Paul Scarr (Queensland, Liberal Party) Share this | Hansard source

I'm delighted to have the opportunity to speak in relation to this bill, the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026. The first point I want to make is in relation to some egregious components of this legislation as it was originally presented to the parliament. There were two in particular.

The first was the proposal to apply capital gains tax to unrealised capital gains. The Labor government proposed to impose a tax on unrealised capital gains—that is, a tax on paper profits. It's absolutely extraordinary that the Treasurer would even contemplate proposing such a tax, because it has long been part of Australian taxation law that paper profits aren't subject to taxation—that capital gains on paper are not subject to taxation and that capital losses on paper can't be used to offset other capital gains. The abandonment of that fundamental principle of the Australian taxation system was of deep concern right across this country—to businesses, to superannuants, to those running self-managed superannuation funds and to the general public—so it is very pleasing to see that the concept of taxing unrealised capital gains, taxing paper profits, has been dropped from this legislation. The coalition fought long and hard to get that tax on unrealised capital gains dropped. I am very pleased that the coalition, with support from some members of the crossbench, has been successful in that regard, and I commend all of my colleagues who've been fighting against the imposition of capital gains tax on paper profits.

The other point I want to talk about in relation to the bill as it was originally presented is that the government wasn't originally going to index the threshold at which the greater rates of taxation were applied. This was absolutely nonsensical, and it would, in effect, have punished younger Australians. Again, this is something which the coalition fought tooth and nail against—the failure by the government to propose threshold indexation in the initial legislation —and, again, it is pleasing to see that the nonindexation of the thresholds has been abandoned.

So those were the two issues. First, the taxation of unrealised capital gains has now been dropped from the bill, largely as a result of the coalition standing firm on that point of principle, and, second, the nonindexation of thresholds has also been dropped, again as a result of the coalition's steadfast opposition. This raises a point as to whether or not these concepts were ever taken to the Australian people during the election campaign.

I have a pretty fundamental principle as to how one should conduct oneself in public life: one should take to an election the platform which one will implement after the election. The Labor Party never took to the election taxation on unrealised capital gains, and the Labor Party never took to the election the nonindexation of different rates of tax on superannuation balances. Those two elements of the bill they presented to this parliament were never mentioned when they went to the Australian people to seek a mandate.

It's absolutely appropriate that the Labor Party has been forced—kicking and screaming—to withdraw those two elements from this bill; however, there is still another issue with respect to the legislation before us, and that is that it introduces serious structural risks. My colleague Senator Smith spoke to some of these structural risks, in his erudite contribution in this chamber. One of these is the removal of the effective death tax exemption, which creates uncertainties for families at precisely the moment that they are most vulnerable—when losing a loved one. Surviving spouses who rely on superannuation balances to maintain stability after the loss of a partner could face additional tax complexity and reduced security at exactly the time when they don't need that additional complexity and lack of 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, are no longer able to work. Their superannuation is not an abstract investment vehicle; it's a lifeline. Any change that increases volatility, reduces predictability or complicates access to those funds carries real human consequences.

The other point I would make in conclusion is that this proposal should not be viewed in isolation. It's about Labor being able to spend more and pour more debt petrol on the inflation fire. When spending accelerates without corresponding structural form, governments eventually reach the limits of conventional revenue sources and then test new boundaries. We saw the testing of new boundaries in the legislation as it was originally proposed, in the initial bill. Taxing unrealised capital gains would have created a new boundary, and thankfully, kicking and screaming, the government has had to retreat from that position.

Australians deserve clarity with respect to their retirement funds and superannuation, and the coalition will be watching very, very carefully to see what the government proposes in the lead-up to the May budget. I reinforce the point: be honest with the Australian people. Don't introduce something in the budget, in terms of taxation measures, that you did not take to the last election, because that's unfair to the Australian people. Be upfront with the Australian people.