Assistant Treasurer and Minister for Financial Services & Superannuation
14 September 2010 - 14 December 2011
Matter of Public Importance - MRRT, Small Business and Superannuation
Speech to the House of Representatives
23 November 2011
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I must say that at a personal level I enjoy reasonable relations with the member for Dunkley, but listening to his speech I did feel we had entered the twilight zone of politics. There are opposition members saying, 'Oh, my goodness, we'll all be ruined; the government doesn't like small business.' Weren't they here last night, when they saw some of the good changes which we have introduced to assist small business? I am fortunate to have the opportunity to go through some of the accomplishments and plans the government has to keep assisting small business, because this government understands that small business is all about people. We can respect the aspiration to be your own boss and we also understand the importance of simplicity and trying to cut red tape. For parents who have to do the paperwork on a Sunday instead of spending time with their family, that is time that can never be replaced. This is a government who understands the value and the contribution of small business to our nation. We understand the legitimate aspiration of people to accomplish more and to be their own boss.
That is why we are simplifying the tax system. We can talk about a range of those measures, but I thought I would roll off a lazy eight ways we are doing it for the benefit of the member for Dunkley. First of all—in no particular order and courtesy of what we did last night—members who voted for the minerals resource rent tax have supported an instant asset write-off, so when you need to buy that valuable refrigerator or that photocopier or that capital item, courtesy of the Gillard government, between our Clean Energy Future package and the mining tax package, the instant asset write-off will rise from $1,000 to $6½ thousand. This is real money. This government understands not the twilight zone of the opposition, but the real world. That is real money that is going to materially assist 2.7 million small businesses.
What I do not understand is why the opposition, whenever they have a chance to back the little guy over the big guy, they always pick the big guy. What is it that makes Rio Tinto, Anglo American and BHP Billiton household names in the battling Frankston suburbs which the member for Dunkley represents? Why is it that he would vote to give $11 billion back to the richest companies in the world but not provide a $6½ thousand instant asset write-off for small business. The mind boggles, but of course in the twilight zone of the opposition, anything goes.
I promised to report on several other features of what we are doing for small business, again in no particular order. Just yesterday we released a discussion paper about how we have improved the operation of trusts in Australia—660,000 of them. The only contribution I have seen from the opposition on the question of trusts came from the member for North Sydney, the current shadow Treasurer, who had a thought bubble and said we should tax trusts the same as corporations. But don't worry: the red danger warning light went off in the opposition leader's office. They said, 'The member for North Sydney is on the loose; he's speaking first, thinking second.' Within a number of hours he had hauled down his colours and said, 'I'm very sorry, I was misquoted'—even though we all had a written copy of what he said.
There is another benefit in what we have been doing for small business. We are also changing the way the pay-as-you-go instalments operate so that small business can receive the benefit of $700 million in cash flow benefit in the 2011-12 financial year. I must also address the member for Dunkley's discussion about the entrepreneurs tax offset. The member for Dunkley is crying crocodile tears, I am afraid to report to the House, because while he quite rightly identifies that we have scrapped the entrepreneurs tax offset, which is worth $365 million over the forwards—schedule 1—we have in fact provided $2.6 billion in additional tax assistance and write-offs for small business. It does not take a Rhodes scholar to work out that when you are giving $2.6 billion to small business and you deduct the cost of the entrepreneurs tax offset of $365 million, you are still $2.3-plus billion ahead of the game.
There is another benefit in the Clean Energy Future package. We have not added any red tape to the lives of small business with that. On motor vehicles we are proposing a $5,000 instant asset write-off per vehicle. If you are a tradesperson and you buy a $33,000-plus ute you will be able to get back $1,275 in tax from that purchase. That is real money; that will assist with three weeks of shopping for a family of four. Real money.
What I do not understand is why the opposition wants to give money back to the very richest companies in Australia and not give a fair share to the whole Australian economy? Small businesses pay their taxes. They have helped pay for the roads, the education and the health care of the people of Australia, why shouldn't they and all Australians get a dividend from the richest companies making superprofits? I know that some opposite shake their heads: how can one be mean to their large, vested-interest allies? It is not us. We just want a fair share for all Australians of the mining boom.
It is very clear that we are pro-business. We are improving and reforming the future of financial advice,. We have been assisting small business with our reforms to flood insurance, for instance. We are continuing to see how we can work with the retail industry to help it through very difficult times. There are very many areas we are working at. I understand the opposition's role is to be negative and say no, and even the normally avuncular member for Dunkley seems to have been infected with a little bit of the contagion of his boss's negativity.
Let us go to one of the most significant things that happened last night. We passed a bill in the House of Representatives which will increase compulsory superannuation over the next seven years from nine to 12 per cent. That is a matter of history. People in 10 or 20 years will say, 'Wasn't it far-sighted of a government to get on with increasing the compulsory savings of Australia?' I know that people do not mind, because those opposite get 15 per cent super or defined benefit plans, so they are very happy to take super and their boss, the people who pay them, are the taxpayers of Australia. They do not refund their super. They are happy to pocket it. Always back the horse called self-interest when it comes to the opposition. That is fair enough; it is a legitimate condition, and I support the condition...
I hear the member for Dunkley; he is obviously busily trying to remake his case. I can hear he has some concerns now through his interjections. But the reason why we are increasing super from nine to 12 per cent is there are no free lunches when it comes to growing older.
