Warning that Labor's new tax will smash green energy shift
A prominent green energy investor has warned a controversial new tax to be brought in by Labor will hit them in an awkward area.
As the Albanese government aims to reduce Australia's carbon emissions, Mike Fitzpatrick — a founder of renewable energy infrastructure firm Hasting Funds Management — said the proposed tax on unrealised capital gains will hit his industry hard.
Treasurer Jim Chalmers defended his plan to double the tax rate on superannuation earnings above $3 million, from 15 per cent to 30 per cent, despite growing pressure to ditch the policy which would, most controversially, tax unrealised gains on assets including property, farms and shares held by super funds.
He called the policy 'modest' and claimed the 'changes affect a tiny, tiny sliver of people with superannuation'.
At the same time, Anthony Albanese has placed climate action as a central goal of its agenda over the next three years, aiming to transform Australia into a renewable energy leader while addressing environmental challenges and economic opportunities.
However, Mr Fitzpatrick said the proposed new tax would hurt the very investments that were needed to build a green-energy revolution.
'The Labor Party has been at the forefront of financial reform in this country, from floating the dollar to starting superannuation, but unrealised capital gains tax is a disappointing initiative,' Mr Fitzpatrick told The Australian.
'It will be particularly tough on the start-ups in the technology and renewables space, and I would put renewables at the top of the list.'
Mr Fitzpatrick was the AFL chairman for a decade and a director of Pacific Hydro and Global Renewables before founding 88 Green Ventures, which invests in green technologies.
He was also one of the frontrunners during the Rudd-Gillard Labor government to be chairman of the Clean Energy Finance Corporation.
He said his was hesitant to speak out but felt compelled to join several other business figures to warn the about the impacts of the proposed tax, which is slated to start on July 1 if the legislation is passed by the Labor-Greens majority Senate.
Aware Super chief executive Deanne Stewart, who is in charge of Australia's third-largest superannuation fund, has joined growing calls for the tax threshold to be increased in line with inflation to prevent younger generations from being hit hard.
Nearly 1.2 million Australians have self-managed super funds, which now account for more than $1 trillion of the total $4.2 trillion superannuation system.
Treasury estimates that the changes will only affect 80,000 superannuation balances when introduced this year.
However, the Financial Services Council (FSC) has warned that for those entering the workforce today, an estimated 500,000 super balances will eventually breach the $3 million cap if it is not indexed to inflation.
AustralianSuper and Australian Retirement Trust have lobbied Treasurer Jim Chalmers to automatically index the $3 million threshold each year in line with inflation — warning hundreds of thousands more people could be gradually dragged into the doubling of the tax.
'I think for generations to come, it will be nice to see [indexation]. Whether it is this government or the next government, we would like to see that,' Ms Stewart told the AFR.
National President of the ALP Wayne Swan said the plans put forward by Labor were fair.
'Look, if you're a nurse or a pipe fitter and you're on $80,000 or $100,000 a year, you should not be subsidising tax breaks for people with $3 million,' he told Today on Friday.
'It's about investing more in superannuation. It's about what happens with the tax breaks and who gets them. And people on modest incomes should not be subsidising those with more than $3 million in a superannuation account, which is simply there to minimise tax for the wealthy. That's what it's there for.
'Yes, we do need to look at issues like indexation. And the treasurer has actually made that point this week, although you wouldn't know it from reading the newspapers.'
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