Protecting choice
the government’s super tax reforms and its broader attack on self-managed super undermines aspiration, reward for effort and choice, says angus taylor.
I want to focus on three things in particular:
The first of course, is the importance of self managed super funds for the retirement system here in Australia.
The second is the Div 296 tax on super and the broader attacks on self managed super that we're seeing right now.
And the third is the Coalition's priorities for super and how that fits into the broader economy we're seeing right now.
THE IMPORTANCE OF SELF MANAGED SUPERANNUATION
Now, it’s not lost on me as a Liberal, as someone who is still a farmer and a fifth generation farmer, indeed, down in southern New South Wales alongside my three brothers, as a former business owner, that our SMSF sector is intrinsically linked to Australia's rich ecosystem of small and family businesses.
I think this is unbelievably important in politicians understanding the sector. You understand it better than anyone of course.
Not only do a lot of small business owners rely on self managed super to plan for their retirement, the advisors to the sector, of course, many of whom are here today, are themselves often small businesses.
Financial advisers.
Accountants.
Lawyers.
Australia's 3.7 million small businesses generate a third of GDP, make up 98% of all businesses, and employ around 50% of the private sector workforce.
Self managed superfunds make up a quarter of Australia’s total superannuation assets.
While some would like to see it as a smaller number, we will be very happy in the Liberal party and the National party to see it as a bigger number.
But beyond the statistics, I think it's incredibly important to keep in mind what the sector embodies - what it stands for:
Aspiration and the desire to pay one's own way
Reward for effort and a willingness to back yourself
Independence, self reliance and personal responsibility
And a priority on creating something local, something owned, something that can give back to your family and to your community
These, in my view, are noble values, they are the values that are the backbone of this great country, and have been, of course, for a long, long time.
Which is why it's so confounding for me personally to observe the changes that Labor is making to the sector, after promising no changes before the election.
LABOR’S CHANGES TO SUPER TARGETTED AT SMSF
Now ideally, when I come to these things, I don't want to be overly political, but right now, it's pretty hard to be apolitical about what we're seeing.
At the election in 2022, the now government claimed they wanted to end the superannuation wars.
A year ago almost to the day, we instead had the government reignite those wars.
And only in the last few months have we begun to see what that really looks like.
The new tax is a shocker:
A doubling of taxation on Australians’ retirement savings
A regime that proposes a different approach for a farmer or a small business owner, than a public servant, a judge, or a politician.
For those lucky enough to have a defined benefits scheme, they will enjoy deferred payments and rates of tax set entirely by regulation not legislation
For everyone else, they face an unindexed annual tax on unrealised capital gains
So let me be clear about what this means: Labor's Division 296 tax is an unindexed wealth tax. It is a wealth tax.
We are going down that pathway in this country as far as Labor is concerned, and according to Treasury's own case studies, this policy will double the taxes on the retirement savings of an average earning 21 year old today.
It is a tax on aspiration.
And sadly, it was the first of many tax policies that weren’t taken to an election, that are now standing as broken promises on taxation, flaunting well established principles of tax reform and that when bundled across the economy will make Australians worse off.
We know it will primarily hurt people who utilise self-managed super fund structures.
Combined with other changes – the response to the Quality of Advice Review, the changes to NALE provisions – it is clear it is part of a broader attack on self-managed superannuation, and a regulatory approach that favours one form of superannuation fund, over another.
That's what we’re seeing, and I have no doubt whatsoever this has been encouraged strongly and driven by the paymasters of the Labor Party, their union official mates.
This is the wrong way to look at superannuation.
Under law of course, superannuation is compulsory, but with that option should come choice.
Australians can’t opt out, even if it means Australians face lower take home pay and higher non compulsory payments than the OECD average in other advanced economies.
They can’t opt out of it so the trade off must always be choice.
Choice about whether they use an industry fund or establish your own fund.
About the risk profile of your investment mix.
And whether you use your savings for a first home or in equities.
And whether you wish to preserve your lump sum or invest a portion of it in a retirement product.
Those choices are absolutely fundamental to Australians being able to tailor and customise their investment strategy to their own needs and their own retirement.
The framework must always come back to what benefits Australians in retirement and the evidence on this is very, very clear. The research is very, very clear that’s their health, their wealth and their welfare.
Home ownership is essential to all three.
