Latest / The Front / How your super is fuelling Jim Chalmers’ budget brag

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How your super is fuelling Jim Chalmers’ budget brag · The Front

• 0:03
  Speaker 1: From The Australian, here's what's on the front. I'm Claire Harvey.
• 0:06
  Speaker 1: It's Wednesday, September 30, 2026.
• 0:08
  Speaker 2: The target cash rate is up to a 15-year high
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  Speaker 2: and unemployment is up too. But the Treasurer says the
• 0:18
  Speaker 2: budget's looking better than even he expected.
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  Speaker 3: Why?
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  Speaker 2: Record tax revenue, and a big chunk of it is
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  Speaker 2: from all of our superannuation accounts. Matt Cranston is here
• 0:29
  Speaker 2: in just a moment. On Monday, we finally got the
• 0:50
  Speaker 2: final budget outcome numbers. That's where the boffins from Treasury
• 0:54
  Speaker 2: and Finance dig through the budget numbers and give us
• 0:56
  Speaker 2: a reality check. How much is the government spending?
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  Speaker 1: What's the debt? What's the deficit?
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  Speaker 2: The government is spinning a $ 6 billion reduction in the
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  Speaker 2: deficit as all thanks to their good management. And Jim
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  Speaker 2: Chalmers loves saying the budget is in great nick. Matthew
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  Speaker 2: Cranston is the Australian's economics editor. Matt, is the budget
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  Speaker 2: in great nick?
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  Speaker 3: No, it's not.
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  Speaker 4: I mean, it's a deficit. But there's a lot of, obviously,
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  Speaker 4: there's a lot of spending pressures. It is better than
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  Speaker 4: what it was earlier this year. And whether or not
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  Speaker 4: you can really say that's down to pure management from
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  Speaker 4: the Treasurer, I think is highly debatable. I think that
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  Speaker 4: they try to make some improvements to spending. But in
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  Speaker 4: the end, the improvement was mostly from economic parameters. There's
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  Speaker 4: a key thing people look at in the budgets. It's
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  Speaker 4: a bit technical, but it's called the table of truth
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  Speaker 4: or the reconciliation table.
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  Speaker 3: It basically shows you what.
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  Speaker 4: Changes to the budget have happened through policy decisions and
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  Speaker 4: what changes have happened through economic conditions. And the economics
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  Speaker 4: played a lot more of an influence in.
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  Speaker 3: Improving the budget than just policy decisions.
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  Speaker 2: The tax to GDP ratio is now 24.1%, Matt, and
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  Speaker 2: you've made the point in The Australian that that's pushing
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  Speaker 2: us close to having the Albanese Chalmers government being the
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  Speaker 2: highest taxing government on record.
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  Speaker 1: How is that happening?
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  Speaker 4: This is an interesting story, actually, Claire, because when the
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  Speaker 4: final budget outcome came out yesterday, it came out about
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  Speaker 4: a minute into Jim Chalmers doing his press conference.
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  Speaker 5: The final budget outcome that we're releasing today shows that
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  Speaker 5: the deficit.
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  Speaker 4: So none of the, say, 30 journalists that were in
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  Speaker 4: the press conference actually had the final budget outcome that
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  Speaker 4: they could read before asking him questions that he was
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  Speaker 4: fielding about the final budget outcome.
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  Speaker 5: We're going to start with Paul. I've got a bit
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  Speaker 5: of feedback about going side to side, so we're going
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  Speaker 5: to go Paul, then Tom, then back to Clare.
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  Speaker 3: Very, very annoying.
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  Speaker 4: But I sat there with my phone scrolling through it
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  Speaker 4: and went straight to the back tables of this and
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  Speaker 4: found that the number had in fact breached the famous
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  Speaker 4: coalition tax cap of 23.9% and was now 24.1%. That's
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  Speaker 4: the tax to GDP. The spending to GDP ratio is
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  Speaker 4: also up as well. Now, he's tried to explain that
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  Speaker 4: away by saying, well, the GDP was lower because the
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  Speaker 4: inflation rate changed and that changes GDP.
