Rebekha Sharkie (Mayo, Centre Alliance) Share this | Link to this | Hansard source

As we know, tax is imposed at a rate of 15 per cent on earnings equal to the percentage of superannuation balances that exceed $3 million for an income year. What the government is looking to do here, with the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023, is to impose an additional tax, above the existing 15 per cent, bringing the total tax payable on superannuation balances above $3 million to 30 per cent. That sounds reasonable in the sense that we only have around 80,000 Australians with balances over $3 million, but my concern with this bill is that there is no indexation. While we're only talking about 0.5 per cent—less than one per cent—of superannuation accounts right now, we know that, with inflation, it won't be long before that become two per cent, five per cent or 10 per cent. In future generations, $3 million is probably not going to be considered a lot. While the underlying principle with respect to the balance makes sense, I have a real concern about what is effectively a version of bracket creep. We will be increasing tax on superannuation, and in the perhaps not-too-distant future $3 million will not be considered a very substantial superannuation balance.

I'd also like to talk briefly about the other issue of concern, which is that this tax will be applied to unrealised gains. This violates the principle of the Australian tax system that capital gains taxes are paid on realisation and not accrual. Accrual taxation of gains creates valuation and liquidity issues. This is particularly problematic for those who have placed large assets into super funds, such as farms and businesses—and that will very much affect many constituents in my electorate.

The other challenge is that a farming property's value fluctuates, perhaps not so much in my electorate but more broadly, across more marginal farming land. Those valuations can fluctuate between 20 and 30 per cent, particularly in times of drought, in times of flood, in times of disaster, when we know that the overall value can diminish. So, we could potentially have people paying tax on those unrealised values, and potentially that value could fall.

I had a constituent in my electorate not very long ago who wanted to talk about why we don't have a national superannuation fund—a fund that we as Australian citizens could choose to put our retirement savings into. It would not be a national fund dictated to or managed, or a cashflow option for unions or indeed private organisations, but an Australian fund that belonged to Australians and was managed by government. Many nations have this. I guess you could say we have something similar in the Future Fund. I do hope that this government or future governments will consider this idea, which I think is a very noble one. I think that potentially there are many Australians who would like to put their money into, effectively, a fund to grow Australia, a fund to support Australia, a fund to invest in Australia.

My other concern with this piece of legislation is that there is no transition period. Those who are already retired may not be able to restructure their superannuation arrangements. As I said previously, businesses and farmers will I think be disproportionately negatively affected by this legislation. I hope the government addresses particularly the indexation part of this bill. What might seem like a bit of a tax on very wealthy people now will perhaps in decades to come not be considered so. It's very difficult for governments to walk away from tax revenue streams. So I think if we're going to do this piece of legislation we need to make it fairer. I think we need to have indexation and I think we need to address the issue with respect to unrealised gains. Thank you.

Mr Tony Burke (Watson, Australian Labor Party, Minister for Employment and Workplace Relations) Share this | Link to this | Hansard source

For the benefit of the House, can I suggest that what we do now—I think the member for Mayo was the last speaker listed to speak on this bill—is deal with the second reading amendment and the second reading vote and, at the end of that, when the Speaker announces that we are moving to consideration in detail, I'll move that consideration on detail be adjourned and that it become an order of the day for the next sitting. At that point I will move a suspension of standing orders in the terms that have been agreed with the member for Warringah and the opposition, which would then allow a one-hour debate from that time, which can be extended if we require.

For people who might want to speak—just to give an early indication—the whips have not filled the time. It's the sort of issue where sometimes people do spontaneously want to come to the chamber and speak. So, that opportunity is certainly there, and it is there deliberately, given the gravity of it. But I suggest that if we finish the second reading debate now, have the second reading amendment and then the second reading vote, then adjourn, and then move to the debate that's been the subject of discussion during the course of the day.

Milton Dick (Speaker) Share this | Link to this | Hansard source

The question is that the amendment be agreed to.

Milton Dick (Speaker) Share this | Link to this | Hansard source

The question is that this bill be now read a second time.