Super stoush reveals teals’ leanings

It was a message hammered relentlessly by conservatives before the election: the teals are just Greens in disguise.

For the community independents to portray themselves otherwise, Peter Dutton told one media conference during the campaign, was “dishonest”. They were, he said, just Greens who have “just got a teal T-shirt on”.

This was a variation on an old theme. At the 2022 election, the Liberal Party-aligned outfit, Advance, put up big signs portraying ACT independent Senator David Pocock and Member for Warringah Zali Steggall in Superman pose, ripping open their business attire to reveal the Greens logo on a T-shirt.

The Australian Electoral Commission found that the signs were misleading and deceptive, ordering them to be taken down.

The teals-as-Greens theme only intensified ahead of the recent election, however, as the Liberal Party attempted – largely unsuccessfully – to reclaim former blue-ribbon seats lost to independents. Teal, as the Advance campaign would have it, “is just another shade of green”.

That’s just not true, says Frank Bongiorno, a professor of political history at the Australian National University. Yes, he says, the teals are socially progressive, “but their economic views in many instances seem to be quite dry and very much in line with someone like a Malcolm Turnbull, whose economics was also incredibly dry – very much what we used to call economic rationalism”.

This may come as a surprise to progressive voters who, at election time, tactically switched their votes from Labor or the Greens to a teal candidate, with the intention of keeping a conservative out. When it comes to certain issues, such as industrial relations or tax reform, the teals are philosophically closer to the Liberals than to Labor or the Greens.

Pat Leslie, a research fellow at ANU who tracks the way the votes fall in parliament, says there is a “bit of a divide” between the teals, with some, such as Monique Ryan and Zoe Daniel, tending more progressive than others, such as Kate Chaney and Allegra Spender.

“But more often than not,” he says, “they’re on the right side, that is, closer to the Coalition, when it comes to economic policy.”

One example of the teals’ economic conservatism during the last parliament arose late last year when the Albanese government put forward legislation to double the tax on earnings for the portion above $3 million held in superannuation accounts.

“On that issue,” says Leslie, “they’ve already been quite clear that they’re on the right wing … They all voted with the Coalition.”

Every one of the so-called teal members of the House of Representatives – Spender, Chaney, Daniel, Ryan, Sophie Scamps, Steggall and Kylea Tink – joined the Coalition parties to vote against the changes.

Their combined numbers were not enough to prevent Labor’s proposed legislation going through in the lower house, but it was subsequently blocked in the Senate, with David Pocock and Jacqui Lambie opposing. Allegra Spender claims credit for persuading them.

So when the government’s legislation died with the end of the 47th parliament, it looked like some 80,000 of Australia’s wealthiest people had been spared the new tax, which would have cost them collectively $2.3 billion in the first year, growing to $40 billion over a decade, by the government’s calculation.

Had the election played out as most observers expected a few months ago, Labor’s plan to introduce a bit more equity into the superannuation system would have stayed dead, because the teals would have held the balance of power in the lower house.

Instead, of course, Labor won 94 of 150 seats in the house, and the Greens – who not only support the principle of Labor’s plan but would prefer to take it further and levy the extra tax on super balances above $2 million – won the balance of power in the Senate.

No surprise then that the government is making those superannuation reforms an early order of business after the parliament resumes in July. It has a mandate; the changes were part of its election policy platform.

The make-up of the new parliament leaves those 80,000 people with super balances of more than $3 million – almost all in self-managed funds, where some have more than $100 million – completely unprotected in the parliament. Their erstwhile saviours in the Coalition and on the cross bench no longer have enough votes in either chamber to stop Labor and the Greens.

All they can do is complain, in the hope of stirring enough popular opposition to persuade the government to back off. The chances of that happening are just about zero, but that has not deterred those wealthy superannuants and their supporters in politics and the conservative media from running an almighty campaign against the proposed reforms.

Some of the complaints have been pretty virulent. In a recent piece in The Australian Financial Review, one finance academic, associate professor Mark Humphery-Jenner of the UNSW Sydney business school, railed against “the moral repugnance of targeting someone merely because they are wealthy”.

Interestingly, however, many of those who oppose the reforms concede that something needs to be done to stop the well-off from using superannuation – which was supposed to provide people with a comfortable retirement – as a vehicle for tax minimisation and intergenerational wealth transfer.

Allegra Spender, for instance, the teals’ go-to person on tax matters, says it is reasonable to reconsider the tax treatment of super balances above $3 million. She just doesn’t like the way the government is going about it.

She has several objections, the major one being that it will capture unrealised gains. For example, say your self-managed superannuation fund (SMSF) holds real estate valued at $3 million at the start of the year, and its value rises to $4 million at the end of the year. You will pay additional tax on the proportion of the new total that exceeds the government’s $3 million threshold. That is, since the $1 million represents a quarter of your balance, the 15 per cent tax applies to $250,000 – amounting to $37,500.

Spender says taxing these paper profits “even though … [they] may never be realised” is a breach of long-standing tax practice. “And there’s currently no provision to return taxes paid, if the asset value falls, or even to index the high balance level as inflation pushes more and more people over the limit,” she says.

These are all contested claims, as are predictions that Australian start-up ventures will become “uninvestable” and that farmers will be forced to sell up in order to pay their tax bills.

First, the assertion that the taxation of unrealised gains breaches standard tax practice is actually not based on any “firm principle”, says Professor Miranda Stewart, a tax specialist with the University of Melbourne Law School.

“We tax unrealised gains in land tax. We tax unrealised gains in council rates. These are taxes on the value of assets [levied] every year,” she says.

Even if it is a “bit novel” in the context of superannuation earnings, she argues, that does not make it a bad way to try to rein in the gross inequities of the current system.

