potential changes.

“Less than 1 per cent of people have got more than $3 million in their superannuation,” he told Sky News.

“Good on them if they do, but less than 1 per cent of people have that.

“But that’s a good example for people to focus the mind on some of these big balances, which are attracting incredibly concessional tax arrangements. We do need to work out whether that’s the best use of taxpayers’ money.”

Of those accounts, Dr Chalmers said the average balance is close to $6m.

Sophie Scamps, an independent MP representing Sydney’s northern beaches, said any changes needed to be done “very cautiously”.

“I think if people are using it as a tax break and a way to avoid paying tax, that needs to be looked at,” she told ABC News Breakfast.

“But the rules have been in train for a long time and people have made long-term decisions about their investments based on the rules there.

“So to change it suddenly, this needs to be done very cautiously, and I think that we need to be careful about.”