Super tax offer signals the potential for better policy
Jim Chalmers successfully has shifted the narrative on lifting taxes for high-balance superannuation funds and now has a chance to demonstrate he is capable of legislating sensible policy through federal parliament. To get there the federal Treasurer must recognise the overreach at the heart of the proposed superannuation changes and accept the compromise offer put by new opposition Treasury spokesman Ted O’Brien. Those compromises include sensible modifications to remove the additional tax from unrealised capital gains and to index the rate at which the new measures kick in. Both changes improve the policy; guard against unintended consequences on small business, farm families and start-up ventures; and will ensure today’s punitive taxes for the rich don’t become draconian measures for most taxpayers down the track.
Acceptance of the changes by Dr Chalmers would lessen community resistance to the new taxes and send a clear message to the Greens that a template exists in the Senate for the government to achieve better outcomes in other areas as well. These include long-awaited reforms to the Environment Protection and Biodiversity Conservation Act that satisfy the demands of business to cut red and green tape while protecting the environment. The Greens have been obstructionist on the issue, refusing to compromise and ultimately exhausting the political capital of former environment minister Tanya Plibersek.
For Sussan Ley and Mr O’Brien, compromising on tax on high-balance superannuation funds sends a signal that the Coalition is prepared to work in good faith to improve government policy. This is unlikely to be the case with the Greens, who have been triumphant in their claim to hold a sole balance-of-power position in the Senate. Admittedly, the most strident claims were made by former Greens leader Adam Bandt before he lost his seat in parliament. New Greens leader Larissa Waters must figure out her party’s return pathway to relevance.
Mr O’Brien’s offer on amendments to the superannuation tax is distinct from opposition criticism that centres on the way senior government and public service officials on defined benefits schemes will be treated differently to other taxpayers. This is something that applies to Anthony Albanese and other MPs who have been in parliament for a long time, as well as judges and other well-paid personnel. While embarrassing for the Prime Minister, the issues of taxing unrealised capital gains and not indexing the rates at which higher taxes apply are structural problems and of greater significance in their own right.
It is instructive to witness the groundswell in public opposition to the new tax as it becomes better understood; as well as the response being generated to a petition being circulated by funds manager Geoff Wilson, who also led the charge against Labor’s proposed tax assault on franking credits. The tax on unrealised gains will directly affect fewer people but is generating a more intense reaction.
The size of the pushback is confirmation that the Coalition erred in not making more of a deal about the issue during the federal election. Mr O’Brien admits the point and has made some welcome comments about where the Coalition should now position itself on economic matters. He is correct to say there is no better driver of revenue than a more ambitious economic growth agenda. This must include policies that zero in on growing productivity and freeing the economy through less restrictive industrial relations laws, a better approach to energy and tax, and through cutting red and green tape. The government must use the compromise offer on superannuation tax reform to demonstrate it is able to take a bipartisan approach to fixing the nation’s budget position and accelerate private sector economic growth more broadly.
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