Kylea Tink (North Sydney, Independent) Share this | Hansard source

They are also concerned this legislation is really a trojan horse, designed to put an end to self-managed super funds and instead preference the large commercial superannuation entities, as those can better be influenced by the government of the day in terms of priority areas for national investment.

At this point, I need to declare a deep personal belief that the money held in superannuation vehicles belongs to the person who has put it there. To me, the superannuation structure introduced in our nation over 30 years ago was established to significantly decrease the number of people who would be reliant on the age pension in later life. To this end, the system introduced then and modified since offers preferential tax treatment of the funds to compensate people for forgoing immediate access to earnings of the present day.

With all of that said, I recognise that this legislation proposes to rein back generous tax breaks for super balances that are beyond what is currently perceived as necessary to fund a comfortable retirement, and generally I'm comfortable with that idea, even if in its execution it's inelegant. However, both I and my community believe the mechanics proposed in this bill are poorly conceived and will result in unintended consequences and that the government's complete refusal to enter into constructive discussions about how this legislation could better work only adds weight to the arguments that this legislation is about much more than large balances.

Currently, investment earnings in superannuation funds are taxed at 15 per cent, and this is clearly well below the top marginal tax rate of 45 per cent on ordinary taxable earnings. As I have already said, however, the concessional treatment was originally designed as a way of encouraging people to save for their retirement. I agree with the government that the treatment was not intended to assist people in accumulating excessive wealth, nor was it designed to enable wealth transfer between generations. In this context, people across my community of North Sydney understand the intent behind this reform and generally support it.

But in attempting to address this issue, which applies to very few Australians across the board at the moment, the government is seeking to introduce legislation which could have far wider implications. It's these implications that my community is concerned about. We must absolutely address fundamental inequity in our society, but it is not reasonable for the actions we seek to take to achieve that outcome to set a precedent that could be used to completely reshape the way in which unrealised gains are currently dealt with in our tax system in Australia. The proposed measures will undoubtedly add further complexity and cost to what is already a complex legislative framework, and it's hard to not see this legislation as a direct assault, specifically on people's rights to self-manage their super funds.

The following issues are of particular concern. Firstly, the $3 million threshold is currently not indexed. Secondly, the calculation of earnings, including unrealised gains, sees people taxed on money they may never actually see. This approach is unprecedented, not only here in Australia but around the world. There are the cashflow and liquidity issues this bill will cause for those with illiquid assets held in super and, finally, the effect on individuals in defined benefit schemes. Dealing with each of these in turn—

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