Ben Small (Forrest, Liberal Party) Share this | Hansard source

The one word missing from this debate is 'sorry'. The Treasurer should be saying sorry to the Australian people, particularly those aspirational Australians who believe in reward for effort and the incentive to strive in this country. Ultimately, we're only here today with a massive policy backtrack from this government because of sustained pressure, led by the coalition and backed in by everyday Australians across this country, to force this Labor government to abandon the taxation of unrealised gains, leading to the indexation of the new proposed threshold, which was a sorry absence from the previous proposal.

It would seem that the government has been found out by everyday Australians. For all of their talk about lower taxes and people keeping more of what they earn, this was a sneaky and devious taxation proposal that would have left Australians poorer, particularly everyday Australians, who ultimately would have been caught by the $3 million threshold in the absence of indexation. Thanks to sustained scrutiny from the coalition, from the superannuation sector itself, from small-business owners—including the farmers from my electorate—and from everyday Australians, Labor have been forced to step back from the most outrageous proposals of this particular policy.

But, let's face it, it is still an unashamed tax grab by a government that is addicted to spending. It was a proposal that was aimed not just at hurting retirees, but at ultimately stealing from future generations—younger Australians—without their knowledge or understanding, because, at the end of the day, things like the indexation of taxation thresholds aren't front of mind for young Aussies, for whom the dream of homeownership in this country has become something of a nightmare.

Having exposed a clear breakdown in the relationship between the Prime Minister and his Treasurer, the original design to tax unrealised capital gains for the very first time in this country—which represented a fundamental break with the longstanding conventions of our tax system in this country—has seemingly been thrown in the bin. Australians have always understood that a fair go, a fair deal with the government, would be that tax is paid when you've got income being realised. If you've got cash in your pocket, it's fair for the government to grab a share of it.

To propose taxing paper gains, particularly in volatile asset classes, wasn't just a minor tweak; this was the abolition of a cornerstone of the taxation system in Australia. We in the coalition believed it was a dangerous precedent, because it was a structural shift that would have led to people in Australia facing massive tax bills without the cash in their pocket to pay them. There's no better example of this than the farmers in my electorate, who are, at the end of the day, small businesses, and who, for a variety of reasons and reflecting the longstanding principles of the superannuation system, have put family assets like the farm into self-managed super funds.

These aren't massively lucrative businesses operating on massive margins, particularly when you look at the pressures in the dairy sector for which the South West of WA is renowned. These are small family businesses who would have faced tax bills in the hundreds of thousands of dollars just because a paper valuation on the family farm had gone up. There's no extra money in the kitty to pay for it, and that's what was so dangerous about this proposal.

The fact that the original $3 million threshold wasn't indexed ultimately led to a situation where everyday Australians earning an average income would have eventually been tangled in this tax—no more so than in the inflationary environment that we see today, which has been made worse by the Treasurer's failure to control spending and indeed his willingness to pour debt petrol on the inflation fire that is raging in this country. Over time, more and more Australians would have been caught, not because they were wealthier in real terms but because inflation simply would have eroded the real value of the threshold.

It's effectively bracket creep by design, the so-called thief in the night given free rein in our community by the Treasurer of Australia. It wasn't just flawed policy; it was a sneaky trick to take more of your hard earned savings, all the while talking about being a government committed to lower taxes and Australians keeping more of what they earned. The government's backdown demonstrates one thing very clearly—that this was never settled policy based on sound principle; rather, it was a blatant tax grab that, when exposed, collapsed under the weight of public scrutiny in Australia.

At the last election, Australians were not presented with a policy to tax unrealised gains in superannuation. They were not told that the longstanding superannuation settings in this country would be fundamentally altered, and they were not warned that indexation would be stripped away. Promises should matter in a democracy like Australia. Major structural tax changes should be put clearly and transparently to the Australian people. Instead, this was a proposal out of left field by a government that has simply run out of money.

With limited consultation and a rushed legislative timetable, it is fortunate that the debate has resonated so strongly with Australians, who instinctively understand when something just isn't fair. When it comes to retirement savings in Australia, the nest eggs that are built over decades of hard work should be sacrosanct, and the bar for legitimate debate should be even higher than normal. Instead, we've seen a government that simply can't be trusted with the hard earned savings of Australians. The Treasurer, addicted to spending as he is, found himself without money. We always know what happens when Labor run out of money; they come after yours.