It is a great thing that Australians are growing older—it certainly beats the alternative—but having said that we have to pay the bills. We can pay through the aged-care pension and lift taxes for that, but the pack of negative Twilight Zone dwellers opposite would say they do not want to do that. So how will we afford our retirement? It is okay for some of the lads and ladies opposite in the lap of luxury. They have their defined benefits, but how will the other Australians afford their retirement? It is true: do not take a condition which you are not willing to give to other people.
When we look at what the government has done with the mining tax we have ensured that, if we are increasing super from nine to 12 per cent, the concessional tax benefit afforded to Australians as a result of the income which would previously have been taxed at a higher marginal rate is now taxed at only 15 per cent. That is what happens when you increase the amount of income which is concessionally taxed as opposed to taxing it at the marginal rates of taxation. That has to be paid for by someone.
What is interesting is that the opposition have had more positions on superannuation than are in the Kama Sutra. Initially, in 1995, the member for Warringah and current Leader of the Opposition said superannuation was a con job. More recently, the shadow Treasurer said, 'No way are we going to keep any of the things which the mining tax money is being spent on because we are going to give the mining tax back to the big end of town.' If that is your value base, fair enough—it is an honestly held position to give it back to the richest. Their shadow Assistant Treasurer, a person I think is of some capacity, then said at a lunch for business leaders: 'We're going to wind back the 12 per cent to nine per cent. If those scurrilous socialists across the aisle'—I do not think he said 'scurrilous socialists' although he might have thought it, but I am not a mind-reader. At the end of October or beginning of November he said: 'We will put our hand in the retirement savings pocket of every Australian and we will reduce super from 12 per cent to nine per cent.'
Even some supporters of the Liberal party were sufficiently aghast at the Twilight Zone analysis that the Sydney Morning Herald broke the story. Then, because the famous red lights went off when an opposition coalition frontbencher said something random, planned and unsupported, there was a meeting of the leadership of the coalition. When I say a meeting of the leadership, that was minus Andrew Robb, the shadow finance minister, as people could not find his phone number. The opposition said: 'We don't like nine to 12 per cent, but if it gets up we're going to keep it.'
Last Friday, the Leader of the Opposition, to ingratiate himself to a group of people in the financial services sector, said: 'We're going to abstain on the vote. We're not even going to vote against it.' And we know what happened last night. They got their latest position out of the manual of backflips and they said, 'We're going to vote against it'. Last night they not only voted against increasing compulsory super from nine to 12 per cent, they actually voted against abolishing age discrimination. They voted against the idea that people over 70...
Look at it: the honourable member said we stole their idea. Not only did we not steal it, but if you have such a good idea, why is it that you have a good idea until it comes to voting on it and then you drop it? What do you stand for? You cannot be half-pregnant in this life. You either believe something or you do not. They voted against abolishing discrimination against people over the age of 70. This government had said if you are over 70 and working, we want you to get super. I think that is a good idea. Certainly 53,000 people currently working will not be unhappy with that. We proposed that 8.4 million people should have their superannuation increased through modest increments over the next seven years to 12 per cent.
We also have proposed and voted up in the House of Reps—when I say 'we', I mean the majority of people in parliament and not the coalition because they are always last to anything—that 3.6 million Australians, the people who earn less than $37,000 a year and we estimate there are 3.6 million Australians who earn less than $37,000 a year, will no longer have to pay 15per cent tax on superannuation. Unlike people who earn more than $37,000 a year their actual rate of taxation is either 15 per cent or zero. That will mean that quite a sizeable number of low-income Australians, people who work hard to earn their income but get a low income, are paying the same rate of tax on their super as they pay on the income they earn. One of the important features of superannuation in Australia is if it is going to be compulsory it should be concessional. We propose that for 3.6 million Australians it should be compulsory, but we respect it should be concessional. We are abolishing the tax they pay.
The opposition voted against it—mind you, half of them were asleep although not everyone, but more nodding than awake. I accept that some of them might not have realised what they were doing, but there is a question for the opposition leader to answer. I know he does not like doing the tough interviews on television and the big press conferences where the gallery might ask him hard questions, but there is a rule ultimately in politics as there is in life: you can run but you cannot hide. In the court of national opinion you need to make it very clear, Mr Abbott: do you support 3.6 million...
I ask the member for Warringah, the current holder of the Leader of the Opposition job, this: the government has supported legislation in the House of Representatives which will abolish the concessional tax paid by 3.6 million Australians who earn less than $37,000 a year; will the Leader of the Opposition—not that he ever hangs around—do the same thing? That promise is worth $1.8 billion over the forwards, therefore the opposition have two choices. One, they can say they do not like the mining tax, and they have said that, but they will keep this promise and they will find the money elsewhere. Two, they can say they are not going to keep this promise. They would then reimpose a tax on 3.6 million Australians who currently, under our proposal, will no longer have to pay concessional tax on their superannuation.
As they say on the game show, it is deal or no deal, member for Warringah and Leader of the Opposition. You can run but you cannot hide. We want to support small business and we want to support all Australians by sharing a fair share of the mining super profits of the largest companies in Australia using non-renewable resources throughout Australia. Will you give the lowest-paid Australians the tax cut in superannuation as this government is doing or will you refuse to do it and demand that the money come back and instead give it to a few of the richest companies in the world? It would be better if it clarified your position today. (Time expired)