Labor could shun the Greens and work with the Coalition on increasing taxes on superannuation accounts worth more than $3m, after the prime minister,Anthony Albanese, signalled he was open to constructive talks to pass the delayed legislation.
The deputy Liberal leader, Ted O’Brien, this week suggested possible talks as part of efforts to help address the structural budget deficit, but insisted the treasurer, Jim Chalmers, would have to radically change the proposal, including ending moves to tax unrealised gains.
Labor plans todouble the earnings tax on superannuation balances above $3m– from 15% to 30%. The plan, first announced in late 2023, affects only an estimated 80,000 people, and still leaves in place highly favourable tax treatment for retirement savings.
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Labor is expected to pass the changes with the support of the Greens, once the minor party has the sole balance of power in the Senate after 1 July.
Politicians won’t be exempt from the change, even if their retirement savings are in so-called defined benefit accounts. Separate regulation, allowing some payments to be deferred, is expected to explain how the accounts will be treated.
Defined benefit rules are based on a formula for retirement savings – usually using an individual’s salary level at retirement – rather than contributions made throughout their working life. Many politicians elected before 2014 are entitled to defined benefits, along with former bureaucrats and judges.
The Greens leader, Larissa Waters, has warned Labor any special arrangements for politicians and other former public officialswould be unworkable.
The Greens also want a threshold of $2m so more account holders are covered by the tax.
Speaking during a visit to Perth on Tuesday, Albanese said Labor was open to working with the Coalition.
“We obviously work with different parties. If the signal from the Coalition is across the board – I’m not talking specifically here – that they will be more constructive and not just be part of a “No-alition” with the Greens party, then that would be welcome.”
He said voters wanted MPs to work constructively and called on the Coalition to support Labor’s plans to cut higher education debts for university graduates when parliament resumes on 22 July.
Albanese said politicians are not exempt. “They’re not exempt, full stop.”
“That was clear in the previous legislation that was introduced.”
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O’Brien told the Australian newspaper Labor’s plans to tax unrealised capital gains, profits for investments which exist on paper because the asset has not be sold,would “breach a red line”.
“But if Jim Chalmers is prepared to be humble for a moment and realise he’s made a mistake and wishes to engage with me, my door is open,” O’Brien said on Monday.
Albanese is expected to hold talks with Waters in coming weeks. Greens MPs are yet to settle on a final position on the issue.
Waters told ABC radio the party was waiting to see the government’s final proposal.
“There’s been some suggestion that there’ll be some changes to the government’s approach, potentially giving politicians a free pass from this proposed super tax, which doesn’t seem like such a good idea,” she said.
“In the last term we did think that you could raise more revenue from folk who are doing very nicely for themselves, and that it is important that we have a revenue base.”
In the last parliament, key senate crossbenchers including David Pocock and Jacqui Lambie were opposed to taxing unrealised capital gains.