Tom Venning (Grey, Liberal Party) Share this | Link to this | Hansard source

I rise today to speak on a matter that cuts to the very core of this government's character, its competence and its fundamental lack of respect for the hardworking people of Australia. What we are witnessing in this chamber, and what the Australian public is watching unfold with increasing alarm, is a government that has been completely found out.

This is a government in full retreat, scrambling backwards under the sheer weight of its own flawed ideology. Thanks to the sustained, unrelenting scrutiny from the coalition, from the superannuation sector, from small-business owners and, most importantly, from everyday Australians, we have forced Labor to step back from the most outrageous, destructive elements of the proposed family savings tax. Let the records show that the Liberal and National parties and community pressure have forced Labor to abandon their disastrous taxation on unrealised gains and their insidious indexation freeze. They did not backtrack out of sudden benevolence or a renewed understanding of economics. They backtracked because they got caught.

This was never a proposal just aimed at hurting retirees, though it certainly would have done that. This was a proposal aimed at hurting future generations. It was a calculated attempt to steal the future of younger Australians away from them, banking on the hope that they would not have the knowledge or understanding to see what is happening to their retirement nest eggs. Through our scrutiny, we also expressed a clear, undeniable breakdown in the relationship between the Prime Minister and his Treasurer. When a flagship economic policy crumbles so spectacularly under the first signs of public examination it speaks volumes about the dysfunction at the very top.

Let's look at the original design of this policy. To tax unrealised gains represents a fundamental break with the longstanding bedrock principles of the Australian taxation system. Australians are fair minded people. They've always understood and accepted that tax is paid when income is realised, when a gain is crystallised and when cash is in your hand.

To propose taxing paper gains, particularly in volatile asset classes where values can fluctuate wildly from one month to the next, was not some 'minor tweak' as the government tried to spin it. It was structural. It was a structural shift that would have set a deeply dangerous precedent across the entire tax base. Imagine a farmer or a small-business owner being handed a massive tax bill for an asset that they haven't sold, using money that they do not have, simply because the paper value of their property or their business went up. It is economic vandalism. It would have bankrupted so many businesses, including so many farmers and small businesses in my electorate of Grey, who have had the driest season in history, particularly 2025.

Equally concerning was the government's stubborn refusal to index the $3 million threshold. We are living in a severe inflationary environment—an environment being made materially worse by this treasurer and his utter willingness to pour debt petrol on the inflation fire. In that context, failing to index thresholds is nothing less than a silent tax hike.

Over time, more Australians would have been captured by this tax, not because they were wealthier in real terms or because their standard of living had improved, but simply because inflation, the silent thief in the night, had eroded the value of their threshold. That is bracket creep by design. It is a deeply flawed policy. If it wasn't flawed policy, then it was a sneaky, deliberate trick to take more of Australians' hard-earned savings. The government's humiliating backdown demonstrates one thing clearly—this was never settled policy grounded in principle; it was a blatant revenue grab that was exposed, and it collapsed under scrutiny.

The fundamental issue here is trust, and the sad reality is that Labor and the Greens simply cannot be trusted. At the last election Australians were not presented with a policy to tax unrealised gains in their superannuation. They were not told that longstanding superannuation settings—settings that Australians have planned their entire lives around—would be fundamentally altered. They were not warned that indexation would be stripped away.

Promises matter in a democracy. Major structural tax changes should be put clearly, honestly and transparently to the Australian people before an election. Instead, this proposal appeared out of nowhere with limited consultation, shrouded in secrecy and forced onto a rushed legislative timetable. That is why this debate has resonated so strongly in our suburbs and in our regions. Australians instinctively understand when something has been slipped in without their consent. When it comes to retirement savings and nest eggs built over decades of blood, sweat, tears and hard work, the bar for legitimacy must be higher. Labor failed to clear that bar.

We have a government that cannot be trusted. We were promised by Labor, and specifically by this treasurer, that they had beaten inflation and high interest rates. We were told by this prime minister that they were going to make life easier for families. Yet what is the reality? Families have less flexibility, less choice and less to pay the bills with. Life has become immeasurably harder for hardworking Australians. They are struggling to pay the mortgage, to pay the grocery bills, to pay the exorbitant energy bills and just to make ends meet. The fact of the matter is that inflation and high interest rates have not been beaten by this Treasurer. Rather, inflation and high interest rates have beaten this Treasurer and this government.

