The governing Labor Party in Australia has just delivered bills to the Parliament to authorise next year’s budget. Included in the measures is the additional tax on superannuation balances that exceed $3m.

This policy amendment was flagged months ago. It is a measure that has many flaws, not least of which is that it will tax unrealised capital gains.

Nonetheless, Junior Jim Chalmers, who identifies as our Treasurer, has pressed ahead. The Treasury has announced that it anticipates the increased tax rate, from 15% to 30% on balances over $3m, will raise $2.3b in its first year and affect 80,000 people.

A few back of the envelope calculations are in order here. $2.3b in additional tax from 80,000 people is equal to an average of $28,750 per person. If the tax revenue increases by $28,750 when the tax rate doubles, then the new amount of tax per person on their balance will be $57,500.

Let’s assume the average superannuation balance in excess of $3m is $3.5m. (I don’t have access to the actual number.) If those balances could earn an average gross rate of investment of 7%pa, the current net rate of return would be 6.2% pa. After the additional tax rate is applied, that net return will fall to 5.4%pa.

You don’t have to be a genius to know that a reduction in the net rate of investment return from an average 6.2%pa to 5.4%pa will have a material long term effect. You can be sure that people with at least $3m in their superannuation fund will know that.

I can predict with a high level of confidence that the tax measure will not raise anywhere near the amount claimed by the Treasury. There are ways and means of adjusting one’s financial affairs once your wealth is at that level. It is not the 80,000 people with high balances that concern me.

Instead, it is the on going trashing of policy that will damage the standing of superannuation in the public eye that is of concern. Superannuation is seen as a honey pot that politicians, particularly those of the Left, simply cannot leave alone. Piecemeal amendments over the years, all of them money grabs, have made the system complex, almost to the point of unintelligibility, and are seeding the failure of the whole project. This latest money grab is simply one in a long line.

Public faith in social institutions is necessary for the institutions to survive. Virtually continual changes to how superannuation operates is damaging to the public perception of and ultimately the public faith in superannuation. It is being dismantled.