‘The new super tax has been designed to excuse long-serving politicians': And it’s causing outrage
- Replies 41
Superannuation has long been a hot-button issue in Australia, but recent developments have sparked fresh outrage.
A controversial change to tax policy is now under scrutiny—not just for who it targets, but for who it appears to protect.
What’s unfolding has fuelled claims of political double standards and left many wondering who really shoulders the burden.
A fresh political firestorm erupted after it was revealed that Prime Minister Anthony Albanese and other long-serving MPs would be ‘shielded’ from a looming superannuation tax reform hitting everyday Australians.
The new tax, set to be debated when Parliament returns in late July, would force Australians with super balances over $3 million to pay tax on unrealised gains each year—even if they have to sell assets just to cover the bill.
Yet politicians benefiting from the old parliamentary pension scheme, including the PM, would only be taxed once they retire and actually receive the funds.
For additional context, only 1 per cent of former politicians and public servants with defined benefit pension schemes will be impacted by Labor’s controversial superannuation changes in the first year. Meanwhile, others who qualify for these generous arrangements, including Anthony Albanese, can delay paying the new taxes until they retire.
Critics described the move as a blatant double standard, with the opposition accusing Labor of crafting rules that protect its own.
Some Liberal MPs still in Parliament, including new leader Sussan Ley who entered politics before the scheme was abolished in 2004, would also benefit from the same delayed tax conditions.
A spokesperson for Treasurer Jim Chalmers attempted to defend the carve-out, but was slammed for delivering what many labelled a confusing justification.
The carve-out allows MPs to defer tax until retirement, with payments calculated using a modest inflation rate aligned with government bonds.
Supporters of the exemption argued it made sense, as parliamentary pensions couldn’t be sold down to pay the tax bill the way other super accounts could.
Without the exemption, figures like the PM would need to liquidate personal assets to settle the yearly tax—an expectation critics said highlighted the broader flaw in the policy.
That flaw—taxing unrealised gains—drew condemnation from economic heavyweights including former Treasury Secretary Ken Henry and former RBA Governor Philip Lowe.
Liberal Senator Andrew Bragg has accused Treasurer Jim Chalmers of crafting superannuation changes that would unfairly exempt Prime Minister Anthony Albanese. Bragg argued that the Treasurer plans to set ‘special arrangements for the Prime Minister’ under Division 296 and called for full transparency in the legislation itself rather than through later regulation.
‘Otherwise, it’s a massive conflict of interest,’ Bragg warned, suggesting that delaying details could allow the Treasurer to manipulate pension arrangements for the PM after the bill passes.
In response, a spokesperson for the Treasurer dismissed the claims, accusing Bragg of ‘lying and misleading again in his desperation to get selected for the Liberal shadow frontbench.’ They emphasised that defined benefit interests, including those of federal MPs, have been publicly covered in the legislation since 2023 and clarified in draft regulations since March 2024.
‘Our modest changes to make superannuation tax concessions fairer and more sustainable apply to defined benefit interests,’ the spokesperson said, adding that only ‘half a per cent of people with more than $3 million in super’ would be affected.
The government also defended its approach as consistent with how the previous Coalition administration handled similar reforms.
Despite growing backlash, Labor insisted it would push forward with the changes.
The threshold for the tax would remain fixed at $3 million, with Chalmers refusing to index it in line with inflation.
This has sparked warnings that while few Australians would be impacted initially, over time the tax net would widen significantly.
Modelling from AMP suggested that by the time Generation Z reached retirement age, about half of them would be liable unless the threshold was adjusted.
Treasury estimated the tax would raise $40 billion over the next decade, with most revenue collected in the later years as more people are caught by the static cap.
Australia Institute chief economist Greg Jericho recently pushed back against claims that many young Australians would be impacted by the proposed $3 million superannuation cap, calling such arguments part of a ‘hyperbolic scare campaign’.
