Kate Chaney (Curtin, Independent) Share this | Hansard source

I rise to speak on 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. When I spoke on these bills previously, I said that I supported their intent—to ensure our superannuation system is designed for people to prepare for a dignified retirement, not as a tax break for the super wealthy. I also raised three key concerns from my community that prevented me from supporting the bills at that time.

The bills didn't pass through the Senate in the last parliament and have come back now with some amendments, and I'm pleased that the government has now acted on all three of the concerns that I raised last time. The government has ensured that tax will only be applied to realised gains, has committed to indexing the new thresholds and has delayed the implementation date, although I note that this remains an area of some concern. With these changes, I'm satisfied that the bills now meet the intent in a targeted and fair way and, as such, I will be supporting them.

Firstly, I will speak on the intent of the bills. Tax concessions exist in superannuation to compensate people for putting their hard-earned income away for their future. In recognition of this, super contributions are taxed at 15 per cent, significantly lower than income tax rates, which range from 16 per cent up to 45 per cent. But some very wealthy individuals already have far more in super than they need for even the most luxurious retirement and yet they continue to receive the same concessional 15 per cent tax rate.

The purpose of super concessions is to support hardworking Australians saving for their future, not to subsidise wealth accumulation for those who are already extraordinarily well off. Every tax concession costs the budget, and therefore the Australian people, through reduced government services or higher taxes elsewhere. We have a responsibility to ensure that these concessions are appropriately targeted. This bill reduces tax concessions for those with significant super balances. For every dollar contributed to super, up to $3 million, the concessional 15 per cent tax rate will continue to apply. Above $3 million, contributions will be taxed at 30 per cent—still well below the top income tax rate of 45 per cent but less of a concession than before.

The bill also introduces a $10 million threshold. Contributions above $10 million will attract a 40 per cent tax rate. Again, this remains concessional. Only 0.5 per cent of Australians have more than $3 million in super. Just 8,000 Australians hold more than $10 million. These are extremely high balances. In the wealthiest suburbs of my own relatively wealthy electorate, Cottesloe and Peppermint Grove, the average super balance is just over $500,000, which is still only a sixth of the new $3 million threshold. It's entirely reasonable to expect individuals with very large super balances to receive lower concessions.

When these bills were first introduced, I had significant concerns. The most pressing was the proposal to tax unrealised gains. This was poor tax policy, and a number of my constituents were strongly opposed to it. Taxing people on hypothetical profits before an asset is sold could result in large tax bills in years where asset values spike, even if those values fall later and the actual realised profit is far lower. I'm glad the government listened to the widespread concerns expressed across the community, industry and parliament, including my own concerns, which I expressed in letters, in person and in public. Under the revised bill, only realised gains will be taxed, resolving this issue.

I also advocated for indexing the $3 million threshold. Without indexation, inflation would slowly push more and more Australians above this threshold, even though their real wealth had not increased. One analysis suggested that, without indexation, today's $3 million threshold would effectively become $1 million in real terms for a 30-year-old worker by the time they reach retirement. Indexing this threshold, as well as the new $10 million threshold, is good tax policy and ensures the reform remains squarely focused on the very wealthy. It's worth pointing out here that income tax thresholds should also be indexed. The refusal by both major parties to do so is a farcical example of political game playing, where periodic tax cuts are used to earn popularity, instead of simply indexing tax brackets to prevent bracket creep once and for all.

The third concern I raised was the transition period. People make long-term financial decisions based on the rules that exist at the time, and superannuation, by design, locks up people's own money. We must be extremely cautious about making changes without giving people enough time to rearrange their affairs accordingly. The new bill delays commencement by a year to the 2027 financial year beginning on 1 July 2026. This is an improvement. It still gives only a few months to people to restructure their super if they believe the new settings no longer suit their circumstances and that another structure would be more efficient and appropriate for them.

The bill also includes other changes that I support. The introduction of the new $10 million threshold with a 40 per cent tax rate above that level is reasonable and well targeted, particularly considering that it still remains concessional. The bill unfreezes the low-income super tax offset, or the LISTO, for the first time in 13 years. LISTO ensures low-income workers are not paying more tax on their super contributions than they do on their take-home income. At present, a cleaner earning $42,000 a year receives only a one per cent tax concession on their super, while a senior manager earning $220,000 enjoys a 30 per cent concession. This is clearly inequitable.

Previously, workers earning below $37,000 could receive a LISTO payment of up to $500. This bill increases the eligibility threshold to $45,000 and lifts the payment to up to $810. This is meaningful support for 1.3 million of Australia's lowest paid workers, most of whom are women, so it will also help narrow the gender super gap. The bill also pegs LISTO to the second tax bracket and the super guarantee rate, ensuring it adjusts automatically over time.

It's good to see the government responding constructively to feedback. I commend the Treasurer. This is not a backdown but genuine engagement with community concern.

I want to thank all the constituents who engaged with me on this issue, both in the last parliament and in this one. Superannuation is a vital part of Australia's financial system. It's important that when we make changes we get them right, and I believe we've done that here after some ups and downs. While it would have been better to deal with these issues in an exposure draft, we got there in the end. The government put forward reform, the community and parliament provided thoughtful and reasonable feedback, and the government eventually acted on that feedback to improve the legislation. I commend the bills to the House.

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