BROKING BREAKDOWN GOVERNMENT SET FOR SUPER OVERHAUL

When then Labor Prime Minister Paul Keating (pictured below) was facing electoral defeat in 1996, he famously said: “When you change the government, you change the country”. Now back in power after claiming government almost 10 months ago, Labor under Anthony Albanese looks to be following that catch cry.

Determined to bring an Indigenous Voice to federal parliament and do more to tackle climate change, the Albanese government now has its sights set on making changes to Australia’s superannuation system in the May budget.

Federal Treasurer Jim Chalmers has said the $50 billion annual cost of tax breaks for superannuation is not “sustainable” and he wants to “elevate and broaden” the powerful sector’s role in the economy.

He has hinted the government is looking at a $3 million cap on super funds, with any super above the cap taxed at traditional rates. This change would affect around 36,000 “wealthy” people.

But Labor’s plan to legislate a purpose for superannuation and deploy the $3.3 trillion in savings for nation building has been criticised by former banker David Murray, who said it is “not the place of the government” to decide investments. The Coalition Opposition is positioning for a major political fight with

Labor over the future and purpose of superannuation.

Financial commentator Peter Switzer said other changes to super by Labor could include limiting salary sacrifice or taxing salary sacrifice contributions at a higher rate plus laws to limit early access to super.

Interestingly, Treasurer Chalmers is a protégé of former Deputy Prime Minister Wayne Swan, a Treasurer in the Rudd and Gillard governments who is now chair of leading industry superannuation fund Cbus.

Swan has defended super funds examining new areas of investment such as renewable energy projects, emerging high-tech manufacturing, medical research and affordable housing.

“Why wouldn’t they?” he said in the New Daily

“These sectors of the economy are where millions of Australians gain employment and profit. They are the modern economy. If funds invest in them, it is because they offer sound investments that promise favourable returns. It is that simple.”

We are certainly in for an interesting few months when it comes to super, and there’s no doubt it’ll be a hot debate heading into the budget in May.

You can rest assured we will keep you up to date in this column.