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June 5, 2025
Thursday 5 June 2025
Greg Brown and Matthew Cranston
The Australian
Jim Chalmers has declared he will not negotiate with the Coalition on superannuation tax reforms just a day after Anthony Albanese left the door open to compromise, with the Treasurer preferring to do a deal with the Greens that retains the contentious tax on unrealised capital gains.
Dr Chalmers lashed out at opponents of the government’s proposed tax hike on superannuation balances above $3m, accusing critics of pretending to dislike the model of taxing unrealised capital gains while actually being against clamping down on tax concessions for the wealthy.
He said it was hypocritical of opponents of the plan also to be calling for an increase to defence spending, a cut to the company tax rate and bigger surpluses, claiming the debate “doesn’t augur well for bigger, broader tax reform, when such a modest and methodical change is being resisted in some quarters”.
“A lot of people say they’re in favour of tax reform in the abstract, but they very rarely, if ever, support it in the specific and I think there’s an element of that playing out here as well,” Dr Chalmers said.
“People will say it’s about the calculation (of taxing unrealised capital gains), some people will say it’s about the indexation. But I think a lot of it is not really about the method of calculation. We put this proposal out there some years ago. There have been multiple occasions for people to propose alternative ways of calculating the liability. This is the way recommended by Treasury, and it’s the way that we intend to proceed.”
The unrealised gains tax component of Labor’s proposal has received stiff opposition from some of the highest-ranking business and economic voices, who are in favour of a clampdown of superannuation tax concessions.
CSL chairman Brian McNamee and Wesfarmers chief executive Rob Scott have both criticised unrealised gains tax while indicating they are open to changes on the rates on earnings for wealthy superannuation accounts.
Former Treasury secretary Ken Henry has suggested more equitable ways of applying tax rates on super, but is firmly against unrealised capital gains.
Former Reserve Bank governor Philip Lowe said tax rates on super earnings and contributions were too generous and could be lifted but was also against unrealised capital gains.
Even the most avid opponent of unrealised capital gains, Geoff Wilson, concedes that higher taxes on earnings and capital gains would be fine as long as there was not an unrealised capital gains tax introduced.
The Australian has also spoken to several senior Labor MPs who are concerned about the unrealised capital gains model and would prefer a deal with the Coalition to one with the Greens. Dr Chalmers said he did not think opposition Treasury spokesman Ted O’Brien was being serious with his offer to begin talks on a new superannuation reform package if Labor agreed to dump the proposal to tax unrealised capital gains without indexation.
Dr Chalmers pointed to fierce criticism of Labor’s plans by opposition finance spokesman James Paterson and Nationals senator Matt Canavan, despite both MPs over the past week limiting their argument to the Albanese government’s model to tax unrealised capital gains without indexation.
“I’m not convinced that the Coalition wants to have a conversation about these changes,” Dr Chalmers said.
When asked on Tuesday if he would consider tweaks to the superannuation tax hike to win Coalition support, the Prime Minister did not shut the idea down. “We do not have a majority in the Senate; we obviously work with different parties,” Mr Albanese said.
“If the signal from the Coalition is across the board – I’m not talking specifically here (about superannuation) – that they will be more constructive and not just be part of a no-alition with the Greens party, then that would be welcome.”
The Australian understands the Coalition will take a formal position as early as this week against the bill to double the tax to 30 per cent on superannuation earnings for balances above $3m without indexation, with those balances also to be hit by a new tax on unrealised capital gains.
However, senior Liberals conceded there would be a difficult internal discussion over whether the Coalition should go to the election vowing to repeal the policy if it were legislated with the support of the Greens.
Mr O’Brien’s offer to negotiate on a revamped superannuation proposal has angered some members of the Coalition, with Liberal MP Garth Hamilton demanding new leader Sussan Ley to commit to no new taxes on retiree balances.
After Dr Chalmers shut down the prospect of a compromise, Mr O’Brien hardened his language against any reforms that would raise taxes on superannuation. “We don’t want to see any increases in taxes,” Mr O’Brien told the ABC.
He said it was problematic that Dr Chalmers had shut down the prospect of a compromise a day after it was left open by Mr Albanese. “I do suggest that they might want to talk together, given one is saying they wish to compromise and the other is saying there’s no compromise at all,” Mr O’Brien said.
Dr Chalmers said he would begin talks with the Greens ahead of parliament resuming in July, but declared his intention was to legislate the package unchanged.
Under the leadership of Adam Bandt, the Greens refused to pass the package unless the threshold was lowered to superannuation balances worth more than $2m.
Greens Treasury spokesman Nick McKim said he looked forward to “constructive discussions with the Treasurer to make sure the legislation is as strong and fair as it can be”.
“Over time Australia’s superannuation system has become less about providing a dignified retirement for working people, and more of a vehicle for wealth accumulation – this needs to change,” Senator McKim said.
“The Greens want to ensure that very wealthy Australians pay their fair share of tax, so that governments can do more to support people who need it.”
The political debate came as Barrenjoey head of bank research Jon Mott warned that the shares of the major banks could be collateral damage from Labor’s proposal.
“If super rules are changed, we believe blue-chip stocks like the banks could see sporadic bouts of substantial selling to find potential super tax invoices in coming years,” Mr Mott wrote in a note to clients.
“Although other blue-chip stocks are also likely to be impacted, the overweight position that many under-advised SMSFs have in the banks makes this a greater risk.
“We have spoken with a number of adviser and wealth platforms which specialise in high net worth clients. These platforms’ funds under administration represent about 7 per cent of the registers of the major banks.”