Monique Ryan (Kooyong, Independent) Share this | Hansard source

Australians are proud of our superannuation system. As a nation, we have one of the most sophisticated and modernised retirement income safeguards in the world, a system designed to guarantee dignity for older Australians. Generations of Australians will finish their working lives knowing that they are financially secure because of their superannuation. Our system is not only strong; it is also robust and sustainable. Despite projections that the number of Australians aged 65 and over will double in the 2060s, the value and size of our superannuation pool means that the percentage of Australians receiving the age pension will continue to decline.

When the Keating Labor government legislated our system of compulsory superannuation in 1992, it did so in the country's best interests, with a focus on fairness, sustainability and equity. In 2024, we legislated to enshrine those values. We affirmed in this place that the objective of superannuation is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way. In 2026. I'm pleased to see the Albanese government listening to the crossbench calls over several years now to ensure that these super reforms maintain that focus on equity and sustainability.

The bills before the House, the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026 and the Superannuation (Building a Stronger and Fairer Super System) Imposition Bill 2026, will make two significant changes to the tax treatment of superannuation. The first will adjust tax thresholds on realised superannuation earnings. The second will ensure that people in the lowest income tax brackets receive a genuine tax concession on their super contributions.

When these measures were first brought to the House in 2023, they provided for the taxation of unrealised superannuation earnings for balances exceeding $3 million. It was my belief that that legislation in 2023, had it passed, would have represented a policy failure. In 2024, I supported an amendment to that legislation to prevent the taxation of unrealised capital gains, and I noted then that the government's changes would have been a departure from the traditional capital gains treatment in this and other OECD nations in which taxation applies only on realisation. I warned then of the potentially chilling effect of those changes, about which I'd heard from a number of constituents, on small businesses, on farmers and on venture capital funds.

Australians need and deserve certainty in their financial decision making. They invest in superannuation in good faith, believing that it is the best investment vehicle for their long-term savings. That certainty would have been threatened by the legislation that we saw in 2023. I was also concerned then that the initial legislation didn't provide for indexation of the $3 million threshold at which balances would be subject to the 15 per cent tax. It was my belief that this policy would have unfairly impacted young Australians when their balances eventually exceed $3 million, which seems like a fantastic sum to many now, but it won't in 20 or 30 years time. So I'm really glad to see the government heed calls from the crossbench and from many in our communities to ensure that reforms to our superannuation system are generally fair and generally targeted.

These bills will reduce tax concessions for individuals with total superannuation balances above $3 million. From the 2026-27 income tax year onwards, the concessional tax rates will be an additional 15 per cent on the proportion of realised earnings accrued between $3 million and $10 million and an additional 25 per cent for the proportion of realised earnings accrued above $10 million. Those are still—let's face it—concessional tax rates. Our super tax concessions still go well beyond what is required for a dignified retirement. These bills will result in only modest decreases in the concessionality of superannuation. It will still remain a tax-efficient vehicle for retirement. By the government's projections, these bills will impact fewer than 0.5 per cent of Australians with superannuation accounts in the 2026-27 financial year. The rates on balances above $10 million will affect less than 0.1 per cent of Australians with superannuation accounts. Together, it's projected that, for the moment, these changes will affect only about 90,000 Australians. For that small proportion of Australians who are impacted by these new settings, the financial impact is limited. A person with a $3.2 million balance, with $125,000 in realised investment income, will only pay an additional $1,171 in tax. This increase does seem fair and appropriate.

The second change brought about by this legislation also promotes greater fairness in superannuation. The LISTO is a government payment that offsets the 15 per cent tax on concessional contributions to super for eligible low-income earners. It ensures that those in the lowest income tax brackets still receive a genuine tax concession on super. The LISTO is effectively about fairness. It's particularly fair for those people earning less than $18,200, who are not liable to pay tax on their wages but who would otherwise be required to pay 15 per cent tax on contributions to super. Currently, to be eligible for the LISTO, individuals must have a taxable income of $37,000 or less. The Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026 will expand LISTO eligibility to the upper threshold of the second-lowest tax bracket, meaning that Australians earning up to $45,000 will receive genuine tax concessions on their super. This change is predicted to improve outcomes for approximately 770,000 people who were previously not eligible for the payment. That's actually one in 20 Australian workers.

