Labor has today signaled that it might support the Coalition’s $1.6 million “restrospective” cap on tax-free superannuation contributions after all. From The AFR:
Federal Labor will today leave open the prospect of supporting – and possibility even adopting – the government’s plan to cap superannuation retirement funds at $1.6 million.
…the shadow minister for financial services, Jim Chalmers, will use a speech to an industry conference to stress that Labor has not yet made a final decision on the policy as well as other elements announced on budget day and “will not be rushed into a view”…
Labor has claimed the Coalition’s policy is retrospective because it would force people already with more than $1.6 million in their retirement accounts to move the excess out of the account.
Dr Chalmers will repeat Labor’s “grave concerns” about the retrospectivity of the measure, slam the government for creating uncertainty through the entire super system, but indicate Labor was prepared to be swayed.
Labor’s hypocrisy meter has been dialed-up to maximum on this issue.
First, if the Coalition’s cap is “retrospective” then so is Labor’s. Under Labor’s proposed superannuation reforms, annual earnings in retirement of more than $75,000 would be taxed at 15% versus 0% tax currently. Assuming an historical 5% return, this equates to a super balance of $1.5 million – even less than the Coalition’s $1.6 million cap.
Second, there is nothing “retrospective” about the Coalition’s reforms since the changes would apply only to future super earnings, not income earned in the past.
It’s no different to when changes are made to pensions, family tax benefits, child care rebates, or the like. These are rarely grandfathered and almost always affect existing users, not just users in the future.
Let the misleading arguments about “retrospectivity” go Labor. You are being highly hypocritical and merely empowering the vested interests against much needed reform.