He argued that even under generous assumptions—like an 18-year-old earning the average wage of $106,277, receiving 3.7% annual raises, and working until age 67—their superannuation would only reach $2.1 million.
‘Even if someone works their entire life on the full-time average wage, they will not get $3 million in super,’ Jericho said.
However, critics such as Mr Wilson argue that these calculations ignore key factors like compounding investment returns and rising employer contributions, which are set to increase from 11.5% to 12%.
He contends that super funds typically grow at 8.5% annually, and using more favourable assumptions, a 21-year-old university graduate could amass $3.6 million by retirement. Support for this view comes from AMP’s deputy chief economist and FSC modelling, which suggests that around 500,000 young Australians could eventually breach the cap if it's not indexed to inflation.
Wilson further warns that the tax on unrealised gains could lead to a ‘deadweight loss’ of $94.5 billion and shift $155 billion from superannuation into the housing market, undermining public trust: ‘Effectively they’re destroying the social contract... He feels caged in … what are they going to do to me?’
Women could be disproportionately affected, especially those who inherited super after the death of a partner and found themselves nudged above the $3 million limit.
Some experts called it a ‘widow tax’, warning that many older women would be hit with high tax bills simply for surviving their partners.
‘Critics say the new tax will be particularly tough on women, and some widows who inherit their partner's super savings will suddenly be forced to cough up big tax payments.’
Farmers and property investors were also expected to struggle, as they would be taxed on valuations of assets they couldn’t easily sell or subdivide.
‘If that on paper value goes down in subsequent years too bad, the tax hit doesn’t change.’
Labor would have the numbers to pass the legislation with support from the Greens, who from 1 July held the balance of power in the Senate.
The Greens signalled they might push for the tax to apply at $2 million instead, making the measure even more far-reaching than what Labor proposed during the election campaign.
Despite widespread concerns from economists, the public, and even some within government, Labor showed no signs of backing down.
With super rules shifting and exemptions stirring controversy, do you think politicians should be held to the same tax standards as everyday Australians? Let us know your thoughts in the comments.
A controversial change to tax policy is now under scrutiny—not just for who it targets, but for who it appears to protect.
What’s unfolding has fuelled claims of political double standards and left many wondering who really shoulders the burden.
A fresh political firestorm erupted after it was revealed that Prime Minister Anthony Albanese and other long-serving MPs would be ‘shielded’ from a looming superannuation tax reform hitting everyday Australians.
The new tax, set to be debated when Parliament returns in late July, would force Australians with super balances over $3 million to pay tax on unrealised gains each year—even if they have to sell assets just to cover the bill.
Yet politicians benefiting from the old parliamentary pension scheme, including the PM, would only be taxed once they retire and actually receive the funds.
Albanese spared from new super tax hit. Image source: Instagram/albomp
For additional context, only 1 per cent of former politicians and public servants with defined benefit pension schemes will be impacted by Labor’s controversial superannuation changes in the first year. Meanwhile, others who qualify for these generous arrangements, including Anthony Albanese, can delay paying the new taxes until they retire.
Critics described the move as a blatant double standard, with the opposition accusing Labor of crafting rules that protect its own.
Some Liberal MPs still in Parliament, including new leader Sussan Ley who entered politics before the scheme was abolished in 2004, would also benefit from the same delayed tax conditions.
A spokesperson for Treasurer Jim Chalmers attempted to defend the carve-out, but was slammed for delivering what many labelled a confusing justification.
The carve-out allows MPs to defer tax until retirement, with payments calculated using a modest inflation rate aligned with government bonds.
Supporters of the exemption argued it made sense, as parliamentary pensions couldn’t be sold down to pay the tax bill the way other super accounts could.
Without the exemption, figures like the PM would need to liquidate personal assets to settle the yearly tax—an expectation critics said highlighted the broader flaw in the policy.
That flaw—taxing unrealised gains—drew condemnation from economic heavyweights including former Treasury Secretary Ken Henry and former RBA Governor Philip Lowe.
