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The federal Coalition says it will block any move by the government to change the superannuation system, accusing it of breaking an election promise.
Key points:
- The shadow treasurer says any changes would undermine the super system
- The prime minister insists Labor promised during the election campaign not to make major changes
- Treasurer Jim Chalmers says a responsible government should be open to improving the system
Labor has started a conversation about potential changes to super in a bid to make it more "sustainable" and, in the process, bring billions of dollars back to the budget.
Treasurer Jim Chalmers has been at pains to make clear the government has not made any decisions on changes, but that he is open to hearing from industry and other stakeholders about ways it could be tweaked.
Opposition Leader Peter Dutton told Channel Nine the Coalition would block any changes that did end up in parliament "in the first instance" and said any tweak would be a "broken promise".
In a speech later today Shadow Treasurer Angus Taylor is expected to describe the recent conversation about super as "the new front of the super wars".
"The entire super system is undermined when parties break election promises, particularly when it comes to the tax arrangements on superannuation," he will say.
During the election campaign Anthony Albanese said if elected Labor had "no intention" to make changes to super.
He has since insisted Labor had promised not to make any "major changes" and its focus firstly was to define what superannuation should exist for.
Speaking to the ABC before his speech Mr Taylor said the Coalition would hold the government to its election promise not to make changes to super.
"Flying kites [putting out ideas] and all the things they may want to do on super, whether it is taxing or spending on pet projects, is completely inconsistent with what we heard from the prime minister before the election," he said.
"The other point I would make is that people put money into super over very long periods of time, and you change it with enormous caution, with real caution."
Labor not trying to 'revolutionise' super
While nothing has been ruled in or out, Mr Chalmers has raised his concerns about the lost revenue of super tax concessions.
Under the current scheme super contributions — made by your employer or by you — are taxed at a lower rate than the personal income tax rate.
That means people who make extra contributions to their super both boost their retirement savings and reduce the amount of personal income tax they have to pay.
Speaking to Nine Radio on Wednesday he said the government was up for a conversation about whether tax concessions were the best use of government money when they were going to those with millions in their accounts.
"What we have to accept at the same time is the average super balance is about $150,000," he said.
"Less than one per cent of people have got more than $3 million in their super [and] the average amount that people have when they've got more than $3 million is $5.8 million.
"I'm not taking shots at anybody with lots of money, good on them. Genuinely. I genuinely want more people to be successful. The question really for us is, can we continue to pay big tax concessions when you weigh that up against some of the other things that I want to fund in the Budget?"
But Mr Chalmers made it clear the government did not intend to overhaul or make major changes to the system.
"We're not trying to kind of revolutionise the system. We believe in the system. We think it's a good system overall," the treasurer said.
"But if it requires some kind of tweaks to make sure that we can afford it in the longer term, then I think as a responsible treasurer, then I need to be open to that."
Assistant Treasurer Stephen Jones said if the objective of superannuation was for retirement, it raised questions about why some accounts had hundreds of millions of dollars in them.
"It beggars belief to say a superannuation fund with say $100 million or more, and there are some with more, is about retirement income," he said.
"C'mon it's not, it's about tax minimisation, it's about estate management or something else, c'mon fair go."
According to a pre-budget submission by the Association of Superannuation Funds of Australia Limited (ASFA), if a $5 million cap on superannuation was put in place it could save about $1.5 billion in tax concessions.
According to Treasury figures as at June 2020, there are approximately 12,000 people with superannuation balances above $5 million.