The Budget, Socialism and Our Superannuation

The Budget

Labor’s Federal budget has received criticism for being economically irresponsible in that Labor doesn’t understand its implications. Criticism includes that the budget was rushed and half-baked, and it will make the housing shortage worse, push up rents, deny young people the ability to create their own wealth and force investors, start-up businesses and entrepreneurs overseas. This is probably all true except for one thing. Labor does understand the implications.

This budget has the pretence of an economic and tax budget. The reality is that it is almost exclusively political. It has a twenty-to thirty-year horizon on its ambitions. Its aim is to further remould the very fabric of Australian society and how and where we live. It changes who controls our wealth and whether each person controls their own wealth or wealth is collectivised, centralised and controlled by a politically connected institutionalised elite.

The New Socialism

This is a further and highly important phase of Labor’s new socialism promoted under the guise of reformed capitalism. I first wrote this up in January 2023 The New Australian Socialist Experiment. My article was a reflection on a key position paper by the new Labor Treasurer Jim Chalmers in which he stated that Labor will “…build a better capitalism, uniquely Australian…a new values based capitalism.” That is, that the fundamentals of the Australian capitalist/economic system are to be moulded into a Labor vision. Chalmers budget is another step in that Labor vision started thirty plus years ago.

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The Superannuation Connection

The dawn of this new Australian capitalist system rose in 1992, fashioned by Labor Treasurer and Prime Minister Paul Keating with the introduction of the compulsory superannuation system. They key to understanding this compulsive system from a political perspective is that the system removes a worker’s individual control over their savings. Any control they do exercise is only within the constraints of investment options offered by the superannuation funds operating within the system. Under any definition this is socialism. As socialism and socialists always claim, the loss of personal control is done for the ‘benefit’ of workers.

Specifically, what the system does through its particular design feature, tied in with industrial relations laws, is to funnel workers savings into the ‘Industry Funds.’ These are effectively financial arms of the Labor union movement. Of the nearly $4.5 trillion in total superannuation assets around $1.6 trillion of that is in the 7 mega industry superannuation funds. These funds operate as a formalised coordinated investment network. As a unit they constitute the largest single financial powerhouse in Australia.

Labor has not nationalised the Australian financial system. Labor hasn’t needed to. They have taken a massive amount of workers’ savings and institutionally exercised centralised control of workers’ savings and hence massive control over Australian capitalism. This is why I say in ‘The new Australian Socialist Experiment’ that the socialists have become the capitalist. By capturing control of workers savings,’ they capture control of capitalism.

In this Australian transformation, Labor is enormously patient, forward thinking and strategic. They are politically impressive. They understand like no other, that real power politics is about capturing institutional control of society. This is something that transcends democratic elections and the comings and goings of the varying political flavour of governments.

The Next 20 Years – The Super Effect

Labor Treasurer Jim Chalmers, in this budget (May 2026), is striking an additional major strategic step in this Australian socialist endeavour. It is no accident that former Treasurer/Prime Minister Paul Keating who is a mentor of Jim Chalmers publicly backs and defends this budget. This Labor grand master of long-term strategy must surely be pleased with his protégé.

The long-term politically strategic move in this budget is doing the following.

• Placing heavy limits of negative gearing of established residential properties

• Allowing negative gearing on new builds

• Removing the current 50 percent capital gains tax discount with a system based on (CPI) indexation.

• A minimum 30 percent tax on capital gains

These new taxes apply to existing residential properties, family trusts, shareholdings and small business assets where these are owned by individuals and business.

Specifically, and of huge political implications, is that superannuation accounts are exempt. That is, negative gearing and existing capital gains tax rules are maintained for superannuation funds. This gives the superannuation funds a huge tax competitive advantage over exactly the same investment options a person may take outside of superannuation. The budget is designed to force people to shift their savings from the free market operating outside superannuation, to the superannuation funds and the Labor aligned capitalist/socialist elites who control superannuation.

Labor Treasurer Chalmers states that the reason for the changes is to alter the “…difference between the way workers are treated versus people who derive their income primarily from assets.” This is a diversionary assertion.

This is NOT a recalibration of the balance between assets income and ‘workers’ (wage) income. Rather this is a direct attack against individuals having control of their own savings and wealth and effectively forcing people to transfer money into the superannuation system through the differencing tax rules.

It is true that large numbers of people impacted are likely to transfer money into Self-Managed Super funds. That is small funds of usually 2-4 people where the people with money in the fund effectively control the money. Over 1.2 million Australians have money in more than 650,000 SMSF with combined assets of over $1 trillion being about 24 percent of the total Australian superannuation pool.

This is an escape route for large numbers of people from the Chalmers/Labors budget agenda. Many will predictably take this route. Labor is patient. Very patient. SMSF do not fit the Labor long term socialist/capitalist political agenda. Over time they will move in on the SMSF sector, twiddle with tax and other rules to push people into the big funds, particularly the funds in which the Labor establishment has established its power base.

Beyond this large political agenda is the damage to huge numbers of people to occur almost immediately and explained by a wide range of critics.