Liberal Senator Andrew Bragg has accused Treasurer Jim Chalmers of crafting superannuation changes that would unfairly exempt Prime Minister Anthony Albanese. Bragg argued that the Treasurer plans to set ‘special arrangements for the Prime Minister’ under Division 296 and called for full transparency in the legislation itself rather than through later regulation.
‘Otherwise, it’s a massive conflict of interest,’ Bragg warned, suggesting that delaying details could allow the Treasurer to manipulate pension arrangements for the PM after the bill passes.
In response, a spokesperson for the Treasurer dismissed the claims, accusing Bragg of ‘lying and misleading again in his desperation to get selected for the Liberal shadow frontbench.’ They emphasised that defined benefit interests, including those of federal MPs, have been publicly covered in the legislation since 2023 and clarified in draft regulations since March 2024.
‘Our modest changes to make superannuation tax concessions fairer and more sustainable apply to defined benefit interests,’ the spokesperson said, adding that only ‘half a per cent of people with more than $3 million in super’ would be affected.
The government also defended its approach as consistent with how the previous Coalition administration handled similar reforms.
Despite growing backlash, Labor insisted it would push forward with the changes.
The threshold for the tax would remain fixed at $3 million, with Chalmers refusing to index it in line with inflation.
This has sparked warnings that while few Australians would be impacted initially, over time the tax net would widen significantly.
Modelling from AMP suggested that by the time Generation Z reached retirement age, about half of them would be liable unless the threshold was adjusted.
Treasury estimated the tax would raise $40 billion over the next decade, with most revenue collected in the later years as more people are caught by the static cap.
Australia Institute chief economist Greg Jericho recently pushed back against claims that many young Australians would be impacted by the proposed $3 million superannuation cap, calling such arguments part of a ‘hyperbolic scare campaign’.
He argued that even under generous assumptions—like an 18-year-old earning the average wage of $106,277, receiving 3.7% annual raises, and working until age 67—their superannuation would only reach $2.1 million.
‘Even if someone works their entire life on the full-time average wage, they will not get $3 million in super,’ Jericho said.
However, critics such as Mr Wilson argue that these calculations ignore key factors like compounding investment returns and rising employer contributions, which are set to increase from 11.5% to 12%.
He contends that super funds typically grow at 8.5% annually, and using more favourable assumptions, a 21-year-old university graduate could amass $3.6 million by retirement. Support for this view comes from AMP’s deputy chief economist and FSC modelling, which suggests that around 500,000 young Australians could eventually breach the cap if it's not indexed to inflation.
Wilson further warns that the tax on unrealised gains could lead to a ‘deadweight loss’ of $94.5 billion and shift $155 billion from superannuation into the housing market, undermining public trust: ‘Effectively they’re destroying the social contract... He feels caged in … what are they going to do to me?’
Women could be disproportionately affected, especially those who inherited super after the death of a partner and found themselves nudged above the $3 million limit.
Some experts called it a ‘widow tax’, warning that many older women would be hit with high tax bills simply for surviving their partners.
‘Critics say the new tax will be particularly tough on women, and some widows who inherit their partner's super savings will suddenly be forced to cough up big tax payments.’
Farmers and property investors were also expected to struggle, as they would be taxed on valuations of assets they couldn’t easily sell or subdivide.
‘If that on paper value goes down in subsequent years too bad, the tax hit doesn’t change.’
Labor would have the numbers to pass the legislation with support from the Greens, who from 1 July held the balance of power in the Senate.
The Greens signalled they might push for the tax to apply at $2 million instead, making the measure even more far-reaching than what Labor proposed during the election campaign.
Despite widespread concerns from economists, the public, and even some within government, Labor showed no signs of backing down.
With super rules shifting and exemptions stirring controversy, do you think politicians should be held to the same tax standards as everyday Australians? Let us know your thoughts in the comments.
.png){kind=icon}
