Australia’s peak farming body has warned that superannuation changes announced by Treasurer Jim Chalmers could cool investment in agriculture, unless the detail is worked through with farmers.
National Farmers’ Federation CEO Tony Mahar is now calling on the government to undertake formal consultation before the measure is budgeted and legislated later this year.
“For many farmers, their farm is their superannuation, and it’s not uncommon to hold land assets in superannuation – particularly as the next generation enters the business.
“Yesterday’s announcement throws up significant uncertainty for family farms – with scant detail on things like grandfathering, treatment of revaluations, or how this might impact lending in a climate of rising costs and interest rates.
“A change as significant as this can’t just be left to policy by press release. We deserve a formal consultation process to unpack the detail and provide input.”
Mr Mahar said the uncertainty created by this proposal risked chilling investment in an industry crying out for capital.
“Research from AgriFutures Australia shows that Australian agriculture needs an additional $3 billion in capital investment each year to reach our target of $100 billion in farm gate output by 2030.
“Now is not the time to dampen investment in one of Australia’s growth industries that creates jobs in regional Australia and plays a central role in our transition to a low carbon economy,” Mr Mahar concluded.
In a joint media release, Treasurer Dr Jim Chalmbers and Assistant Treasurer Stephen Jones said the Federal Government was “making Australia’s world‑class superannuation system more sustainable and fairer with one modest change that affects less than 0.5 per cent of all Australians”.
“Since coming to government, we’ve been up‑front about the challenges facing the economy and the budget. We inherited a trillion dollars of debt as well as growing spending pressures in defence, health, aged care and the NDIS” the statement reads.
“These challenges mean we need to make responsible budget choices to ensure generous superannuation tax breaks are better targeted and sustainable.
“The modest adjustment we announce today means 99.5 per cent of Australians with superannuation accounts will continue to receive the same generous tax breaks, and the 0.5 per cent of people with balances above $3 million will receive less generous tax breaks.
“Currently, earnings from superannuation in the accumulation phase are taxed at a concessional rate of up to 15 per cent. This will continue for all superannuation accounts with balances below $3 million.
“From 2025‑26, the concessional tax rate applied to future earnings for balances above $3 million will be 30 per cent.
“This is expected to apply to around 80,000 people, and they will continue to benefit from more generous tax breaks on earnings from the $3 million below the threshold.
“This adjustment does not impose a limit on the size of superannuation account balances in the accumulation phase. And it applies to future earnings – it is not retrospective.
“This modest adjustment to tax breaks for the biggest accounts is expected to generate revenue of about $2 billion in its first full year of revenue after the election.”