Labor leader Bill Shorten has sparked a political firestorm over superannuation after telling voters he had "no plans" to increase taxes on their nest eggs despite taking four policies to the election to raise $32.6 billion over a decade.
Subscribe now for unlimited access.
or signup to continue reading
More than one million Australians could pay more tax on their super under Labor plans including stricter caps on contributions and a bigger contributions tax for workers on higher incomes.
Labor rushed to clarify its position after Mr Shorten also struggled on climate change policy when asked about the economic impact of his pledge to reduce carbon emissions, including a new permit scheme for manufacturers. Prime Minister Scott Morrison declared he would not make changes to super if he held power at the election, adding that Mr Shorten "must have forgotten" the Labor policies to raise more revenue.
The contrast on super deepens the political fight over Labor tax policies that raise $157 billion over a decade according to a contested government analysis of its changes to negative gearing, capital gains tax, dividend imputation, family trusts and super.
Rice Warner executive director Michael Rice said the Labor policies on super, as well as the changes to cash refunds on dividend imputation, qualified as tax increases.
"It does seem the 'no new taxes' claim is a bit contrary to the policy," he said.
Mr Shorten was asked by journalists on Tuesday whether he would rule out "new or increased" super taxes and responded with a general assurance that made no mention of his policies.
"We have no plans to increase taxes on superannuation," he said.
Asked again to rule out change, he said: "We have no plans to introduce any new taxes on superannuation."
When pressed on ruling out new or increased taxes, he said: "Sure".
The four Labor policies on super include a reduction in the threshold for the High Income Super Contribution tax, which means workers earning more than $200,000 a year would pay twice the rate of the standard 15 per cent tax on contributions.
The government estimates 130,000 people would pay more tax under the cut from the current threshold of $250,000 a year.
Mr Rice said the change would result in more workers paying 30 cents in the dollar on their super contributions, leading them to put less into their funds.
"It's a discouragement to people being self-sufficient in retirement," he said.
The second Labor measure would abolish a government rule to allow "catch up contributions" so that workers who do not make one-off payments into their funds over several years can make a lump sum payment.
A worker who chose not to put $25,000 into his or her fund for four years could make a one-off contribution of $125,000 in the fifth year under the rules, but Labor would stop this.
The government estimates this might constrain 230,000 workers who could use the rules.
The third Labor change would undo a government initiative to allow more small business owners to claim their personal super contributions as a tax deduction, a measure available to about 800,000 workers.
The fourth change would reduce the non-concessional contribution cap from $100,000 to $75,000, curbing the ability of people to put lump sums such as inheritances into their funds. This is estimated to impact 20,000 people.
Labor released a cost estimate in November 2016 saying the four measures would raise $18.9 billion over a decade.
The government released Treasury modelling last Friday that forecast $34 billion in tax revenue from the same measures, although this was based on the Coalition's description of the Labor policies rather than Labor's own.
Labor is in the process of compiling new cost estimates from the Parliamentary Budget Office ahead of the release of its costings in the final week of the campaign.
A Labor spokesman said the party's policy had been public for a long time and Mr Shorten had made clear there were no other changes.
He noted the Opposition was also spending $400 million to increase super fund balances for women and was making sure that recipients of commonwealth paid parental leave would continue to receive super contributions.
Another Labor measure would phase out the $450 minimum monthly income threshold at which employers do not have to pay super for their workers, a reform intended to increase retirement savings for those on low incomes.
Mr Rice said Labor would probably not raise the $56 billion it estimated over a decade from its changes to dividend imputation rules, saying many retirees would transfer money to a super fund or change their investments in other ways.
The stumble on policy detail came when Mr Shorten is expecting the government to intensify its attacks on Labor's target to reduce carbon emissions by 45 per cent by 2030, requiring changes in the electricity grid as well as new rules on manufacturers, gas producers and others.
Asked to explain the economic impact of his policy, Mr Shorten attacked Mr Morrison's claims about a strong economy but did not answer the question at a press conference while campaigning in South Australia.
An analysis of alternative policies by Australian National University professor Warwick McKibbin in 2015 estimated the government's reduction target of 26 per cent would reduce gross domestic product by 0.2 to 0.3 per cent by 2030.
Professor McKibbin found that a target of 45 per cent would reduce GDP in 2030 by 0.5 to 0.7 per cent.
Labor expects the government to launch a new attack on its carbon policies during the campaign, with new estimates by economist Brian Fisher that could apply a financial impact to the more ambitious target.
- SMH/The Age