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  Speaker 5: GDP came in lower because inflation was lower than expected
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  Speaker 5: in the May budget.
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  Speaker 4: But when you're having to explain all these technical things,
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  Speaker 4: you're sort of losing is what they say. The actual
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  Speaker 4: fact is that both tax and spending as a percentage
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  Speaker 4: of the overall economy is higher.
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  Speaker 3: And that's a problem for economists. Economists don't like that.
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  Speaker 4: Some will say that okay, but maybe this is because
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  Speaker 4: we're in an advanced economy now and the government becomes
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  Speaker 4: a bigger share of the economy because it's providing more
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  Speaker 4: things for the economy. It's doing more safety and we're
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  Speaker 4: willing to pay for that. But I suppose that's the
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  Speaker 4: political question is, are Australians happy about government playing a
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  Speaker 4: bigger role in spending compared to their role in spending?
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  Speaker 4: And this is what the Reserve Bank Governor has to
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  Speaker 4: think about as well when she.
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  Speaker 3: increases interest rates.
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  Speaker 5: Higher interest rates are needed to ensure inflation returns to target.
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  Speaker 5: Inflation is too high and has been driven by domestic
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  Speaker 5: capacity pressures.
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  Speaker 2: One of the things the Reserve Bank is also trying
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  Speaker 2: to do is keep unemployment down. Unemployment was 4.1% at
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  Speaker 2: the beginning of the year. It's now 4.6%. This is
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  Speaker 2: a paradox, isn't it, Matt? Apparently we're spending so much
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  Speaker 2: that the cash rate has to keep going up and
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  Speaker 2: interest rates have to keep going up to stop us
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  Speaker 2: from spending, but unemployment's also on the rise.
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  Speaker 1: So how does that all fit together?
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  Speaker 4: I mean, obviously there's more people coming into the workforce.
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  Speaker 4: That's the participation rate. So just as many people are
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  Speaker 4: getting jobs, but then you get all these extra people
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  Speaker 4: looking for work and entering the search for work as well.
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  Speaker 3: So that creates the higher unemployment rate.
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  Speaker 4: So that's how you get that mechanical sort of result.
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  Speaker 4: But there's another thing happening too, Claire, which is that
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  Speaker 4: there is a demographic shift in the workforce as well.
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  Speaker 3: And there's also a problem with skills.
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  Speaker 4: You can blame that on all sorts of things like
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  Speaker 4: who's being allowed into the country on what skill basis
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  Speaker 4: and so forth.
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  Speaker 3: But there is a problem with skills in the country.
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  Speaker 4: Even Michelle Bullock said last week that she finds it's
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  Speaker 4: ridiculous that a nurse in Queensland is.
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  Speaker 3: Can't come and become a nurse in New.
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  Speaker 4: South Wales without having to do all this regulation and
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  Speaker 4: red tape and getting all those things right.
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  Speaker 3: So there's a problem with skills.
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  Speaker 4: Now, what happens is if you've got a slight shortage
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  Speaker 4: in skills, businesses have to pay more for those skills.
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  Speaker 4: So you can have unemployment rising in areas where there's
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  Speaker 4: not so much a demand for those skills, but then
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  Speaker 4: you have wages rising and labour costs where the skills
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  Speaker 4: are in high demand, but there's a shortage of them.
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  Speaker 3: And what does that do?
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  Speaker 4: Well, it forces business to pass on prices and that's inflation.
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  Speaker 4: And of course, when you get higher inflation, higher unemployment
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  Speaker 4: and lower growth, that's a very dangerous word, which I
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  Speaker 4: don't want to use because people will say I'm sort
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  Speaker 4: of talking things down or something. But that's a stagflationary
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  Speaker 4: sort of environment where you get high inflation, higher unemployment
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  Speaker 4: and economic growth is going down.
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  Speaker 2: Let's look at where this extra tax revenue is coming
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  Speaker 2: from that Jim Chalmers is very happy to be receiving.
