Opposition Treasury spokesman Ted O’Brien is seeking the advice given to Jim Chalmers on the constitutional risks of Labor’s controversial super tax changes, as superannuants prepare for a legal challenge if the Treasurer sticks by the current wording of his bill.
Labor wants to introduce an unrealised capital gains tax for super accounts starting with a $3m threshold without indexation, while Dr Chalmers is seeking special powers via a clause that would allow the Treasurer to further “modify” the super tax rules after the original bill is approved by parliament.
Some constitutional lawyers have argued that this so-called Henry VIII clause could be unconstitutional and cause political headaches for Labor.
On Thursday Dr Chalmers defended the clause, saying similar rules were used by the previous Liberal government.
“Legislation introduced by my Liberal predecessors included clauses like this one,” Dr Chalmers said. “They are not unusual and have been used consistently in legislation by governments of both political persuasions for many years.
“The proposed Better Targeted Superannuation Concessions legislation and regulations have both been available for well over a year. Any change to the scope of the regulation-making power would require an amendment to the act.”
The Australian also has been informed that a group of superannuants is preparing to mount a legal challenge when Dr Chalmers introduces his bill into the new parliament.
Mr O’Brien said he would officially ask the Treasurer’s office what constitutional advice was received on the bill’s wording.
“By seeking to tax unrealised capital gains, Chalmers is already crossing a red line in tax law, and now it seems he wants to take the constitutionally questionable step of transferring power from parliament to himself, allowing him to change this law at a later date,” he said.
“It begs the question, what is he planning to change in the future which he is not prepared to reveal now? I accept Labor won a whopping majority at the election, but let’s not forget the old adage about the danger of absolute power.”
Opposition leader Sussan Ley also criticised the Treasurer’s plans, saying they created even more uncertainty around superannuation tax regime.
“How can you possibly trust this government with a measure that actually allows them to raise the rate if and when they choose, without consultation with the Australian parliament? That means without consultation with the Australian people.”
The special clause would allow the Treasurer to make changes to super computation and withdrawals, balances and total contributions.
It also would include several regulations on super tax including the individual to whom the modification relates; whether a superannuation interest of the individual is in retirement phase; whether a superannuation interest of the individual is a defined benefit interest; the rules of a superannuation fund; and whether a superannuation interest of the individual is subject to a payment split among others.
Dr Chalmers’ office regards the bill’s provision of such powers as being consistent with standard practice for specifying further details about the operation of the rules through regulations.