Dean Smith (WA, Liberal Party, Shadow Assistant Minister to the Shadow Treasurer) Share this | Hansard source

I rise to speak on the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026 and related bill.

At its core, this bill introduces Labor's division 296 superannuation tax, and, while the Albanese government has now modified its original proposal, that change demonstrates how flawed the original design was. Initially, Labor proposed taxing unrealised capital gains within superannuation. That would have broken a fundamental principle of the Australian tax system—which is that tax is paid when income is realised, when a gain is crystallised and when there is actual cash available to pay the liability. It was a structural shift that would have set a dangerous precedent across the entire tax base.

At the same time, the government proposed not indexing the $3 million threshold. In an inflationary environment, the effect of this would have been to quietly drag more Australians into the tax over time through bracket creep. These were critical and obvious flaws. But the policy backtrack we've witnessed in relation to this bill is not an acknowledgement by Labor of these flaws. It is the result of the sustained and justified external pressure placed on it by stakeholders. The reality is that the Albanese government only retreated on the taxation of unrealised gains and the indexation freeze following strong and ongoing scrutiny from the coalition, the superannuation sector, small-business owners and everyday Australians.

We highlighted that these were not minor tweaks. We highlighted that the original design to tax unrealised gains represented a fundamental break with longstanding principles of the Australian tax system. We highlighted, as I've already noted, that failing to index the threshold was a silent tax hike, especially given the inflationary pressures that flow from the Albanese government's mismanagement of the economy. An increasing number of Australians would have been captured over time, not because they were wealthier in real terms, but because these inflationary pressures would have eroded the value of the threshold. We highlighted the unique negative impact that that would have on future generations of hardworking Australians and not just on the very few wealthy Australians that they said it would impact.

It must be noted that ours were not the only dissenting voices when it came to these flawed policy proposals. Even individuals closely associated with the labour movement went on the record against the Albanese Labor government's tax plan. Former ACTU secretary Bill Kelty said:

… 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.

If that wasn't bad enough for Jim Chalmers, former prime minister Paul Keating, an early and central figure in Australia's superannuation policy—it has to be said—came out against taxing unrealised gains, flagging concerns that workers would eventually be impacted by the changes. If Paul Keating and Bill Kelty weren't enough, in the same vein, the current ACTU secretary, Sally McManus, said:

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

How remarkable that a Labor Prime Minister in Anthony Albanese and a Labor Treasurer in the form of Jim Chalmers would find their tax plan, their clever tax thinking, attacked by former ACTU secretary Bill Kelty, former Labor prime minister Paul Keating and a current leading figure of the ACTU. Given this opposition, including from its own people, why did the Albanese government think these measures should become law? The answer is that, rather than considered policy based on sound principles, it has fundamentally always been part of a revenue grab by a government that cannot exercise discipline in its own spending.

Not simplification of the superannuation system, not improvement on current or future retirement outcomes for Australians, but quite the opposite—the intent was to fund higher government spending. Government spending has risen to around 26 per cent of GDP, well above long-run averages outside crisis periods. When spending grows faster than the economy, governments start looking for new tax bases, and, increasingly, Labor sees superannuation as one of them. That approach risks undermining confidence in the entire retirement system, because, once the principle is accepted that super balances can be taxed more heavily whenever fiscal pressure emerges, the stability of the whole system is weakened.

Today, it may apply above one threshold. Tomorrow, the threshold may change. Confidence in retirement savings depends on stability, predictability and transparency. Importantly, it also depends on trust. This Labor government has demonstrated that it can't be trusted with peoples' superannuation. It is damaged when governments like this one are not up-front with the Australian people and when the Australian people feel they cannot trust their government. Australians were not presented, at the time of the last federal election, with a policy to tax unrealised gains in superannuation, nor were they told that longstanding superannuation settings would be altered, nor were they warned that indexation would be part of the plan.

In my experience, that waning confidence is particularly strong in regional Western Australia, where I so frequently travel. Many small business owners and family enterprises hold assets through superannuation as part of a long-term retirement plan. These are not theoretical high-balance accounts; they often represent decades of working and building farms, small businesses and regional enterprises. Those Australians most certainly need more certainty from the government, not less. They need stable rules. They need to be able to trust the government with their superannuation. That brings me to some further concerns regarding the bill.

The revised legislation removes the earlier effective death exemption and raises questions about how inherited super balances and total and permanent disability payments interact with these new thresholds. These are structural risks but also very human problems. Surviving spouses rely on superannuation balances to maintain stability after the loss of their partner. There is the potential for additional tax complexity and reduced security at a time when they are least positioned to cope with it. Then there are those Australians who, through no fault of their own, are no longer able to work. Superannuation is a lifeline more so for many of this cohort than for anybody else in our community.

Policy in this area must be approached with care, and any legislative change resulting in greater volatility and complication and less predictability will have meaningful consequences. It's important that we view this bill as the beginning of Labor's approach to superannuation rather than the end to it—that is to say, very warily—because it is unlikely, now it has begun, that the Albanese government will ever stop taxing super. It is high spending and high taxing, and superannuation is too tempting a source of revenue for this government. Whether it be new boundaries, new tax bases, thresholds left unindexed, creative interpretations of income—whatever Labor proposes, it can be certain we will scrutinise it to the greatest extent possible.

Superannuation is Australians' money. It is not the government's money. The system surrounding it should promote transparency and confidence and trust. Governments should address spending pressures through fiscal discipline, not by treating retirement savings as a convenient source of revenue. That's the reform the Albanese government should now be pursuing as we approach the next budget.