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  Speaker 2: So let's dig into the super first. I think a
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  Speaker 2: lot of Australians kind of think super is almost tax-free
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  Speaker 2: or at least very, very low tax for them. Your
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  Speaker 2: contributions and your employer's contributions are taxed at 15%, not
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  Speaker 2: at your top marginal rate. But then the super funds
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  Speaker 2: are paying another 15% tax on the earnings generated inside
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  Speaker 2: the fund, give or take. So Jim Chalmers is saying, well,
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  Speaker 2: this isn't coming from wage earners. We're not punishing people
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  Speaker 2: who've got a job. But actually, this is wage earners'
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  Speaker 2: retirement savings, isn't it? Yes, it is.
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  Speaker 4: And yesterday at the press conference, he kept on emphasising,
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  Speaker 4: it's not workers, the tax isn't coming from them.
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  Speaker 5: So to be really clear about that, this is not
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  Speaker 5: about wage and salary earners. It's not about commodity prices.
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  Speaker 5: It's about higher than expected wages. super and investor income
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  Speaker 5: higher than was anticipated in the May budget. Mining profits
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  Speaker 5: actually came in lower than was expected.
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  Speaker 3: But it is.
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  Speaker 4: And yes, like the tax rates on superannuation are very low,
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  Speaker 4: and they ought to be too, because why, if the
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  Speaker 4: whole purpose of super is to plan for retirement and
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  Speaker 4: to take the burden off the government for pensions, would
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  Speaker 4: you tax?
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  Speaker 3: That's part of the broader question that people ask. But yeah,
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  Speaker 3: it actually, it is their money. And admittedly, in the.
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  Speaker 4: Last few months, there's been a big gain in investments
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  Speaker 4: that superannuation funds have made. So that gain is coming
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  Speaker 4: through in higher tax collection, not through a higher rate
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  Speaker 4: of But just through a higher volume of profit that's
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  Speaker 4: being taxed and therefore more money going back. But yeah,
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  Speaker 4: you've got to think about this not as super's money
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  Speaker 4: or the government's money or anyone else's, but the workers' money.
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  Speaker 4: And it's what they use to retire on.
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  Speaker 2: Now let's talk about what Jim Chalmers is calling investor outcomes.
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  Speaker 2: That's where the government taxes personal investment earnings outside super.
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  Speaker 2: So savings account interest, the dividends on your shares, your
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  Speaker 2: rental income and your capital gains. So why is all
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  Speaker 2: that going up given all these other things that are
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  Speaker 2: happening in our economy right now?
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  Speaker 3: There's two ways to answer that question.
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  Speaker 4: One is the government wants to, what it would call,
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  Speaker 4: better align the tax treatment of income from labour and
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  Speaker 4: the tax treatment of income from investments. Treasury Secretary Jenny
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  Speaker 4: Wilkinson has called it not so much about trying to
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  Speaker 4: create more supply, but it's about trying to redistribute the wealth.
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  Speaker 4: And so this is a classic decision about redistribution. And
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  Speaker 4: it's one that a lot of investors and people who
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  Speaker 4: are aspirants, people who innovate, are very angry with because
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  Speaker 4: they think that, no, you should be rewarded for taking
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  Speaker 4: risk and building a business. And I'm not talking about
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  Speaker 4: like some one-man consultant thing. But someone who goes out
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  Speaker 4: and risks their home, puts the equity into a business,
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  Speaker 4: has IP, who has an economic cost to doing something
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  Speaker 4: else that they may have had a better life or
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  Speaker 4: a better living or a better income with. There's all
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  Speaker 4: these risks that are incorporated into why you have a
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  Speaker 4: lower tax rate on investment and capital. But yeah, and also,
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  Speaker 4: I mean, the stock market is going up and we've
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  Speaker 4: got a huge amount of money supply, but that could
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  Speaker 4: start to turn soon. And then when people start making
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  Speaker 4: big losses and investors start to see the risks come
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  Speaker 4: through with the big collapse in the asset price or something,
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  Speaker 4: then people start scratching their heads.
