Deputy Leader of the Opposition Sussan Ley has criticised Labor for lacking constraints in spending following the centre-left government’s move to double the tax on superannuation earnings for balances over A$3 million.
She alleged that Labor is already spending A$115 billion extra over the forward estimates and that the recent super tax changes would raise “just about $1 billion” to boost the government’s bottom line.
“They made a virtue of supporting every dollar of the pandemic spending to save lives and livelihoods,” Ley told ABC’s radio program RN Breakfast on Thursday.
Labor Calls Changes to Super Modest
Treasurer Jim Chalmers said the “modest” super tax change to come into effect from 2025-26 would only affect 0.5 percent of all Australians while the rest would “continue to receive the same generous tax breaks.”Superannuation, also known as ’super' in Australia, is a legislated system of placing a minimum percentage of an individual’s income into a chosen financial fund to support the individuals when they retire.
In Australia, workers typically pay 15 percent tax on their super contribution, but under the new laws, those with over $3 million in their super accounts will be taxed at 30 percent.
Prime Minister Anthony Albanese, who pledged during the election that no major changes to the super fund would be made, had also defended the new tax saying it would “improve the sustainability” of the superannuation system.
But Ley said the government misunderstands the “sound fundamental basis”, which is “it’s your money; you deserve to keep more of it.”
She warned the $3 million is not indexed hence it will change over time, adding that Labor “doesn’t understand how to manage money and doesn’t have spending constraints anywhere within its programme.”
Budget Going Up
Labor’s 2022 October budget showed the government had committed to heavy spending on NDIS, paid parental leave, childcare subsidy, free TAFE and university places, as well as electric vehicle subsidies.In particular, spending on welfare programs like aged care and veteran services will soar from $76.3 billion (US$49.6 billion) in the current financial year 2021-22, up to $102.5 billion by 2025-26, according to budget estimates. At the same time, spending on family and childcare assistance will increase from $37.4 billion to $48.9 billion over the same period.
However, the rapid growth of the NDIS has received the most attention, with budget papers revealing handouts to jump from $29.8 billion to $51.8 billion.
Former Commonwealth Treasury official Gene Tunny says the federal government must cut spending to have any chance of reining in inflation.
“That was always going to have an inflationary effect because you’re increasing the amount of money, but you’re not increasing the productive capacity of the economy by the same proportion. Hence, you have too much money chasing too few goods,” Tunny told The Epoch Times.
“That sort of thing was always going to end up with some inflationary impact. So we were starting to see that before the war in Ukraine, and now, the war has amplified that.”
