Budget repair ‘Labor’s priority’

Jim Chalmers has ruled out reinvesting billions of dollars from clamping down on the largest superannuation balances to fix inequities in the sector.

Treasurer Jim Chalmers in Canberra on Tuesday. Picture: NCA NewsWire / Martin Ollman

Jim Chalmers has ruled out reinvesting billions of dollars from clamping down on the largest superannuation balances to fix inequities in the sector, as the ­Albanese government faces calls to fund rent assistance for retirees rather than super on paid parental leave.

The Treasurer and Anthony Albanese have announced the government will double the concessional tax rate from 15 per cent to 30 per cent applied to super balances with $3m or more in savings from July 1, 2025.

They expect the reform, which they labelled a “modest change”, will raise $2bn in revenue in its first full year.

While Industry Super Australia chair Greg Combet suggested the revenue could be ploughed back into super to support women and people on low incomes, as revealed in The Australian, Dr Chalmers said it would be used to improve the structural position of the budget.

“We see this as an important investment in responsible economic management. This is a common sense change that will improve the budget over time,” the Treasurer said.

“Separately, we have said for some time – since before the election, after the election, I said it last Monday in a speech to the superannuation sector – now when we can afford it, we would like to pay superannuation guarantee on paid parental leave.

“But this change that we‘re proposing today is not about redirecting it to another purpose. It’s about improving the structural position of a budget, a budget that we inherited with a trillion dollars of debt and deficits as far as the eye can see.”

Grattan Institute economic policy program director Brendan Coates said in a perfect world the government would pay super for women receiving the commonwealth’s PPL payments but, given the state of the budget, there were more urgent priorities like rent assistance.

“The biggest problems in the retirement income system are things like rent assistance. Half of retired renters today live in poverty,” Mr Coates said.

“Beyond budget repair, which is important, if there are additional funds available from taxing high balances more we should be using them to raise the rate of rent assistance as the No.1 priority.

“Paying super contributions on PPL does very little to boost the retirement incomes of low- and middle-income earners. It most benefits the wealthiest 20 per cent of Australians who don’t qualify for the pension.”

Opposition assistant Treasury spokesman Stuart Robert said the No.1 issue facing women in retirement, and particularly women who have separated from their partner, was housing.

“Owning your own home in retirement will allow you a dignified and sustainable retirement. Under Labor’s policy, your super fund – such as the ones Mr Combet represents – can own your home and rent it back to you. How is that dignified?” he said.

“If Mr Combet was serious about fairness, dignity and ­sustainability in retirement for Australians he should support the Coalition’s policy to release part of super so Australians can get a roof over their head that they own, not Mr Combet’s super funds.”