Super hit for rich is a taste of Labor’s things to come

The true purpose of Jim Chalmers’ superannuation tax scare campaign is finally out in the open and, as many had suspected, it has been a conscious return by Labor to the class-war envy politics that voters have rejected in the past. The $48bn question is: will the Albanese government extend its new approach on superannuation to slapping a capital gains tax on to the sale of rich people’s family homes, the biggest “cost” to government revenue?

On Tuesday, Bill Shorten, who failed at the polls in 2019 in part because voters did not trust his assault on retirement incomes, went as far as to say rich superannuation accounts were stealing the taxes paid by nurses. Anthony Albanese finally brought the issue of higher taxes on big superannuation balances to a close by confirming that taxes would increase on balances over $3m. The changes will not be retrospective and will not take effect until 2025, reflecting the political heat the issue of retirement savings has generated. For fairness, it should leave open the question of equivalent treatment for the overly generous defined benefits schemes still enjoyed by former high-earning public servants and politicians, the Prime Minister and Wayne Swan included.

The federal government will collect far less money than it had perhaps hoped for from the super reforms that have been agreed. It must now work hard to overcome the reality that it is a government prepared to break election promises to get what it wants. The bigger lesson for voters is what the changes say about Labor’s view that all money is government money.

By using the obscure tax expenditures and insights statement to justify its tax raid on high super balances, the government has shown itself more interested in stealing back tax than doing the hard yards on budget management. The whole tenor of Dr Chalmers’ super conversation with voters has been to soak the rich. The TEIS used by government as cover provides a road map for who might be next. As Judith Sloan highlighted on Tuesday, another big-ticket item is the main residence exemption that according to the latest figures costs the government $48bn a year. This is because the government doesn’t impose a capital gains tax on the sale of a main residence. This exemption is treated as a cost to government. Using the government’s thinking on superannuation, high-income earners with bigger houses no doubt benefit more. As economics correspondent Patrick Commins argues, by targeting the tax breaks of the “wealthy”, the Albanese government reckons it’s on a winner.

Dr Chalmers has overhauled an obscure tax expenditures statement to become an instrument of class war aimed at prosecuting its case for clawing back revenue. Superannuation is being targeted now, but the new Treasury analysis provides plenty of ammunition for an assault on capital gains tax concessions, negative gearing and family trusts. Release of the tax data comes ahead of expenditure review committee of cabinet meetings that will decide how far Labor pursues wealthier Australians to claw back tax revenue in the May 9 budget. Dr Chalmers says the government has begun the hard yards of repairing the nation’s finances.

Most worrying is the fact, by returning to its class-war roots, Labor has sent the message that lifting taxes is better than cutting spending. This is a terrible state of affairs. The area where discipline is needed is in containing costs in ill-conceived government services and projects where prices are spiralling out of control. This includes the National Disability Insurance Scheme and some renewable energy fantasies that might look good on paper but push unsustainable costs on to taxpayers. Hitting the rich to cover ill-discipline and past mistakes is a dead end. It sends the wrong message on aspiration. And eventually government will run out of rich people to hit. Then what?