Jim Chalmers failed to model superannuation tax hit on more than 500,000 public servants: Peter Dutton

The Coalition has accused Jim Chalmers of failing to model the super tax hit on more than 500,000 public servants and veterans captured under defined benefit schemes.

Treasurer Jim Chalmers has been unable to quantify how many Australians on defined benefit schemes would lose tax concessions from July 1, 2025. Picture: AAP

The Coalition has accused Jim Chalmers of failing to model the government’s super tax hit on more than 500,000 public servants and veterans captured under defined benefit schemes, which are estimated to cost taxpayers ­almost $300bn by 2025-26.

Coalition analysis of commonwealth defined benefit schemes ­reveals more than 212,000 accounts across three closed funds are yet to hit the pension stage, and tens of thousands of current and former bureaucrats and public officials could be stung under the government’s 30 per cent tax on super balances above $3m.

Amid confusion in public sector ranks over the Treasurer’s pledge to broaden the super tax hit to defined benefit schemes, for which Anthony Albanese and Tanya Plibersek are eligible, opposition Treasury spokesman Angus Taylor said the government could not answer “the most basic questions on how this will work”.

Peter Dutton. Picture: Martin Ollman

As splits emerged between the Prime Minister and the Treasurer over future tax policies, Peter Dutton said on Wednesday that if the Coalition won the 2025 federal election he would repeal Labor’s legislated super changes if they pass through the parliament.

The Opposition Leader warned that, because the $3m threshold was not indexed, tens or hundreds of thousands more Australians would be hit by the tax hike over the next decade.

“We’re absolutely dead against it and we will repeal it,” Mr Dutton said. “We’re not going to stand by and watch Australians attacked. The figure of $3m is not indexed so in 10 or 15 years time there will be tens of thousands, if not hundreds of thousands of Australians who will be affected by this.”

After announcing the superannuation changes on Tuesday, which the government says will apply to 80,000 individuals, Dr Chalmers has been unable to quantify how many Australians on defined benefit schemes would lose tax concessions from July 1, 2025. Given the complex nature of defined benefit schemes, Treasury is understood to be crunching numbers on who is eligible and how a “roughly commensurate” scheme could be applied.

Asked by The Australian whether possibly tens of thousands of Australians on defined benefits schemes would be targeted under the government’s super crackdown, Dr Chalmers dodged the question.

“We intend to consult the sector broadly about defined benefit schemes,” the Treasurer said. “We want it in. We want to make this change that we proposed. Our intention is to have it in, there is some complexity here including some legal complexity with judges and the like. We want to make sure that we get around that properly. And that’s why it is actually quite useful to have a policy announced at the end of February to be budgeted for in May – it does allow for some genuine consultation.”

Figures obtained from Commonwealth Superannuation Corporation annual reports reveal that 216,584 customers fall under the Public Sector Superannuation Scheme, which was closed off to new entrants in 2005.

Under the scheme, customers are entitled to convert 50 per cent of their final benefit to a lifetime indexed pension, with remaining balances able to be taken as a lump sum. In 2021-22, the fund paid out $2.65bn in pension payments and $505m in lump sum payments.

Mr Taylor said the Military Superannuation and Benefits Scheme, which closed to new Australian Defence Force customers in 2016, had 181,987 customers with only 14 per cent currently in the pension phase. The fund paid out $1.4bn in pension payments and $323m in lump-sum payments in the last financial year.

The Commonwealth Superannuation Scheme, which closed off to entrants in 1990 and paid out $4.5bn in pension payments in 2022-22, has 102,565 customers.

Mr Taylor said the Albanese government was “completely unclear” on how defined benefits schemes would be treated. “It will affect a lot of people, including veterans and it needs to be resolved as soon as possible,” Mr Taylor said.

Dr Chalmers was earlier forced to rule out raiding capital gains tax exemptions on the family home after putting himself at odds with the Prime Minister.

He repeatedly refused to confirm the government would not broaden its search for savings by hitting other tax concessions, ­despite Mr Albanese declaring his government would not touch CGT exemptions.

Asked multiple times on Wednesday morning whether he would guarantee no hits on CGT discounts, Dr Chalmers said: “I can’t commit future government to changes or otherwise.”

In a separate interview, Mr Albanese said: “We are not going to impact the family home, full stop, exclamation mark. It’s a bad idea because people who save for their home that they live in with their family is something that we have no intention of making any changes there. I have never heard – in all of the meetings that I’ve been to over the years and I’ve been to a few of the Labor Party cabinet, caucus, branch meetings – I’ve never heard anyone raise that as a proposition.”

Dr Chalmers backed up Mr Albanese’s guarantee later in the day and admitted he “should have done that this morning”.

“I’m trying to maintain a focus on what we’re doing, not what we’re not doing,” the Treasurer said. “I am concerned that having provided in the interests of transparency a sense of all of the tax breaks across the budget, and Treasury’s best assessment of how they’re growing, I don’t want to get into the practice of coming before you each day and working through hundreds of billions of dollars of tax concessions and playing the same ‘rule in, rule out’ game. I should have done that when it came to the family home this morning.”

Mr Dutton said it was “unbelievable” Dr Chalmers had earlier refused to rule out touching CGT on the family home, claiming an “internal war” was being waged within Labor. “It’s clearly the case that the Treasurer has a shopping list, a hit list, and most Australian taxpayers are on that hit list … “I don’t know what’s happened with the rushed decision that they’ve made in the last 24 hours, but it seems that there is an internal war going on within the Labor Party … when it comes to taxing Australians,” he said.