A lifelong Labor member and former colleague of Anthony Albanese has branded the Prime Minister’s shock new superannuation policy as ‘ethically wrong’.
Labor has vowed to tax anyone with retirement savings above $3million on all notional gains – even before they’re cashed in – if the government is re-elected on Saturday.
Those with a self-managed super fund would be taxed at 15 per cent regardless of whether they actually sold off any assets like real estate.
The policy is a radical departure from the fundamental principle of only applying capital gains tax to assets after they are sold for a profit.
The government’s groundbreaking policy has never before been applied to superannuation anywhere else in the world.
Despite that, Labor still included it in the pre-election March Budget.
Former Labor MP Michael Danby described Labor’s plan to tax unrealised gains on super as ‘ethically wrong’.
‘It’s a mistake that shouldn’t be proceeded with,’ he told Daily Mail .
‘The fact that these are unrealised gains, people may not realise they even have them.
‘People have been frugal and put aside money for their superannuation and for it to be, even part of it jeopardised, and have to be sold – when it’s not even realised is wrong, it’s ethically wrong.’
Mr Danby likened the ALP’s super policies to former Opposition Leader Bill Shorten’s 2019 election policy to tax shareholders on franking credits.
‘I think it’s a minefield and it’s as bad as the idea of taxing franking credits – it’s a mistake,’ he said.
But Mr Danby doubted Labor’s super policies would hurt its re-election chances.
‘I don’t think it will because it’s come to light too late for people to realise what’s happening,’ he said.
Earnings taxes on balances above $3million would also double to 30 per cent under Labor’s plan which last year stalled in the Senate.
‘If it emerges from that other policy, it’s a bad idea too,’ he said.
As Opposition Leader, Mr Albanese promised ahead of the 2022 election that superannuation would remain untouched.
‘We’ve said we have no intention of making any super changes – one of the things that we’re doing in this campaign is we’re making all of our policies clear,’ he told reporters.
Despite that pledge, Labor introduced the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill in 2023.
Labor won a majority at the last election and wasn’t forced into introducing this policy to placate the Greens or independents.
This was different to 2011, when former prime minister Julia Gillard introduced a carbon tax as the leader of a minority government, breaking a 2010 election promise.
The Albanese Government’s super proposal stalled in November 2024 when it failed to pass the Senate with the Greens wanting the threshold for taxing unrealised gains reduced from $3million to $2million.
The idea of taxing super assets before they were sold would mark the most radical departure from the capital gains tax since it debuted in September 1985 under Bob Hawke’s Labor government.
Mr Danby, who held the old seat of Melbourne Ports from 1998 to 2019, is campaigning for Labor MP Josh Burns in the renamed electorate of Macnamara on the eastern side of Port Phillip Bay.