These bills, the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 and the Superannuation (Better Targeted Superannuation Concessions) Imposition Bill 2023, are about making sure our superannuation system fulfils its objective of providing for people in their retirement. To fulfil this objective, I agree, as do many of my constituents, that excessively large superannuation balances should not receive generous tax concessions and that it is not the pure intention of superannuation. I support the objective of this bill. But, as it’s currently drafted, it has the potential for some very serious unintended consequences. It must and can be improved, but I must say that, until these improvements occur, I can’t support the bill at this time.

These bills seek to achieve their objectives by imposing an additional 15 per cent tax on superannuation earnings where the balance of superannuation exceeds $3 million. It’s estimated that only about 80,000 Australians have this amount of money in their superannuation savings—not many by national standards. I support the overall intention of this bill, and it’s why I supported the government ‘s Superannuation (Objective) Bill 2023, which was passed by this place earlier this year. I agree that the aim of our superannuation system should not be for it to be used as a vehicle to avoid tax, sometimes with the intent of building wealth to pass on to the next generation. Superannuation is about safeguarding Australians’ retirement. That’s what it’s about. Unfortunately, past government decisions have not adequately considered the pure purpose of superannuation, leading to some damaging consequences.

One such decision is the former coalition government’s early-release-of-super scheme, introduced as an emergency measure at the beginning of the COVID-19 pandemic. This scheme allowed about three million Australians to withdraw $38 billion from their superannuation early, before their retirement. Modelling by the Super Members Council, the representative body for industry super funds, now shows that this scheme has serious long-term consequences for our economy. They’ve found it will ultimately result in more Australians relying on the age pension and lower tax being received from future superannuation. According to the Super Members Council analysis, a 30-year-old who withdrew money from their super under the scheme will be over $90,000 worse off when they enter retirement. This means more people are likely to rely on the age pension. To cover this shortfall, estimates showed that all of today’s 20-year-olds may pay out about $3,000 more in tax. We also know that, under the early-release-of-super scheme, more women than men withdrew their superannuation, and this means that down the track women will be disproportionately impacted compared to men, reinforcing a problematic situation where already women retire with far less superannuation than their male peers. Government policies that treat superannuation as if it’s cash on hand fail our future generations, and that’s simply not good enough. It’s why we as legislators must safeguard superannuation for its specific intention, and that is to safeguard a dignified retirement.

While I support the objective of this bill, I have also listened very carefully to the concerns expressed about the form in which it’s currently drafted. That’s what an Independent member of parliament needs to do. I take my position as a conscientious legislator very seriously, and I’ve scrutinised this piece of legislation, as I do every piece of legislation that comes before me, on its individual merits. I’ve asked myself: what is the problem that this law is aiming to solve? I’ve looked out for potential unintended consequences and whether these can be mitigated, and I’ve asked: is this bill good for the nation, is it ethical, and does it demonstrate good governance? Specifically, I ask: what does this mean for the people I represent, the people in Indi? This bill ticks some of these boxes. As I said earlier, I support measures to ensure superannuation is setting up a dignified and sustainable retirement system. This is ethical and it is good for the nation. But I have two major concerns with this bill that suggest that it should be improved to achieve its objective and avoid unintended outcomes that really could be perverse for the very people whose futures we’re trying to protect. Until these concerns are addressed, I will not be supporting these bills.

First, many superannuation companies and tax experts are concerned that this $3 million is not indexed. We don’t currently index any taxation—that I admit. We don’t index income tax brackets. But, as we saw with the debate on the Treasury Laws Amendment (Cost of Living Tax Cuts) Bill, the problem of bracket creep, of pushing taxpayers into higher tax brackets where they pay more tax without a material change in their income, is going to be very hard to address without applying indexation. It also creates uncertainty and instability for taxpayers—something that the Tax Institute of Australia is very concerned about. So we must put indexation of taxation on the table for discussion. This is a big, national debate we really need to have. That includes indexing the $3 million cap under this bill.

The second concern that I have is that the bill in its current form is taxing unrealised capital gains. This raises some very genuine and serious concerns, and the member for Goldstein has just outlined many of them. I’m really concerned about the unintended consequences for a very specific group of people I represent. These are people who hold their family farms in self-managed super funds. This includes family farms from my electorate of Indi and, of course, family farms all over the nation. It’s very common for farmers to not make regular superannuation contributions. Instead, their land is effectively their superannuation. In order to succession plan, the next generation then takes on the running of the business of the family farm and makes lease payments to the retiring farmer, usually their mother and father, which is effectively their parents’ retirement income. These lease payments do not necessarily increase with an increase in property values.

If this tax on superannuation above $3 million goes ahead, these farming families may not receive the lease payments or rental yields to meet the annual tax bill on their land assets without ultimately having to sell the land itself. This, dangerously and seriously, has very negative potential consequences for succession planning of family farms, and this is already a deeply challenging task for rural Australia and a deeply challenging issue right across my electorate.

The two problems I’ve identified can be addressed, first, by indexing the $3 million threshold and, second, by excluding agricultural land assets from the calculation of total superannuation balance using the Australian Taxation Office’s existing definition of ‘primary production asset’. These, I believe, are reasonable and simple amendments that would not take away from the important intent of the bill: to make sure our superannuation system fulfils its objective of providing for people in their retirement. I’m disappointed that the government has failed to take on these recommendations, but I’m hopeful that they will in the Senate. These are reasonable amendments that are being put before the House. I think it is the role of parliament, after all, to debate, to improve and to pass good law that benefits all Australians. So until this bill is improved, I won’t be supporting it in the House of Representatives, and I encourage my colleagues in the Senate to make the changes necessary so that, ultimately, I can support it.