We were told by this government that they were going to make life easier for families, for young Australians and for those who want to work hard to get ahead. Life has been harder under the Albanese government, and everyday Australians know that—whether they're paying the mortgage, paying the bills, simply leaving the supermarket or opening their power bills after a long hot summer—because they feel poorer. Their real standards of living are declining. The cost of living is rising, and the only thing that isn't is their real wages. The fact of the matter is that inflation is high. Interest rates are high because inflation and government spending are out of control. The government has been beaten by inflation in the economy.

Perhaps most startling of all was that there were Labor voices against this proposal, and they varied. The ACTU's Sally McManus warned:

I do think it's got to be indexed because you've got to make sure eventually people don't end up there—

meaning, of course, those everyday Australians on ordinary wages who would have fallen victim to a $3 million threshold, had that not been indexed. The ACTU's former secretary Bill Kelty said:

I think taxing unrealised capital gains is bad policy. It distorts the effective tax, changes your income flows, and if it was on superannuation generally, there would be a revolution about it. It would destroy super.

It seems that the government has finally listened to some of its own critics, and that is a pleasing result. But, at the end of the day, it doesn't belie the fact that they have a spending problem, not a revenue problem.

There's a structural spending growth in our country that is outpacing sustainable economic growth. Indeed, with the economy stuck in first gear because of regulation, high inflation, high interest rates and the red tape that is crippling private business investment in our country, the reality is that the government is spending beyond its means and so it is reaching for new taxes to fill the gap. The Liberal Party and the National Party are committed, in coalition, to always be the parties of lower taxes. That means we're not supporting this blatant tax grab. Rather than confronting waste, prioritising programs and restoring fiscal discipline, Labor's simply on the hunt for new pools of your money to spend.

As I said, trust is fundamental in tax reform in our country. I think there are many across the chamber who recognise that we should have robust debate about taxation reform in Australia. But, it should be principled, predictable and based on broad consultation. It should be about enabling better economic growth in our country, rather than simply grabbing more of the hard-earned money of Australians and spending it as the government does. Ordinary Australians don't accept retrospective tinkering, ad hoc changes and ideological experiments dressed up as modest adjustments. Indeed, this proposal is simply emblematic of a broader pattern: higher spending first and then new taxes to pay for it later. It's not reform; it's just fiscal mismanagement.

When we consider the additional risks in this new proposal beyond the headline rate and the threshold changes, the legislation introduces serious structural risks. The removal of the effective death tax exemption creates uncertainty for families in Australia at precisely the moment they are most vulnerable. In their darkest hours of grief, surviving spouses who rely on the superannuation balances of a partner to maintain stability after a death in the family shouldn't face additional tax complexity and reduced security.

Total and permanent disability benefit recipients are another cohort whose needs need to be considered carefully. These are Australians who, through no fault of their own, are no longer able to work. Their superannuation is not an abstract investment vehicle or some piggybank to be raided by the government. It is a lifeline. Any change that introduces volatility, reduces predictability or complicates access to those funds carries real and devastating consequences for those individuals.

The reality is that tax policy can't be designed in isolation from the lived reality of those Australians it impacts. When Australians' retirement income settings are destabilised, confidence in the superannuation system overall is eroded. The government's pointed to increases in the low-income superannuation tax offset, the LISTO, as evidence of balance in its proposal. Indeed, any measure that supports low-income earners building their retirement savings is welcomed by the coalition. But we have to be honest about the scale and the timing. The LISTO adjustments, while positive at the margin, do not put money back into household budgets today. Ultimately, from the power of compounding, we understand that Australians who are able to invest today will do better in the decades ahead, and they do not have the ability to do so while grocery bills, power bills and their mortgages are going through the roof.

Australians are facing immediate cost-of-living pressures because inflation is running rampant in this country. A future offset adjustment to super does little to relieve those stressors now and it reduces the ability of Australian families to set themselves up for a prosperous retirement. If the government is serious about helping Australian households, it needs to tackle inflation at its source today. Excessive spending and weak economic growth in Australia are the priorities for economic reform, rather than reshuffling offsets within the retirement income system.

This leaves us looking at a situation where this might well be the beginning of Labor's high-tax, high-spending agenda, where the money is spent first and then they come hunting for the tax grab afterwards.

We can't view this proposal in isolation. It is simply about this government spending more and pouring debt petrol on the inflation fire that is raging in our country. Let's not misunderstand—this is a fire that has been burning out of control since long before the recent events in the Middle East caused further concern with spiking energy prices and the likely impacts on the economy here in Australia. We'll see when the national accounts come out later today, but Australians have very real cause to be uneasy.

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