Anthony Albanese’s office sought Treasury briefing on super tax backlash
The revelation in Senate estimates is likely to fuel speculation that Anthony Albanese has grown uneasy with what has become an increasingly politically sensitive proposal.
Anthony Albanese’s office sought a briefing from Treasury on the government’s plan to tax unrealised capital gains on superannuation accounts after the policy received a backlash from stakeholders.
More than two years after the unlegislated measure was announced, the Prime Minister’s office demanded to know how the criticism – marked by more than 20,000 petition protest signatures in the seven weeks following the election – might change the policy.
The revelation came after Treasury revealed last month that the new tax could be hit with a legal challenge and that policy considerations around large superannuation balances “remain under active development by government”.
Appearing before Senate estimates on Thursday, the head of Treasury’s revenue group, Diane Brown, said the department had provided advice to the government regarding changes to Labor’s planned tax following the opposition.
“Stakeholders have raised concerns with us,” Dr Brown told senators. “In order for us to understand it better, we might have done some modelling, and that is for us to provide good advice to government.”
In February 2023, Dr Chalmers announced a doubling of the existing 15 per cent tax on the annual returns from superannuation savings above $3m, including unrealised gains on assets held inside super funds.
Prominent economists and businesspeople have aired their concerns publicly on the new tax from former trade union boss Bill Kelty, former Treasury secretary Ken Henry and former Reserve Bank governor Philip Lowe.
The Australian revealed that, during the last term of parliament, a key minister had sought a carve-out for farmers and small business owners who were concerned that taxing unrealised capital gains would create cashflow problems and perversely did not rebate for losses.
Dr Brown revealed that the Prime Minister’s office had specifically requested a briefing on stakeholder criticism of the tax, which centred on the measure’s treatment of unrealised gains and the decision not to index the $3m threshold.
Downplaying the significance of the conversation, Dr Brown said it was “not unusual” for Mr Albanese’s office to request meetings “from time to time”. She refused to provide details of the conversations, claiming that doing so would diminish her ability to provide further advice.
While the Treasurer has been leading the policy’s development, the testimony is likely to fuel speculation that Mr Albanese has grown uneasy with what has become an increasingly politically sensitive proposal.
A spokesman for Mr Albanese declined to say why his office had requested a briefing from Treasury, and not Dr Chalmers’ office, which sought to portray the meeting as a regular occurence.
“As the officials made clear, when stakeholders inside and outside the parliament put views to us it’s not unusual for the Treasurer to seek Treasury advice on them, and nor is it unusual to facilitate joint briefings with other officers from time to time,” a spokesman for Dr Chalmers said.
Dr Brown and fellow Treasury official Brendan McKenna, who was appearing alongside her, also told the hearing that the department had examined how the new tax would affect self-managed superannuation funds’ investments in property and venture capital.
Both sectors, the Treasury officials concluded, had only a “very small” share of the overall SMSF savings pool.
Greens senator Nick McKim asked whether Treasury was preparing any amendments to the new tax, but Dr Brown said there had been “no decision to amend the bill”.
Pressed further if Treasury had modelled how amendments to the bill would impact the revenue it was expected to raise – which amounted to $2.3bn in its first year – Dr Brown flagged that it had.
“It’s reasonable, and wouldn’t be surprising, for us to want to understand concerns that people have raised, and as part of that, we may have looked at what might be the impact on revenue as a result of a suggestion or comment,” she said.
The revelation that changes to the tax are being considered come despite Dr Chalmers’ assurances that it would push ahead with the tax as planned after Labor’s thumping election win in May.
However, he has yet to hold discussions with Senator McKim, whose support is crucial to pass the reform through the upper house. Senator McKim has indicated he wants the threshold reduced to $2m and indexed.
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