This goes well beyond Treasurer Jim Chalmers’ recently announced amendments to the Petroleum Resource Rent Tax. Simultaneously, he’s pushing through politically divisive superannuation reforms aimed at high-income earners. The changes aim to more than double the tax that applies to superannuation balances over $3 million from 15% to 30%. Chalmers signalled that he would have to go begging to the Greens to get these reforms passed. The Coalition has signaled they have no interest in bargaining on non-starters to the proposal.
The government’s superannuation reforms are set to bring in an extra $2.4 billion over the forward estimates. Recent changes have led to a halving of projections for superannuation returns. It fell from a projected $10.8 billion to just over $6.3 billion during that same time frame. The changes push the revised estimate down, in fact, such that the reworked oil and gas tax will bring in $4 billion less than anticipated. This news makes the budget pit even deeper.
Coalition’s Stance on Superannuation Reforms
The Coalition has utterly opposed major planks of the Chalmers’ superannuation changes. Ted O’Brien, a prominent member of the Coalition, criticized the Treasurer’s approach, stating, “Well, I have already outlined our concerns and the treasurer is saying he’s proceeding anyway and he’s running to the warm embrace of the Greens in the hope of just jacking up taxes.”
O’Brien emphasized that the Coalition’s principles remain steadfast: “So we’re clear with our principles. Lower taxes, simpler taxes, fairer taxes, and so that’s where we stand on it.” And he went on to warn that if Chalmers decides to increase taxes on Australians now, “that’s on him.”
Bridget McKenzie voiced her discontent regarding comments made by fellow Coalition member Alan Stockdale about assertiveness among women in politics. “Honestly, Alan, read the room. I hope women are assertive as they represent their communities,” McKenzie remarked, highlighting a broader conversation about gender dynamics within the party.
Chalmers’ Justification and Future Steps
To that criticism, Treasurer Chalmers stood by the reforms being proposed, calling them important structural reforms to improve revenue. In fact, they’re revised up in the most recent budget, too. He said that this diamond in the rough serves as a critical reminder of the precarious nature of oil price forecasts. This area is rife with unpredictability. He reiterated the need for these reforms to occur. Second, they are essential for addressing financial inequities and ensuring that the developing offshore LNG industry pays its fair share of taxes.
Chalmers also recognised that negotiations with the Greens are key to progressing further with his superannuation plan. “I’ll have discussions with the spokesperson from the Greens, Nick McKim…I’ll have discussions with him between now and parliament returning,” he confirmed. He reiterated his intention to legislate the original plan announced nearly two and a half years ago, reflecting his commitment to seeing it through despite opposition.
Chalmers pointed out that recent interest rate reductions have pumped “billions of additional dollars” into the economy. As he acknowledged, the March growth figures hardly capture these effects in their entirety. He pointed out that smart tax policies will be as important as ever in helping us move through these economic transitions.
Concerns Over Unintended Consequences
Although some are pushing for higher levels of taxation on large superannuation balances, there is some fear about the unintended consequences. Former MPs like Zali Steggall have condemned the proposal to tax unrealized capital gains. She worries that it may have far-reaching unintended consequences. She passionately attacked the government’s decision to target hard-working Australians for tax. Rather, she argues, they should focus on the systemic revenue potential of wealth and super profits generated from gas resources.
Chalmers remains committed to pursuing reforms despite significant opposition and potential challenges in Parliament. As discussions continue with various stakeholders, including the Greens, he faces pressure to deliver a balanced approach that addresses both fiscal needs and equitable taxation policies.
