The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

5 April 2013

Press Conference

Joint Press Conference with
The Hon Bill Shorten MP
Minister for Employment and Workplace Relations
Minister for Financial Services and Superannuation

SUBJECTS: Superannuation Reforms; Joe Hockey's MRRT backflip

TREASURER:

I'm here with Minister Shorten to talk about some very important reforms in our superannuation system, to make it fairer for all Australians but also to make it sustainable as the system matures over time. I think it's pretty fair to say that the reforms we're announcing today are very much within the spirit of the Keating reforms going back about 20 years. Labor is very proud of our $1.5 trillion superannuation system. We want to make it better, we want to make it fairer and we want to make it stronger. Labor is the party that invented superannuation, we've nurtured superannuation, we've grown it and we will always protect it because it goes to the very core of our beliefs about the future of Australia. What we need to do to grow our economy, what we need to do to give people dignity in retirement and fairness for subsequent generations that come after us. National superannuation in Australia is one of our unique advantages here. National superannuation in Australia is the envy of the developed world and it has also been studied very closely by the developing world, something Minister Shorten will discuss when he's in China. It was our pool of national superannuation savings that was critical for Australia to get through the Global Financial Crisis when business had access to the capital they needed domestically that they couldn't access internationally. But as I said before, more important than that is the dignity it will give to people and the peace of mind in retirement that people crave because they are concerned about their retirement as we live longer. And that is why the creation of this national system 20 years ago was so unique, so important, and why we need to grow the system to make it bigger and better than it has been before.

Now of course, there are some challenges in the system, challenges Minister Shorten will talk about in a minute. There is certainly a disproportionate level of government support that flows to a few select Australians in the system. And I want to make this point really strongly: no-one begrudges there being support in the tax system for all Australians in building up their retirement savings, at any income level. There is a rolled-gold public policy purpose in putting in place concessions for all Australians to save for their retirement. And that is a bedrock principle. But there is something wrong in a system where working Australians on average wages are providing excessive support to people with millions in their superannuation account. Why should someone who has millions of dollars in a superannuation account pay no tax on their earnings while someone on $80,000 a year pays a marginal tax rate of 37 cents in the dollar on every additional dollar they earn? So what today's reforms address is this imbalance. There are still strong concessions going forward for all Australians but they do address that imbalance. So the changes that we're announcing today reduce the level of government support for less than 20,000 of Australia's most wealthy Australians. So these reforms will grow superannuation for all Australians, they're balanced, and of course, they are designed to make the system more sustainable for the decades ahead. So this isn't a package about today, it's not a package about next year; it's a package about the next decade and beyond. That's why some of the reforms we're announcing are so important, the reform for the Council of Superannuation Custodians, the policy changes we announced in last year's Budget, the policy change we announced from 9 to 12 [per cent] some years before that. The policy changes today are all part of a package to grow the system and make it stronger.

That decision that we took a couple of years ago to take the superannuation guarantee from 9 to 12 per cent was a fundamental reform very much in the spirit of meeting the challenge of an ageing population for decades ahead, dealing with a critical intergenerational challenge. As too has been the reform that we've put in place in recent years to boost support for the superannuation savings of 3.6 million low-paid Australian workers. So we believe national superannuation is an indispensable part of what makes our country strong and that's why we want to grow it even further. And of course, every step of the way in national superannuation we have been opposed by the Liberal Party, and I think it was Tony Abbott who described superannuation, and I quote Mr Abbott, as the 'biggest con job ever foisted on the Australian people.' This has been one of the most fundamental reforms that gives us the strength as we confront the challenges of the Asian Century. Of course there is a very clear choice out there now, a sustainable system under Labor which delivers fairness to all, and Mr Abbott's proposal to rip away support from 3.6 million of the lowest paid Australian workers in the superannuation system. I'll now throw to Minister Shorten to make some comments and to go through the detail.

SHORTEN:

Thank you, Treasurer and good morning. As a Labor Government we're proud to be part of a two-decade plus long legacy of universal superannuation for all working Australians. It was begun under the Hawke and Keating Governments and it's been continued until today, which has created one of the best part government, part private pension systems in the whole world and it is the envy of the rest of the world. It is a system which assisted Australia weather the worst effects of the GFC. At its core Australia's superannuation has a set of principles which Labor supports, principles which this Government recommits to today. Superannuation needs to deliver longevity, that the greater life expectancy that Australians enjoy and require. Superannuation has to be adequate for its purpose. It must provide certainty within and between generations for a comfortable and dignified retirement. In 2020 superannuation must look towards 2040, in 2030 superannuation must look to 2050. The decision and the vote last year narrowly won by Labor against the Coalition to increase superannuation from 9 to 12 per cent over the next 7 years is a fundamental part of looking forward to the future.

Superannuation is and should be a source of funding of our infrastructure, superannuation is and should be support to our small business in Australia. But additionally, superannuation must be fair. Superannuation is paid for by the increase in productive capacity within Australia, within Australia's enterprises and workplaces. Superannuation should not be driven by the 12-month budget cycle. The measures that I will go to now reflect the best traditions of Labor's proud, consistent legacy of growing and nurturing Australia's superannuation system, to deepen our liquidity of our capital and most importantly to improve the opportunity for Australians to retire with some level of dignity and decency. I believe that what we are announcing today will put an end to some of the undermining of the confidence and the irresponsible scare mongering that we've seen from a few including some members of the Opposition.

