The AFR’s super tax scare campaign is a lesson in how fear is manufactured

The Australian Financial Review (AFR) has this week unintentionally revealed that its scare campaign over the Albanese government’s proposed changes to the taxation of superannuation balances above $3m was completely concocted, and it should serve as a lesson for the government and all Australians not to be fooled when the powerful try to scare us.

You might recall that during 2024 and 2025, the Albanese government proposed changing the way superannuation would be taxed, by taxing the incomes earned on balances above $3m at 30% (rather than 15%).

The tax would only apply to earnings on the portion of a super balance above $3m. This would mean, for example, that if you have a super balance of $3m, earning $300,000 in a year, you’d pay an extra $4,091 in tax – a rate of just 1.36%.

This was painted as a destruction of aspiration and fairness.

The AFR was at the forefront of the campaign.

In 2024 it ran an article titled “New $3m super tax is ‘stealing my children’s inheritance”.

The AFR and other conservative groups did not like that the proposal would tax unrealised gains of those balances above $3m.

The AFR editorial said “Labor’s super tax grab should worry every Australian”.

One article suggested it “may force early retirement of skilled workers” because “it will raise billions more over time as inflation pushes hundreds of thousands more people above the $3 million threshold”.

The AFR even gave space to conservative academics, who suggested that “Labor’s super tax will make Australia uninvestable.”

They gave then Shadow treasurer, Ted O’Brien, a column to argue the tax would “swallow young people’s hopes”

They also handily gave a list of occupations most likely to be affected by the proposal.

As the legislation reached Parliament, the AFR editorial preached that “Super was never meant to be a government piggy bank. It was designed to give Australians dignity and independence in retirement; a purpose too important to be subordinated to short-term fiscal or political goals.”

It also suggested that everyone (including “your kids”) will end up paying the tax because new “analysis” showed that “today’s 22-year-old worker will accumulate more than $3 million in superannuation by the time they turn 64 even if they only ever earn an average wage”.

In the end, the government bowed to the fears and removed the tax on unrealised capital gains and indexed the threshold, rather than keeping it at $3m.

But even still the AFR kept going. Earlier this year a financial adviser wrote an op-ed in the AFR suggesting “the fundamental structure of the policy is not only punitive, but it also acts as a disincentive to save and be self-sufficient in retirement.”

All this over a tax that applies only when you have more than $3m in your super.

Well, everyone can relax, because this week the AFR published a long article telling readers “Why even a $300,000 salary won’t get you to retirement’s magic number”

Is that magic number $3m?

Nope, it is $2m.

The “magic number” is now a third lower than the balance at which the AFR previously argued a tax would deny Australians “dignity and independence in retirement”.

It is a third less than the level at which the AFR claimed a tax “acts as a disincentive to save and be self-sufficient in retirement”.

It is $1m below the threshold where the AFR warned a tax “may force early retirement of skilled workers” and was “stealing my children’s inheritance”.

Remember, a $300,000 salary is nearly 3 times the current average full-time earnings of $106,657.

A salary of $300,000 would put you in the top 3% of all income earners in Australia, and yet the AFR is telling us that it won’t get you to $3m in super, or even $2m.

But here’s the kicker – later in the article, AFR asks the question: “Do you really need $2 million in super?”

It notes that $2m in super gives you an annual income in retirement of $100,000 and that “for either a single or a couple, “that’s a great retirement income to live on” and that it “will afford you a standard of living that’s well above what ASFA suggests you need for a “comfortable retirement.”

The article makes no mention of the tax on $3m super balances.

All those fears about a 22-year-old merely on “average earnings” ending up with more than $3m in super? They are gone.

Now they present a case of a 30yo on a $150,000 salary whose salary reaches $300,000 by 40 ending up with, at best, $1.5m in super.

This accords with my own figures from last year of a person who begins earning $106,277 at the age of 18 who then gets a 3.6% pay rise every year. Such a person would still only end up with $2.2m in super.

The AFR’s admission now that $2m is even out of reach for virtually everyone is a good example of how conservative forces wield their power.

The scare campaigns are relentless and predict utter doom – whether it be a tax on superannuation or the end of negative gearing or a tax on as exports.

But the doom and fears are make-believe.

The reality, as the AFR has shown this week, is that the Albanese government need not pay any mind to the fear campaigns being waged. The fear campaigns are based on make-believe numbers and hysterical arguments.

Ignore them and make the country fairer and better.