She notes the Association of Superannuation Funds of Australia (ASFA) calculation that couples need $690,000 and singles $595,000 to provide for a comfortable retirement.

“So the $3 million threshold is five times the savings required to achieve a comfortable retirement. Five times!” she says. “Anyone who has in excess of that is way beyond the purpose of the system.”

Brendan Coates, director of the housing and economic security program at Grattan Institute, could not agree more. The proposed change, he says, is a “pretty modest” attempt to address the reality that superannuation “has turned into a tax-subsidised inheritance scheme”.

Much of the blame for this can be sheeted home to the Howard government, which in 2006-07 allowed people to shovel up to $1 million into their tax-advantaged super accounts. That amount has since been capped at $30,000.

Labor’s new tax, says Coates, “is basically about curbing the most successive aspects of the current regime, which is to say reducing – not removing, just simply reducing – the tax breaks on offer for those 0.5 per cent of people with more than $3 million in their super”.

The taxation of unrealised gains is the simplest way to go about reform, Coates says, and the proposed assessment method, using tax office data, “is an easy piece of accounting for both self-managed super funds and APRA-regulated funds to do”.

Even as things now stand, all super funds are required to value their fund balance each year.

“The alternatives that have been put forward – things like, capping the amount that you can have in super at $3 million – would be more disruptive than the option the government has gone with,” Coates says.

“They would involve a lot more cost, such that the juice isn’t worth the squeeze in terms of collecting the tax.”

Coates dismisses as “nonsense” the argument that because the government is not planning to index the $3 million threshold, it will over time disproportionately impact younger people.

“The main people hit by this tax will overwhelmingly be older Australians, both today and for decades into the future. Even in three decades’ time, it’s only going to be hitting the wealthiest 10 per cent of people approaching retirement.”

Of course, there is nothing to prevent a future government increasing the threshold, as regularly happens with income tax rates.

In any case, says Coates, “We’re not talking about enormous liabilities for most people.

“Eighty-five per cent of this [affected] group is over the age of 60, and therefore already has to meet things like the minimum drawdown requirements, which are going to be a larger or more onerous call on liquidity than this tax will ever be.”

So to the next complaint made by Spender and other opponents: that the government does not give money back to those whose super balances decline.

Professor Stewart points out that if you have zero or negative earnings during a year, the excess super balance tax does not apply, even if the account balance is more than $3 million. And losses can be carried over to reduce the tax payable in future years.

This is a design feature that addresses another concern of the tax opponents: that self-managed fund holders will be less likely to invest in start-up businesses, which often have volatile values.

Coates notes that self-managed super funds currently account for only about 5 per cent of the total invested in venture capital. Even if that declines a bit, the impact on innovative businesses will be “infinitesimal”.

Next, there is the complaint that people who hold illiquid assets, such as businesses or farms or other real estate or even artworks in their SMSF accounts, could find themselves without sufficient ready funds to pay.

Robert Breunig, director of the tax and transfer policy institute at the ANU’s Crawford School of Public Policy, has little sympathy.

First up, he says, people should not be running businesses or property portfolios inside their super. It’s simply a tax dodge that allows for the transfer of wealth within families.

“This has nothing to do with retirement income,” he says.

“What they’re doing that’s particularly devious is putting a bunch of property into these things. They’re never selling it and never paying tax on it. Then when they die, they pass it on to their kids tax-free.

“That’s a problem that needs to be fixed, and this tax fixes that problem.”

Furthermore, as the experts note, both prudence and current rules require that funds should hold enough liquid assets to cover “tax events”.

Most people who are wealthy enough to have more than $3 million in super have other assets as well, not to mention high incomes. The likelihood that they could not come up with the funds to pay the tax on the income from their super is very low.

Some opponents have also warned that people will rearrange their financial affairs in such a way that yields far less revenue than the government anticipates.

Brendan Coates acknowledges that the new tax arrangement will “require some adjustment by some parties. But less adjustment than in any other way of implementing this tax.”

Superannuation will remain as tax-effective or more tax-effective than other places to park savings.

“So I don’t think there’s any evidence that says it’s going to collect less revenue.”

The bottom line, says Miranda Stewart, is that the various objections raised about the super tax changes are furphies. “Rich people don’t want to pay more tax … That’s the explanation. It’s as simple as that,” she says.

Also simple, says Frank Bongiorno, is the reason the allegedly leftie teals are backing the well-off. “I suspect it reflects the socioeconomic characteristics of their base of support, frankly, in some of those seats they represent,” he says.

The electorates the teals hold are among the richest in the country. Allegra Spender’s seat of Wentworth, which covers Sydney’s eastern suburbs, is the richest.

The 80,000 Australians with super accounts worth more than $3 million make up a tiny, if immensely privileged and very loud, part of the Australian electorate. And a fair proportion of them live in Point Piper and Vaucluse.

Coates sees the push for reform of high-value super as a litmus test.

“If we can’t even roll back tax concessions for which, everyone agrees, there’s no policy intent or purpose, that is only going to affect 0.5 per cent of Australians … then what hope have we got of getting more serious tax reform up?”

There doesn’t seem to be much risk of this change failing to pass in this parliament. And three years from now, that tiny cohort of people impacted will likely still be unhappy. By then, the other 99.5 per cent of Australians will have moved on, secure in the knowledge they are unaffected.

Perhaps when they vote, they will do so remembering which politicians joined the campaign on behalf of the very rich, and mindful of the fact that, when it comes to tax, teal is not another shade of Green. 

This article was amended on June 3, 2025, to clarify how superannuation balances above the $3 million threshold would be taxed under the reform.