You don't have to just take the coalition's word for it. Just look at what Labor's own stalwarts are saying. Sally McManus, Bill Kelty and Paul Keating all came out to say the family savings tax is a bad idea. It is a bad idea. Labor told the public that this tax would target only the few, but even Labor's mates called out their fibs. The Secretary of the Australian Council of Trade Unions, Sally McManus, warned the government, stating:

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

Former ACTU secretary Bill Kelty was even more scathing. He 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.

Even the so-called father of the superannuation system, former Labor prime minister Paul Keating, who I know our Treasurer is so fond of, has explicitly said workers will be caught up in this net. Industry analysis has demolished the government's claims, revealing that the idea that this would hit only a small number of Australians was a furphy. It was going to hit 1.8 million Australians. They are looking at small businesses particularly closely because so many Australians who put everything on the line to run a small business hold their assets in superannuation.

This brings us to the root and branch of the issue. Labor does not have a revenue problem; Labor has a spending problem. The primary problem confronting our country right now is structural spending growth that is vastly outpacing sustainable economic growth. When governments spend beyond their means, when they refuse to make the tough decisions, they inevitably reach into the pockets of taxpayers and find new taxes to fill the gap. This is precisely what we are witnessing. Rather than confronting waste, rather than prioritising programs and rather than restoring a shred of discipline, Labor has chosen to hunt for new pools of capital to tax.

Trust is fundamental in tax reform. Australians accept reform when it's principled, predictable and based on broad consultation. What they do not and will not accept is retrospective tinkering, ad hoc changes and ideological experiments dressed up in the deceptive language of 'modest adjustments'. This proposal reinforces a broader, more dangerous pattern with this government—higher spending first and then hidden taxes to pay for it later. That is not economic reform; that is fiscal mismanagement on a grand scale.

Furthermore, beyond the headline rates and the threshold changes, this legislation introduces serious hidden structural risks that the government has tried to sweep under the rug. Take, for example, the removal of the effective death tax exemption. This creates immense uncertainty for families at precisely the moment that they are vulnerable. Surviving spouses who suddenly find themselves relying on superannuation balances to maintain some semblance of stability after the devastating loss of a partner could face immense additional tax complexity and reduced financial security. Total and permanent disability benefit recipients are another cohort that must be considered carefully. These are Australians who, through no fault of their own, have suffered catastrophic events and are no longer able to work. Their superannuation is not an abstract investment vehicle. It is a vital lifeline. Any changes that increase volatility, reduce predictability or complicate access to those funds carries real, devastating human consequences.

Tax policy cannot be designed in an ivory tower isolated from lived reality. When retirement income settings are destabilised, confidence in the entire system is eroded. The government has desperately pointed to increases in the low-income superannuation tax offset, the LISTO, as evidence of 'balance'. Let me be clear: any measure that generally supports low-income earners building retirement savings is welcome, but we must be honest about the scale and the timing. LISTO adjustments, while positive at the margin, do not put a single dollar back into household budgets today. They do not lower the grocery bills that are giving parents anxiety at the checkout. They do not ease the crushing weight of mortgage repayments. They do not reduce the electricity costs that are forcing families to choose between heating and eating. Australians are facing immediate, severe cost-of-living pressures right now. A future offset adjustment in a superannuation account does absolutely nothing to relieve those stresses today.

If this government is serious about helping households, it must tackle inflation at its source—excessive government spending and weak economic growth—rather than just reshuffling offsets within the retirement system to buy good headlines. This proposal cannot and should not be viewed in isolation. It is Labor trying to clear the decks so they can spend more and pour more debt petrol on the inflation fire. When spending accelerates without corresponding structural reform, governments eventually reach the limits of conventional revenue. That is when they start testing new boundaries. They leave thresholds unindexed. They invent new bases for taxation, they create new, dangerous interpretations of what constitutes income. Today it is a superannuation balance above $3 million; tomorrow it may be another threshold, another definition or another asset class entirely.

Debate adjourned.