Opposition Claims Victory as Treasurer Abandons Super Tax in ‘Humiliating’ Backflip
Coalition leaders say Chalmers ‘rolled’ by Prime Minister, demand answers on $4 billion budget gap
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Opposition leaders declared a political triumph Monday after Treasurer Jim Chalmers scrapped his controversial superannuation tax, with Deputy Opposition Leader Ted O’Brien claiming the government’s chief economic minister had been “chewed up” by Cabinet colleagues and left to face public humiliation.
“Jim Chalmers has been chewed up and his super tax has been chucked out,” O’Brien told reporters, describing the reversal as “a victory for a coalition of common sense against a Labor government addicted to spending and taxes.”
The policy retreat eliminates two measures the coalition identified as non-negotiable deal-breakers: taxation of unrealized investment gains and a threshold freeze that would have eventually captured middle-income workers. Chalmers now proposes targeting only Australians with retirement balances exceeding $10 million through higher tax rates on realized gains.
But coalition MPs offered no guarantee they would support the revised plan, instead demanding answers about a $4 billion budget shortfall the changes create and questioning whether the treasurer can be trusted after defending the original framework for more than two years.
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‘Do Not Trust This Treasurer’
O’Brien painted Chalmers as an embattled minister abandoned by his own government, forced to announce the policy reversal while Prime Minister Anthony Albanese travels overseas.
“If we can learn a lesson from this experience, it is do not trust this Treasurer,” O’Brien said. “His word cannot be trusted. But nor can his colleagues actually support his own plans.”
In an interview with Skynews, Chief Opposition Whip Aaron Violi went further, asserting that Senate estimates testimony last week revealed Albanese’s office demanded a Treasury briefing on the superannuation policy, evidence of deep divisions within Labor’s leadership.
“It is clear that he has been rolled by the Prime Minister,” Violi told Sky News. “We saw last week in Senate estimates that Treasury had to give a briefing to the Prime Minister’s office. So it’s clear that the Prime Minister, Anthony Albanese, has no faith at all in Jim Chalmers as Treasurer, and he has had to step in and roll him.”
Violi said the timing proved telling, with Chalmers delivering the announcement “on the first day of his holiday” while Albanese left the country.
“Conveniently for the Prime Minister, he’s made the Treasurer come out today on the first day of his holiday to announce it so the PM can avoid media for the week,” Violi said.
The coalition framed Monday’s reversal as vindication after opposing the measure “every step of the way” alongside industry experts, economists and former Labor Prime Minister Paul Keating, who criticized the policy’s structural flaws.
Budget Black Hole Demands Answers
Opposition leaders pivoted quickly from celebrating the policy’s demise to attacking Chalmers over fiscal consequences, demanding clarity on how the government will replace revenue it had banked in budget projections.
“Now the Treasurer has to explain where he’s going to get $4 billion to plug the black hole that now exists in the budget,” O’Brien said. “Today’s decision creates that black hole.”
The shadow treasurer warned Australians face a stark choice under Labor: accept higher taxes elsewhere or watch deficits balloon.
“At this stage all we know is the Treasurer will go after other people with higher taxes or he’ll just throw it on the national credit card and leave it to the next generation of Australians to pay off,” O’Brien said.
Violi pressed the same point, questioning whether the government would cut spending or expand deficits already “continuing to grow on their watch.”
“There’s questions this Treasurer needs to answer around the impact on the budget because they took significant revenue to revenue in the budget to the election,” Violi said. “This is going to blow a hole in the budget. So where’s that money going to come from?”
Red Lines Met, But Coalition Stays Cautious
The opposition had identified two non-negotiable elements that would preclude any negotiation on superannuation tax changes: the lack of indexation and taxation of unrealized capital gains. Monday’s announcement addressed both concerns, but coalition leaders refused to commit support without scrutinizing legislative details.
“On the face of it from what the Treasurer has said that they are off the table,” Violi said of the two red lines. “But obviously we know in the coalition all too well and the Australian people know that the devil is in the detail when it comes to this government’s legislation.”
O’Brien emphasized the coalition’s skepticism during his press conference, noting Chalmers failed to answer basic questions about the revised plan.
“The Coalition will read the details before coming to any conclusion, which is the usual process, of course,” O’Brien said. “All we do see is yet another whopping big tax idea from a Treasurer who can’t stop spending.”
The shadow treasurer dismissed Chalmers’ characterization of the changes as tax reform, calling it instead “just a get out of jail card for the Treasurer who’s been chewed up by his own Cabinet colleagues.”
Government Defended Policy ‘To The Hilt’
Coalition MPs noted the jarring reversal after Labor members consistently defended the original superannuation tax throughout two years of debate, never signaling willingness to negotiate or modify the framework.
“He, the Treasurer this is, and all members of the government have defended to the hilt these changes,” Violi said. “At no point have they said they would be open to changing or to conversations.”
The Chief Opposition Whip cited government MPs who appeared on the same program in recent weeks defending the legislation without qualification.
“Members, Jerome has been on with us and Sam Ray before that, protecting this legislation and defending it,” Violi said. “So this is the first time they’ve talked about any changes.”
That history fuels coalition skepticism about Chalmers’ claim he simply listened to feedback and adjusted accordingly.
“The Treasurer will say it’s just feedback and listening, but we all know he’s been rolled because he’s defended it to the hilt for over two years,” Violi said.
Victory for ‘Forgotten Australians’
Beyond the political theater, opposition MPs highlighted constituencies they said would benefit from the policy’s death, particularly farmers facing tax bills on land value increases without corresponding cash to pay them.
“Farmers in particular, as I’ve talked about previously, that had the risk of their family farms being taxed and having to pay money that they just didn’t have because the land value might have gone up,” Violi said. “They will welcome these changes.”
O’Brien described the reversal as protecting “hardworking, forgotten Australians all across the country” from a fundamentally unfair tax regime.
“Today is indeed a humiliating day for the Treasurer, but it is a victory for common sense,” O’Brien said. “It’s a victory for everyday Australians who are otherwise going to be stung by this tax, which was fundamentally unfair.”
The coalition credited not just its own opposition but a broader alliance including industry leaders and economic experts who identified structural problems with taxing theoretical investment profits and freezing thresholds.
“I want to say thank you to my coalition colleagues who fought this tax every step of the way, together with industry experts, economists, and even Labor luminaries, all of whom pointed out the bleeding obvious,” O’Brien said. “You cannot cross a red line in tax law. You cannot just hike taxes up and then leave them not indexed.”
What Comes Next
Despite welcoming the policy reversal, coalition leaders made clear they won’t rubber-stamp whatever legislation Chalmers introduces, citing past experiences with Labor proposals where “the devil is in the detail.”
“I know our shadow Treasurer, Ted O’Brien, will be out shortly to give more detail on the coalition position,” Violi said earlier Monday. “So we’ll wait to see and make sure that we scrutinise this legislation, because even in the press conference, which I was able to see, there’s more detail and more questions that this Treasurer, who’s clearly out of his depth and struggling at the moment, couldn’t answer.”
The opposition now holds political ammunition heading into a potential federal election, with the ability to portray Labor’s economic team as chaotic and Chalmers as a weakened treasurer who couldn’t maintain support within his own government.
“Today really is a victory for the Coalition of Common Sense over a very tax-hungry Labor government,” O’Brien said.
Whether the coalition ultimately supports the revised superannuation tax or uses it as a campaign issue remains unclear, but Monday’s events handed opposition leaders exactly the narrative they sought: a Labor government in disarray, abandoning its own policies under pressure.
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