And that's why Peter Dutton and a Peter Dutton Government is committed to allowing Australians to access their super to secure a housing deposit.
Under the Coalition's policy, first home owners and women over 55 will be eligible to draw down on their superannuation for a deposit while preserving the value on the sale of the home back into their superannuation funds.
I appreciate this policy has its critics, but it's not sufficient for a compulsory retirement system to stay silent on such an iconic institution in Australia as home ownership.
It's certainly one of many policies that the Coalition is committed to that will improve outcomes for Australians from our retirement system. But they include:
Implementing the Quality of Advice review in full and in a timely manner
Supporting sensible deregulation of our financial system that reduces complexity, red tape, and improves customer outcomes
And driving a revitalisation of our financial advice industry, to ensure that Australians can access the finance they need, access to the advice they need, and get access to the coverage they need
COALITION PRINCIPLES
Now as we develop further policy, the first principle we will apply throughout is that superannuation is Australians’ money.
Not the government's money.
Not the Prime Minister’s money.
Not the Treasurer’s money.
Superannuation is Australians’ money.
As research has pointed out this week, when it comes to super, Australians trust themselves first, funds second and the government last.
That is a message that needs to be repeated to government. Australians make long term decisions about their super.
Australian governments should be extremely cautious about raising taxes on Australian super, watering down consumer protections on APRA regulated funds or trying to direct Australians’ retirement savings to meet political goals, not the goals of the individuals.
Change has to be conservative, measured and responsive to the real gaps that we see in the system rather than the whims and objectives of the government of the day – objectives independent of the interests of the individual investor.
It's essential that we don't just preserve Australians’ retirement incomes, but that we maintain confidence in superannuation as an institution.
Retirement is an individual experience. There's no one size fits all product for retirement.
We need policy that delivers choice, informed options, and the advice and advisor network to deliver the very best outcomes in retirement.
Self managed super funds are an integral part of that choice.
Self managed super was a key component of the original SIS Act that was legislated in 1993 and it will remain critical under a future Coalition government.
And just as Peter Costello and John Howard's government supported the sector, so too will a future Coalition government act to support choice, individual flexibility and simplicity of regulation for Australians who choose to utilise it.
All of this will form part of our broader economic plan to be focused on aspiration, boosting productivity and growing our economy so that all Australians can benefit from a bigger pie. Not just redistributing the existing pie which is the obsession of this government.
Supporting aspiration can't be conditional on a means test, or a union affiliation. It requires a whole of government, back to basics economic agenda, and central to that is:
Supporting small business aspiration and entrepreneurship
Delivering an incentive based tax system that returns bracket creep, and supports lower, simpler, fairer taxes
Rewarding work, not welfare
Containing the growth of government spending and government overreach
And getting the basics right, where government has an important role to play like affordable, reliable energy, high quality education, well targeted critical infrastructure, and defending our great nation
Above all else, we need a government prepared to pull every lever to bring down inflation, and boost prosperity and productivity.
Ending government waste and making sure every taxpayer dollar gets value for money. Some of the waste I have seen in recent months coming out of this government makes me shudder. It makes me shudder because I know how hard Australians have worked for every single dollar that is paid in tax.
Workplace laws that are simple and flexible, encouraging workers and employees to sit down and work out how to make their workplaces more competitive, and more prosperous for owner and employee alike.
Competition policy that supports small business owners and empowers consumers, not lobbyists and big corporations.
And of course, we need a practical, sensible, neutral energy policy which delivers that affordable, reliable energy.
This won't just address the cost of living challenges that Australians all face right now and it’s top of mind for most Australians, but it will create as well, an economic environment that delivers better returns, better investment opportunities, and better outcomes for all.
We’re deep in the policy development process right now. And we'll have much more to say on this in the year to come.
But I'm looking forward to engaging with the leaders from your association, to make sure that we have policies in place as we go into the next election, which support the important role your sector plays.
In the meantime, can I encourage you strongly to continue your advocacy. I've heard from many in your sector over the last 12 months or so and I encourage you to continue to speak out for what you know to be right and true.
And I will continue to do the same. I'll be encouraging my colleagues to do the same every single day as we all fight for a better, more prosperous and more successful Australia.
Thank you very much
This is an edited transcript of an address given by Shadow Treasurer Angus Taylor to the SMSF Association National Conference on 22 February.