The bill makes sensible changes to the maximum LISTO payment as well. Currently capped at $500, many eligible recipients of the LISTO reach that maximum refund. The maximum LISTO will now be linked to the super guarantee so that tax paid on concessional contributions is offset for eligible low-income earners. Together, these changes will increase government payments for about 1.3 million people on the lowest wages. It's estimated that 35-year-olds on lower wages earning $44,000 will be about $51,000 better off in retirement because of these policy changes, and, for those individuals, these changes will be life-changing.

Together, these bills improve the overall fairness and sustainability of Australia's superannuation tax settings. They make our system more equitable, more targeted and more aligned with the legislated purpose of our superannuation system. But it would be a mistake to pretend that our work on intergenerational tax inequity is complete with this bill. Young Australians are still facing unprecedented economic barriers, from housing affordability to insecure work, to slow wage growth and to the rising costs of education and health care.

Our tax system continues to entrench these inequities. It delivers disproportionate concessions to already wealthy Australians, while younger Australians are struggling to build financial security. The reality is that intergenerational inequity remains baked into our tax system. Reforming superannuation tax settings is an important step, but it's only a first step. A broader review of tax concessions across the system, including negative gearing, capital gains and the distributional impacts of various offsets and deductions, remains essential to ensuring a genuinely fair and modern tax system.

The discounting of the capital gains tax in 1999 marked the beginning of the time when house prices really began to soar in relation to income in Australia. That tax discount is now projected to cost the budget $247 billion in foregone revenue over the coming 10 years. The top one per cent of taxpayers will receive nearly 60 per cent of this benefit this financial year. While the horse might have bolted in terms of slowing the increase in house prices, the capital gains tax discount has been demonstrably too generous. It has driven inequity, distorted our housing system and demonstrated poor value for money in terms of growing housing supply. That's why I'm actively consulting with my community in Kooyong on these broader tax issues.

In recent decades, productivity has flatlined and the improvement in living standards that we've come to expect each successive generation to enjoy has stalled. While older Australians have benefited from more generous tax settings on property and superannuation, those who are dependent on income have faced an increasing tax burden exacerbated by the bracket creep that confiscates a higher amount of their largely static incomes. Young Australians are finding it almost impossible to get into the housing market unless they benefit from intergenerational wealth transfer—effectively, help from the bank of mum and dad—and those who are paying tax on work rather than on wealth are bearing too much of the burden for federal spending on programs like AUKUS, the NDIS and other parts of the care economy that will soon reach 27 per cent of GDP.

The government has foreshadowed possible changes to the capital gains tax discount in the May budget. Winding back capital gains tax exemptions and capping negative gearing would go some small way towards addressing intergenerational inequity in our tax system, but these changes have to be part of a more ambitious tax agenda. We need to reform the personal tax system to decrease tax reliance on wages and salaries. We should improve taxation of businesses to promote investment. We should talk about the GST and how it is distributed, and we should charge those responsible for climate change instead of subsidising polluting industries with fuel rebates and failing to adequately tax our oil and gas exports.

This government spends five times more subsidising the diesel fuel tax credit than it gets from taxing gas exports. It collects more money from students paying HECS than it does from gas companies paying the petroleum resource rent tax. The government collects more from taxing beer and from taxing cigarettes than it does from taxing our gas exports—that is confounding. It is robbing Australians of their futures while it is rewarding multinationals by giving away our finite natural resources.

We have to do a whole lot more to urgently address intergenerational inequity. These superannuation changes go some small way towards that, so I support them, but they're very small steps on a very long road. There's a whole lot more that we need to do to reshape our economy for the next generation. In the meanwhile, I commend the bill to the House.

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