Teal MPs say capping superannuation at $3m might undermine confidence in saving for retirement

Independent MPs including Kylea Tink, Zoe Daniel and Zali Steggall have said that capping superannuation balances at $3m may undermine the confidence of people saving for retirement.

The teals have joined the Coalition in warning against capping, which appears to be the most likely measure to implement Labor’s objective for super to be “sustainable and equitable”, saying the government should look to raise revenue elsewhere, including company profits and tax evasion.

Despite the pushback, most crossbench MPs have also said they are open to the debate, and senators holding the balance of power have spoken up in favour of curbing generous tax concessions to help with budget repair.

After starting the conversation on the “sustainability” of the super tax concessions on Monday, the debate has narrowed to the less than 1% superannuants with more than $3m in their retirement accounts.

While insisting the government has made no decisions, the treasurer, Jim Chalmers, has pushed the conversation in the direction of caps for people with large superannuation balances, noting that the average Australian had about $150,000 in their account.

Tink said that government “kite flying” was “causing anxiety” in her community of North Sydney.

“Any time the government talks about superannuation, it doesn’t matter if you put a number to it or not, anyone building up their super balance becomes concerned,” Tink told Guardian Australia.

“The great fear is: what is the point saving for retirement if the government is going to come after it?”

Tink said it was “really disappointing” the government was looking to “shore up a revenue shortfall” by coming after “ordinary investors and Australians” given the budget’s “disproportionate reliance on income tax”.

Tink suggested targeting tax minimising multinationals instead.

Investors are told to think of a “10-year investment” so reform “needs to happen over the next 10 years as well” to prevent people being “penalised”, Tink said.

Wentworth MP Allegra Spender said in her community “many want to see budget repair and feel super could be reformed”.

“But there is a lot of uncertainty about what the government is actually suggesting, and concern this is an ad hoc grab rather than real reform that will grow the pie.”

On Friday, Daniel said she was “cautiously open to conversation about this” but the government should consider other revenue measures such as a windfall profits tax.

“I do see it as a class war tactic,” she told 3AW Radio. “I’m not overly keen on political parties of either persuasion fiddling around with super, which people invest in [in] good faith, only to see rules change under their feet.

“I worry for those in latter stages of working life or retired who are suddenly thinking ‘what’s the deal now with all that money I put in?’.”

Steggall said, “it’s not a question of where you put the cap, it’s a question of principle”.

“It is very important that people can trust the rules around investing in their future through superannuation and it is damaging to investor confidence for the government to want to suddenly change the rules, especially without mandate.

“People make many decisions and saving choices during their working life, like salary sacrificing, and this should not now be punished with a kneejerk policy by the Albanese government.”

skip past newsletter promotion

Sign up to Guardian Australia’s Afternoon Update

Our Australian afternoon update email breaks down the key national and international stories of the day and why they matter

Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy. We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply.

after newsletter promotion

Sophie Scamps, the independent MP for Mackellar, said, “super is an incredibly important pillar of Australia’s social fabric and many people have made investment decisions looking at the long term”.

“However, we do need to acknowledge we’re in a debt crisis, so sensible measures to repair Australia’s debt should be considered.”

Scamps said she favoured “cracking down on multinationals, such as the fossil fuel companies who pay little or no tax” ahead of “taking away tax breaks from Australians”.

Centre Alliance MP Rebekha Sharkie said she was “certainly open to considering it”, especially due to Chalmers stating that by 2050, tax concessions on super will outstrip spending on the aged pension.

“The purpose of super is to provide for a comfortable life post your working years,” she told Guardian Australia. “I do agree that it’s not there as some type of huge inheritance transfer.”

“We need to make responsible decisions when we are in $1tn of debt.”

Curtin MP Kate Chaney said that “some people with massive balances are using [super] for tax avoidance”.

“In principle, I’m not against capping the super balance for which you’re able to get tax concessions, but until I’ve had the opportunity to properly understand the impact on my electorate, I wouldn’t want to pin-point a particular threshold.

“If these changes are made, the transition would need to be fairly managed.”

Several crossbench senators, including David Pocock and Jacqui Lambie Network’s Tammy Tyrrell, have lent support for limiting super tax concessions.

In a statement, Pocock said he is “not interested in attacking people’s super … [but I do want to see] an end to generous tax concessions for superannuation accounts with multimillion-dollar balances”.

But United Australia party senator Ralph Babet told Guardian Australia, “I don’t think we should be capping super balances”.