6 days ago
The world's gone topsy turvy as the GREENS become voice of reason (!) on super - as a rift festers between two of Australia's most powerful men: PVO
Who would have thought that the Greens could become the voice of reason in the current superannuation tax debate?
But with negotiations between the Labor government and the opposition breaking down before they even started - courtesy of the intransigence of Treasurer Jim Chalmers - it is the Greens who have indicted a willingness to try and compromise to find common ground.
Labor's starting position is that it hopes to tax super holdings above $3m at a 30 per cent rate, including unrealised gains.
So earnings on balances over that sum will get taxed, as will the super assets themselves if they rise in value - even if you don't sell them.
That is the taxing of paper profits - the clear worst design feature in what Labor is proposing to do.
The Greens want the threshold lowered to $2m instead of $3m. But unlike Labor they are open to both indexing the rate at which the tax will be applied and discussing at least a partial removal of taxing unrealised gains.
The Greens have expressed concerns at illiquid assets (think property) being taxed, because people aren't able to sell down their holdings to pay such a tax.
If the Greens come to realise that you can't differentiate between liquid (think cash, shares) and illiquid assets when it comes to apply an unrealised gains tax, then we are in business.
A reasonable compromise might be possible.
That leaves the Greens still at the negotiating table but, at this stage at least, not the Labor party. Why? Because the Treasurer just doesn't get it.
Chalmers simply can't get his non-economist head around the deficiencies of the policy as it currently stands. Even though the Greens can.
What does that say about this Labor government?
While some people won't like the idea that a 30 per cent tax on super earning can start to apply from a $2m threshold rather than a $3m one, that's hardly unreasonable in the world of most Australians.
Especially if it is indexed, as Greens have expressed a willingness to embrace.
Given the tax rates working-age income earners pay, 30 per cent on earnings on super assets above $2m isn't exactly a socialism panacea of a policy.
With an ageing population it's part of the tough medicine the budget needs, especially if governments keep spending money they don't have rather than embarking on root and branch budget repairs.
The opposition appears to be fundamentally opposed to lowering the threshold from $3m to $2m, but it's hard not to think that's an example of them being in the pocket of wealthy Australians who have for too long used their super balances as a means of legal tax avoidance.
If Labor was more reasonable it would see opportunity in the Greens coming to the negotiation table.
It might have little choice - despite Chalmers' refusal to accept a compromise - because without the support of the Greens or the opposition there is next to no chance of the super tax hikes passing the senate.
Even after Albo's embrace of defecting Greens senator Dorinda Cox, who has been welcomed into the Labor fold despite the PM previously chastising Senator Fatima Payman for walking away from Labor after she was elected at the 2022 election.
In Albo's myopic world view it's wrong for an elected Labor senator to do that - she should have resigned her seat according to the PM - but it's absolutely fine for a Green senator to do the same if it benefits the Labor Party.
Yes it's contradictory and hypocritical, but don't let such inconsistencies prevent you from accepting Albo's explanation that it's reasonable and fine.
The weird thing is Labor get little value from the defection. It doesn't chance the fact that the Greens control the senate balance of power.
It doesn't make the passage of the super laws, without compromise, any easier. And there are a host of other downsides to accepting Cox into Labor's ranks, including her past anti-Labor rhetoric and accusations of bullying the PM says have been resolved but others aren't so certain about.
With the Greens breaking from tradition and extending the hand of compromise to Labor, Albo now has a choice: stand by his stubborn treasurer who doesn't want to compromise the existing poor drafting of the super bills.
Or overrule his subordinate and come to the table to negotiate an outcome that delivers more revenue without the design flaws currently being picked apart by experts.
It could be a pivotal moment in the relationship between the PM and his Treasurer. It seems likely the opposition will use the new super taxes as a wedge political issue come the next election.
If Labor sticks to its guns and somehow gets the laws past in their current format anyway, by using its election mandate to force others to acquiesce, the Opposition will have significant ammunition.
If a genuine compromise with the Greens does happen, we've already seem senior opposition frontbenchers in the media attacking the 'Labor Greens Coalition', in the hope that doing so takes some shine off of the new government.
This recent development has energised the PM to return to the negotiation table with the Coalition, defying the hopes and dreams of his treasurer.
We now know Chalmers doesn't at all see eye-to-eye with Albo when it comes to compromising with the Coalition. Animosity between the pair will only rise if a deal gets done, brokered by a PM without the support of his minister responsible for super and tax.
There is always tension between treasurers and prime ministers. It happened between Bob Hawke and Paul Keating, as well as between John Howard and Peter Costello.
But when a PM and Treasurer put stakes in the ground the way Albo and Chalmers have, which way the ensuing discussions go will certainly leave one of the pair diminished.
Let's wait to see who that is.
