‘No Election Promise Broken’: PM Defends Super Change

Prime Minister Anthony Albanese at a press conference at Parliament House in Canberra, Australia, on Feb. 28, 2023. (AAP Image/Mick Tsikas)

Australian Prime Minister Anthony Albanese has refuted the idea that the Labor government broke an election promise after announcing changes to the superannuation concession tax on Feb. 28.

This comes after Albanese said during the 2022 federal election campaign that the Labor party would not make any major change to the super tax break if it were elected.

In an interview with ABC radio on March 1, the prime minister said he did not break the promise as the “modest” change would occur after the next election.

“It very clearly takes effect after the next election. What we are doing here is a very modest change to give a less generous tax break for those who have superannuation balances of above $3 million (US$2.01 million),” Albanese said.

“This is a modest change that is about improving the sustainability of the system. It is important as well to recognise that it is not retrospective. It applies to future earnings from July 1, 2025.”

Albanese also said the new super tax break would be the only change proposed to the superannuation system by the Labor government in this term.

However, when asked whether the government would seek further amendments to the super system in the next term, the prime minister did not give a clear answer, leaving the door open to speculation that Labor may be holding that option open.

Changes to Super Tax Breaks

On Feb. 28, the Labor government announced that from the 2025-2026 financial year, superannuation accounts with a balance above $3 million would be taxed at a concession rate of 30 percent.

In Australia, concessional taxation of super exists to encourage people to save for their retirement rather than rely on the age pension, which is a burden to government finances.

People can contribute to their super accounts using before-tax income. If their combined taxable income and super contributions are less than $250,000, their super contributions will be taxed at a concession rate of 15 percent.

However, there is a cap on concessional contributions, which currently stands at $27,500 a year.

Australian dollars are shown in Sydney, Australia, on March 10, 2015. (Dominic Lorrimer/Getty Images)

The government estimated that the super concessional tax rate cost the federal budget around $50 billion in tax revenue each year.

Currently, the concession rate of 15 percent applies to all super accounts, no matter the account balance size.

However, under the new laws, those with over $3 million in their super accounts will be taxed at 30 percent.

The government said the change would only affect around 80,000 people or 0.5 percent of Australians with super accounts.

In addition, it noted that the changes did not impose a limit on the size of superannuation account balances in the accumulation phase.

The Labor government expected the adjustment to generate additional revenue of $2 billion per year when it took effect in 2025.

Criticism from the Opposition

Following the announcement, the Opposition quickly called the Labor government out for breaking an election promise.

“Today, we’ve seen the prime minister and the treasurer walking away from their commitment to not add taxes to superannuation,” Shadow Treasurer Angus Taylor said.

“It is clear that Labor is prepared to break a promise to charge more taxes.”

Apart from the changes to the super tax break, the shadow treasurer warned that Labor had refused to rule out over $150 billion in taxes on Australians, including on capital gains, negative gearing and franking credits.

Shadow Treasurer Angus Taylor at the Leaders Summit on Climate in Sydney, Australia, on April 22, 2021. (AAP Image/Mick Tsikas)

He also said that the government could not manage its own spending and had to come after Australians with higher taxes, citing the “sneaky” $45 billion in spending recently passed by Labor.

“This is a Labor party that says one thing before an election and does something very different afterwards,” Taylor said.

“When the Labor party runs out of money, it comes after yours.”

Meanwhile, the prime minister said Labor did not have any plan to impose taxes on capital gains.

“We are not going to impact the family home. Full stop, exclamation mark,” he said.

“Because it’s a bad idea. We will not be making any changes there.”

However, the prime minister did not explicitly rule out the introduction of a negative gearing tax, which indicates that the government may consider that option in the future.