Large super balances can, will, and should be ‘less concessional’: Treasurer

After announcing a raft of changes to the $3 million super tax legislation on Monday, Jim Chalmers spent Tuesday explaining the hows and whys of the government’s backflip on the controversial legislation after defending it for the past two years.

“In the course of coming up with these sensible changes to the superannuation package, some people who think deeply about these issues were recommending to us a cap on super of $5 or $8 or $10 million. We’ve gone down this path instead,” the Treasurer said.

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“I don’t give personal financial advice to people. People will make their own decisions based on the policy that we announced, but this is a good, sensible, practical, pragmatic set of changes which recognises that tax will still be concessional for everyone in super, but it can be, will be, and should be less concessional especially for people with very large balances.”

The Coalition had criticised the changes, stating the government will now have a black hole in its forward estimates, suggesting that further tax increases will be needed to make up the deficit.

However, Chalmers said the government had made it clear over the forward estimates that the new “arrangements” will raise $2 billion over the course of those estimates.

“The Parliamentary Budget Office has estimated that the old super tax proposal [would raise] about $43.9 billion over a decade. How much less is this new policy projected to raise? That’s not a number that we would ordinarily release,” he said.

“A big reason why it will raise less over the forward estimates than the original package is because of the one‑year delay. The one‑year delay is necessary so that we can bed down these changes and make sure that we get them right before we legislate them as soon as we can in 2026.”

He continued that when the legislation reaches its first full year of maturity in FY2028–29, the original proposal would have raised slightly more than $2.5 billion a year.

“It means that we can fund these practical and pragmatic changes but also at the same time provide more super and a more secure and decent retirement income for people who are currently on low incomes,” he said.

“The budget provides figures over the forward estimates. They’ll be in the Mid‑Year Economic and Fiscal Outlook. But we’ve made it clear already that a major part of the difference between the billions of dollars which would have been raised under the original proposal and the billions of dollars which will still be raised under this proposal is the one‑year delay.”

Chalmers said following discussions with Prime Minister Anthony Albanese over recent months, the decision had been made to find “another way” to deliver on the objectives of the government’s policy.

“Our objectives here are a super system which is stronger and fairer and more sustainable and even with these practical and pragmatic changes, this means another way to satisfy those objectives,” he said.

“It means a better outcome for people on low incomes. It means better targeted superannuation concessions for people with millions of dollars. It means a fairer superannuation system from top to bottom.

He added that he had “taken on board a couple of years of feedback” and as Treasurer he takes this feedback seriously.

“We work through issues in a considered and a methodical way and we come up with the best outcome that we can. What we’ve done here is we’ve found a way to deal with some of those issues that have been consistently raised with us over the course of the last couple of years, to deal with those couple of issues and to come up with a package which still makes the budget much stronger, still makes the superannuation system stronger and fairer and more sustainable,” he said.

“[Australia’s] super is the envy of the world. All around the world people look at our superannuation system with envy. There’s good reasons for that, but there’s imperfections, too.

“There are issues around adequacy, particularly for women and low‑income earners. We’re addressing that with what we’ve announced. There are issues around the sustainability of the tax concessions for people who might have $30, $40 or $50 million in super, and we’re addressing that as well. That’s not always easy, but it’s important.”