Labor landslide gives green light on agenda, even Div 296

Pre-polling ahead of the election led many to believe that a low majority or even a minority government was all but certain; however, Labor actually managed to come out the other side with more seats than before, leading to the question: what will they do now?

As such, Financial Services Council (FSC) CEO Blake Briggs said this will be a “fascinating test” as Australians wait to see how Labor will proceed, particularly when it comes to their handling of contested legislation, such as Division 296.

This specific piece of legislation would see superannuation accounts exceeding $3 million taxed at 30 per cent instead of the usual 15 per cent. While this alone has raised some issues, the fact that it isn’t indexed and would apply to unrealised capital gains got many up in arms.

The Liberal Party, in particular, has been staunchly against it while the Greens have actually called for the threshold to be lowered to $2 million, still without indexation.

“It’s a really interesting test,” Briggs said on The ifa Show, “because they have an opportunity to think about what sort of government they want to be.”

With Labor only needing the support of the Greens to get legislation over the line, some have come to the conclusion that it’s not a matter of if, but simply when.

Even so, Briggs was adamant that the FSC doesn’t support the tax “in the way it’s currently designed”.

“We think taxing unrealised capital gains is bad policy and the absence of indexation, let’s be honest, that’s deliberate. And so, both those things, we think, just make a poor tax policy that would be revisited,” he said.

While maintaining this position, Briggs said this is not to say that superannuation tax settings should not be reviewed, along with the broader tax system, explaining that changes can be made to make the system “more equitable and sustainable, but the way they’ve gone about it is just the wrong way”.

However, he believes that if they were to push it through with a $2 million threshold, they would then just have to “kind of hope people forget about it and stop holding it against you” once Australia is due for another election.

Though, it is important to note that, with the sorry state of the Liberal Party at present, new party leader Sussan Ley has her work cut out for her on the road to recovery over the next three years.

If Labor was to essentially force Division 296 through with the help of the Greens, Briggs suggested that this would set a really clear tone for how they plan on responding to feedback on legislation.

“If you believe some of the reporting that we’ve seen in the papers, that this was actually one of the few issues that got traction against Labor during the campaign, you know, sensible heads might actually say, ‘Well, maybe we should listen to some of that feedback and think about what an alternative could look like’,” he said.

“Do I think they’re going to soften the approach or change tact? Probably not, is the answer. And will it get through in some form? Probably, yes.

“I know a lot of advice businesses are now hurriedly receiving a lot of calls from consumers who are going to be impacted by this, saying, ‘What do I do?’ And there’s no easy answer to that question.”

Briggs suggested that because Labor pulled off such an overwhelming win, it is almost like the Australian people have given them the go-ahead on their overall agenda, despite the strong opposition to Division 296.

“There is a strong sense [from] government of, ‘Well, we took this to the campaign. Our mandate should be respected. We won. And so we’re going to put aside any concerns around the design of it because, on principle, we should be able to get our agenda through in the format that we took it to the election’,” he said.

To hear more from Blake Briggs , tune in here.