Domestic Rental

The changes will push people out of owning residential investment properties. This is set to heavily reduce the number of rental properties available increasing the housing squeeze for rents. Shortage always pushes up rents. Labour did this in the past and created a massive rental problem.

Negative Gearing – The Super Out

The removal of negative gearing is one key to this. It’s just plain dumb defying the basic common-sense arithmetic of how business operates. If for example you own two shops. One shop makes $10,000 a year profit and the other shop makes a $6,000 loss. Your total profit on the business is $4,000 and you pay tax on the $4000. That is effectively negative gearing in its simplest form. The removal of negative gearing ignores the $6,000 loss and charges you tax on the $10,000. Stupid, illogical and unfair. The government is not changing negative gearing under this scenario. To do so would be stupid, illogical, unfair and literally crash the fundamentals of business and the economy.

The Chalmers budget is changing negative gearing on property but the principle issue is the same I describe above. If you earn a wage of $80,000 a year and own a rental property where you make a loss of $10,000 in a year its only sensible and fair that you pay tax on $70,000. Removal of property negative gearing means that the loss is ignored and you pay tax on the $80,000. This is stupid, illogical and unfair. The outcome is that people are forced to sell the rental property or massively increase rent. Either way renters are hurt because the result is fewer rental properties and rents go up.

But note. This will not apply if rental properties are owned by superannuation funds.

Dependent People and Renters = Labor Votes.

Here’s where a further detail of the Labor socialist/capitalist agenda reveals itself. Labor reasons that people who rent are more inclined to vote Labor. Therefore, they need a society that recalibrates from a dominance of people owning their homes to a higher percentage of renters.

Labor does not need to socialise housing to achieve this. As a consequence of this budget, we will predictably see a big push to have the big superannuation funds ‘invest’ in build to rent. That is, the big superannuation funds will own apartment complexes where the apartments are only available to rent not for sale. Industry super funds, controlled by the Labor establishment elite will be at the forefront.

Currently approximately 90% of property investors are “mom and dad” landlords. That’s more than 2.2 million Australians have an investment property. Roughly 71% of them own just one rental property, and about 19% own two. Only about 4% own more than four. These are aspirational people, mostly wage earners, teachers, medicos, police and so on who seek to create, own and control their own savings and wealth. Labor views these people as low on the Labor voter profile. Labor’s political agenda is to dissuade them through the tax regime from being self-reliant and aspirational and push them into superannuation where their savings and wealth are controlled by the Labor establishment elite. It’s very smart, long term, institutional changing politics. This changes the social/economic fabric of society to a more Labor orientated structure. At least that’s the Labor perspective.

Take as another key example of the massive change in the capital gains regime. In a simple explanation, currently if you own a rental property and over ten years it increases in value by $200,000 when you sell it, you pay tax on only half of the increase (ie) $100,000. This is to be replaced by a complex ‘cost-based indexation model’ with a minimum 30 percent tax on the increased value. But again, this is only for people who own property in the (let’s call it) free market spectrum of the economy.

Property owned by superannuation funds still get the old system. Again, this is a double whammy against people creating, owning and controlling their own savings and wealth. The Labor agenda? To make people dependent on the Labor financial establishment elite.

Collectivising and Concentrating the Share Market

Then there’s the crazy treatment of capital gains with shares. Chalmers/Labour budget is doing the same with shares as it’s doing with housing investment. Around 7.7 million Australians own shares. If you own shares in different companies and decide to sell shares in one company and make a $10,000 profit on the sale and you then sell another company shares and make a $6,000 loss you currently only pay tax on $4,000. The Chalmers changes mean that the $6,000 is ignored and you pay tax on $10,000. This is stupid, illogical and unfair and it only makes sense when viewed through the prism of the Labor agenda. Again however, these changes don’t apply for shares owned by superannuation funds.

The political agenda is brilliant from the Labor perspective. The Chalmers Labor budget pushes people well away from personal ownership of shares where people personally control their savings and wealth to have ‘collective’ ownership of shares in big superannuation funds. This collectivisation of shareholdings is Labor’s remoulding of Australian capitalism. Labor does not need to nationalise businesses. That’s so old-fashioned Marxist/Leninists thinking. The modern Labor socialisation of society collectivises the savings and wealth of Australians, funnels the savings/wealth into big superannuation fund institutions where the wealth/savings are controlled by the Labor financial establishment elite.

The added advantage for Labor is that during the periods where they are electorally unsuccessful and non-Labor political parties hold government, Labor’s core financial institutional power remains in place, untouchable.

Further, through the massive financial power of the big industry super funds the Labor establishment effectively can control and do control businesses they target and exert huge influence over any company where they hold shares.

This is a budget of massive political implications.

Even though polling shows that the budget has gone down like a lead balloon and negatively impacted Labors support, Labor would retain a majority of seats if a Federal election were held immediately.

This budget has possibly surprised Labor as to the extent of the backlash. The surprise would not be about the content as such but rather Labor would reflect on how better to spin. Assuming this budget stays as is, Labor is looking not just at the next election but where a Labor leader decades hence, is positioned. With the vision implemented the fundamentals of the Australian society will be starkly different from now.

Australian society will be a socialist/capitalist society with Australian (Labor) characteristics. This is almost locked in.