Super tax will haunt government: Spender

Spender has been campaigning against the proposed legislation since its inception two years ago and led the charge of opposition in the Lower House during the government’s last term of office.

“I think this is bad for Labor. The ability to run scare campaigns on taxation of unrealised gains means if they pursue this, their credibility will be gone in the next election,” Spender said.

“[The issue] was a bit under the radar during this campaign, but I don’t think it will be next time.”

With the government now holding a majority in the House of Representatives, Spender said the fight against the tax will most likely come down to public momentum rather than political opposition.

“There needs to be a big education campaign to let the public understand that with the lack of indexation, this tax is going to affect many more people than the government suggests,” she said.

“The majority of people who have raised this with me are people who either have large superannuation balances themselves, work in finance or who have a business that is part of their superannuation – not everyday Australians.

“I remember speaking to a group of young guys at Bronte who had literally come straight out of the surf, who were all in the start-up sector. I told them that one of the things I was fighting against was the taxation of unrealised gains. They weren't aware of it. It wasn't something that was on their radar.”

Spender said she was most passionate about the tech and start-up sectors regarding the impact of taxing unrealised capital gains.

She said she believes the government “genuinely wants to pursue a high productivity”, but the Division 296 tax will hamper investment in the sector and drive innovation offshore.

On Friday, Cbus chairman and Labor Party president Wayne Swan dismissed concerns from the venture capital sector that the proposed super tax would deter investment, especially from SMSFs.

Appearing on Nine’s Today program, he said SMSFs were used by millionaires as tax avoidance vehicles and supported the government’s plan to tighten tax breaks.

“The fact is that superannuation tax concessions are there for people to have a dignified retirement,” Swan said.

“They’re not funds where you squirrel away tens of millions of dollars.

“So, the government shouldn’t be giving concessions to people who have many millions of dollars squirrelled away well before retirement to engage in other investment activities.”

Spender said one of the issues that needs addressing is the argument from APRA-regulated funds that the calculations involved in the proposal are too difficult to apply across thousands of member funds, but which is expected to be undertaken by those who have SMSFs.

“We need to call out that argument because as I’ve said before, if the tax was on realised gains, those funds that said they couldn’t do it would definitely want to start calculating realised gains,” she said.

“It's not appropriate to put forward bad policy just on the basis that some people can't deal with it."

Spender continued that it will be an uphill battle to make changes to the legislation in the Senate and with new leaders fronting the Coalition and the Greens, there is also an element of the unknown with which to contend.

New Greens leader Larissa Waters announced on Friday that the party will keep pushing its demands to lower the $3 million threshold to $2 million if the government wants to push the legislation through the Senate.

“Our position is that it should be a $2 million threshold and that wouldn’t impact that many extra people,” Waters said.

Spender said the push should now be to get the Greens to recognise that the taxation of unrealised gains is “a bad idea”.

“The Coalition voted against this bill but failed to engage when the crossbench was trying to reach a compromise - they abstained on Kylea Tink’s amendment that would see the threshold indexed. If it wasn’t for the crossbench in the house and Senate, this would have been law last year,” she said.

Spender added that although she understands the crossbench is not as powerful as it was last term, and ultimately the government does not have to listen to the concerns of independents, it would be in the government’s best interest to do so.

“They don't have to listen to [independents] but the point is that it's in their interest, because bad policy is bad policy, and the impact of that policy will become clear over time.”