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  Speaker 3: And thinking, oh, yeah, actually, that was a big risk
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  Speaker 3: to take.
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  Speaker 4: And how are we going to get them to take
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  Speaker 4: the risk again and reinvest and get into it?
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  Speaker 3: But maybe some will say, actually, well, It's collapsed.
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  Speaker 4: In areas that they shouldn't be in anyway because they're
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  Speaker 4: unproductive speculative assets or something like that.
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  Speaker 3: And, you know, the money should never have gone there.
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  Speaker 4: But that's a big debate at the moment around the world,
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  Speaker 4: not just in Australia.
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  Speaker 1: Coming up, what about spending? Okay, now let's talk about spending.
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  Speaker 2: Back in 2000, when the GST came in, the government
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  Speaker 2: was raking in a lot of revenue because we were
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  Speaker 2: right on the cusp of a commodities boom.
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  Speaker 1: The economy was powering and we're.
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  Speaker 2: All spending a lot. So there was a lot of
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  Speaker 2: GST revenue. You've quoted an economist from Westpac, Pat Bustamente,
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  Speaker 2: saying if the government was acting like the Howard government,
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  Speaker 2: it'd be creating surpluses, not continuing to allow a deficit.
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  Speaker 1: So why aren't they doing that?
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  Speaker 4: Well, it's because there's more government services being provided, whether
• 11:59
  Speaker 4: it's NDIS or pressures on defence now. Like there's a
• 12:03
  Speaker 4: lot of pressure worldwide to have a higher percentage of
• 12:06
  Speaker 4: GDP in defence spending. There's also interest costs. So like
• 12:09
  Speaker 4: the cost of the debt is going up. It's over
• 12:12
  Speaker 4: $ 20 billion in interest costs. So there's all these pressures.
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  Speaker 4: I don't envy Jim Chalmers in his job. He's got
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  Speaker 4: to try and pivot and change this huge ramp up
• 12:23
  Speaker 4: in spending.
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  Speaker 3: But is he doing it fast enough?
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  Speaker 4: And even if he's not doing it fast enough, is
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  Speaker 4: he actually answering this dependency now from Australia that they
• 12:36
  Speaker 4: want more from government, that they want more service delivery,
• 12:40
  Speaker 4: better service delivery, but he's going to have to deal
• 12:43
  Speaker 4: with the contradiction of them also saying, well, look, we
• 12:45
  Speaker 4: want government to keep on providing services and all that
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  Speaker 4: sort of thing, but we also want to make sure
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  Speaker 4: that we're in a position where we're not cutting our
• 12:53
  Speaker 4: own household spending and dipping into our own offset accounts
• 12:56
  Speaker 4: and having to get an extension on the kids' school
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  Speaker 4: fees and things like this.
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  Speaker 3: So that's a big contradiction that he has to deal with.
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  Speaker 4: And I don't know how it's going to pan out
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  Speaker 4: because there's a lot of people that are wary of
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  Speaker 4: government spending and they think that maybe the service delivery
• 13:12
  Speaker 4: is not up to standard and maybe it's not good enough.
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  Speaker 4: So then they start to apply like, their qualitative assessment
• 13:19
  Speaker 4: of the delivery and they think, well, stuff it. I mean,
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  Speaker 4: I'd rather the money be given to me and I
• 13:24
  Speaker 4: can go and find the private providers of this myself. Obviously,
• 13:29
  Speaker 4: productivity is another big one, which is the linchpin to everything.
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  Speaker 4: You get that right, everything else flows, but it looks
• 13:35
  Speaker 4: as though there's not much going to happen on that
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  Speaker 4: anytime soon.
• 13:38
  Speaker 1: Thanks, Matt.
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  Speaker 4: Okay. Pleasure.
• 13:50
  Speaker 1: Matthew Cranston is The Australian's economics correspondent.