One in 10 people retiring in 30 years will have a super balance above $3m and could eventually be impacted by Labor’s proposal for less generous tax concessions, the government has revealed.
The finance minister, Katy Gallagher, revealed the long-term treasury estimate in Senate question time, prompting outrage from the Coalition that the government has misrepresented the impact of the measure.
On Monday Newspoll showed almost two-thirds of voters support Labor’s super tax changes, prompting calls from crossbench senators Jacqui Lambie and David Pocock for the government to go further in reducing concessions and tax cuts for the wealthy.
Rising costs of living including capital city rents and an expected 10th consecutive rate rise at Tuesday’s meeting of the Reserve Bank have sharpened the focus on cost of living as parliament resumes on Monday.
The Albanese government has delayed the start of less generous super concessions on balances of $3m or more until July 2025, and argued that only 0.5% of account holders, or 80,000 people, will be affected.
Under the proposed super changes, a 30% tax will be charged on earnings from balances above $3m, up from 15%.
Gallagher told the Senate that “in 30 years the Treasury predicts roughly only the top 10% of earners will retire with super balances of $3m or more”.
Gallagher said that many thresholds in the tax system “are not indexed” to inflation, including the level at which the 30% tax on super contributions kicks in, which the Coalition lowered when last in government.
“This is a modest change that will affect 0.5% of account holders and of the 80,000 the average super balance is $5.8m.”
Nationals senator Matt Canavan told the Senate that the government had hidden the “secret modelling” when announcing the change last week, arguing the claim of only 0.5% affected was a “lie”.
Gallagher said that the Association of Superannuation Funds of Australia estimated that $545,000 was needed for a “comfortable” retirement for a single and $640,000 for a couple. “$3m is more than sufficient for most people for many years to come.”
The treasurer, Jim Chalmers, told the House of Representatives that by 2030 “around 1%” of people would be affected and confirmed that “in 30 years, one in 10 people will be impacted by it”.
“This is the number that the shadow treasurer thinks is some kind of stunning insight,” Chalmers said.
In question time the Liberal leader, Peter Dutton, questioned how this would impact a 37-year-old worker. The prime minister, Anthony Albanese, responded that the Coalition’s changes to super when last in office hit 4% of account holders, raised $5bn and were also not indexed.
According to the Newspoll, 64% of voters approve of Labor’s proposed super changes, some 29% disapprove and 7% were unsure.
The measure received the support of 80% of Labor voters and 79% of Greens voters. Even a majority (54%) of Coalition voters supported the proposed change, which the opposition has vowed to block or repeal.
On Monday morning, Pocock said the super change was “modest” because people “who have millions of dollars” of super will still only pay 30% tax on earnings, a concessional rate.
“It’s blowing up into this huge political fight,” Pocock told reporters in Canberra. “It’s part of the reason why we’re not seeing things like stage three or negative gearing or capital gains discount for investment properties up for discussion.
“My sense is there is a growing frustration amongst Australians that they are being asked to make tough budget decisions and yet the federal government, we’re not having those discussions.”
Pocock said “the majority of the crossbench has been pushing” since the election for reconsideration of the stage three tax cuts, which start at $45,000 but deliver the highest benefit to high income earners.
On Saturday the Greens announced they will push instead of changes to balances over $3m they will push to eliminate all tax concessions for accounts with more than $1.9m in part to fund a doubling of commonwealth rent assistance.
Pocock said he agreed “in principle” with winding super tax concessions back even further.
Lambie told Sky News that stage three tax cuts could “be tapered so those people sitting around that $120,000 mark could still get their tax cut”.
“It’s the ones that go up above $150,000, $160,000 I guess, do they actually need a tax cut? That’s what we need to debate.
“Going up any further, to $160,000, $180,000 – we’re just not in the right economic climate to be giving away freebies.”
Asked about the super change, Lambie said people with $3m had enough in super, and would “be older and cashing in on that in the next 10 years”.
“We’re only looking at anything over that $3m that you’ll be taxed, that you won’t be getting that extra tax [concession] for. I really don’t have a problem with that, neither do millions of other Australians out there.”
The leader of the house, Tony Burke, said the Newspoll results “matches what we’re getting in the community” and people accepted it was a “sensible, calm” response to budget deficits.
“People understand that a trillion dollars of Liberal debt doesn’t look after itself,” he told Radio National.
Burke said Labor’s position on stage three tax cuts had not changed.
Earlier, the Nationals leader, David Littleproud, told Sky News that “aspirational young Australians … starting their journey into superannuation” would be “the ones that are going to feel the pain on this”, with further “unintended consequences” in the agricultural sector, where some farmers hold their property in self-managed super funds.
This story was amended on 6 March 2023 to clarify that it relates to people retiring in 30 years rather than all people.