Therefore, as the Treasurer alluded to, I'm pleased to announce today that the Government will establish a Council of Superannuation Custodians to ensure that future changes are consistent with an agreed charter of superannuation adequacy and sustainability. The Charter will enshrine and make clear the core values and principles and the commitments that Australians expect from governments of all political stripes when implementing superannuation policy. The Council will be charged with assessing all future policy against the Charter and providing a report to Parliament - a report to be tabled in Parliament when changes are under debate. The Council will also provide at least an annual report on the superannuation system against the Charter which will also be tabled in the Parliament. Labor wants to put politics beyond the day-to-day partisanship which we see too much of in the current debate. We want to take superannuation above politics to provide Australians with confidence, with certainty, with stability, with the sole focus in the minds of Australians that their legislators are solely focused on the long-term interests of the retirement incomes of Australians who work very hard.

We will also be announcing a number of targeted, common sense and overdue reforms to ensure sustainability and fairness in the superannuation system. We all understand that superannuation is mandated or compulsory deferred income, you can't use it right now when you earn it. So it is only right that compulsory savings are taxed at a concessional rate. Concessional tax treatment encourages savings. Labor has, will and always support this. We believe the system should focus upon people who earn average wages, who earn 1 or 2 or 3 or 4 times average wages. We believe the system should provide Australians the best opportunity to achieve adequate and comfortable retirement.

But to keep the system sustainable we all know that you can't have concessions being open ended where if you can put in an infinite amount of money you can get an infinite tax concession in the retirement phase. I believe, the Government believes and I think most Australians believe that once you've achieved a comfortable level of account in retirement you probably don't need as much taxpayer support as those who haven't yet got to that. The changes we're announcing today simply correct the anomaly which has provided an extremely generous open-ended tax concession to those hard-working Australians who have been fortunate enough with government concessional support to already achieve a high level of comfort in retirement. Our changes are not retrospective, they will be prospective. In order for universal superannuation to increase from 9 to 12 per cent. In order for Australians to have confidence that the system is working in the interests of all vigilance dictates that we must make these hard changes. It's important that we address this now so that our superannuation system is fulfilling its original intent; to support and encourage savings for retirement through appropriate concessions. Specifically the Government will maintain the tax free treatment of future superannuation earnings in the retirement phase of earnings in the fund up to $100,000 per annum. It will still be tax-free. At this stage most Australians could only dream of having an account large enough to deliver them earnings of $100,000 per year. Beginning on 1 July 2014 future earnings above that level will attract the same 15 per cent concessional rate that applies to earnings in the accumulation phase. There will be no change to the current rules on earnings in the accumulation phase. Furthermore, the $100,000 threshold annually will be indexed to CPI and will increase in $10,000 increments above that. Existing assets with a capital gains liability – so people who've worked on the current goal posts, who've acquired assets will only be subject to this measure10 years after the introduction of the changes. So 1 July 2024, this long period of grandfathering, some 11 ½ years from now will allow people plenty of opportunity to decide how they want to structure their superannuation holdings in the future.

This effectively means, and you can assume over the last 10 years on an average of 5 per cent return, that people who have accounts currently in retirement above $2 million will be the only people affected. This measure I also must stress will apply to members of defined benefit schemes, including members of the Commonwealth Parliament, both Government and Opposition. Furthermore, in terms of simplifying concessional caps, the Government is acutely aware that many retirees approaching retirement are keen to boost their retirement savings above mandatory contributions. We have heard industry for the last 2 years on this question. So I can announce some good news, that for people aged over 60, 60 and over, from 1 July this year will see increased concessional caps; it's currently $25,000, but if you are 60 and over and you have the capacity to contribute up to $35,000 from 1 July this year you will be able to do so. And more good news is that when you look at 1 July 2014 this measure of an increased concessional cap from $25,000 will be extended to people 50 and over. So people in the later years of their working life, perhaps who the kids are not totally off their hands but perhaps not quite as expensive as they were, they've got a bit more money, the mortgage payments are a little more under control, they have the opportunity to put more money in. Women who have had broken service but have re-entered the work, because of these changes will be able to in the next number of years literally put in tens of thousands of dollars more into their superannuation than they are currently.

Also, we have heard industry on the question of excess contributions tax. So I'm able to announce today that we will reform the excess contributions tax to make it fairer and to give individuals greater choice. Under current arrangements introduced by the Howard-Costello Government, concessional contributions that exceed the concessional cap are effectively taxed at the top marginal tax rate. This has seen people who, through no fault of their own, may have more than the concessional cap paid into their superannuation. What we are proposing is that governments will allow individuals to withdraw any excess contributions from their super fund. The excess contributions that go into their fund will be taxed at the person's actual marginal tax rate, not the highest marginal tax rate, that recognises contributions are collected later than normal tax. This reform will mean thousands of people who are currently being penalised and taxed on excess contributions will be taxed in the same way if they'd chosen to make a non-concessional contribution. Furthermore, in order to keep the aged pension sustainable and fair, the Government will just extend the normal deeming rules to superannuation account-based income streams for the purposes of the pension income test. This will ensure that all financial investments are assessed fairly and under the same rules. This reform was recommended by the pension

This will ensure that all financial investments are assessed fairly and under the same rules. This reform was recommended by the pension review and the Henry Review and indeed we've heard this same view put by industry on this question. This is a simple and common sense extension of the normal deeming rules. Furthermore, we've heard industry on the following question of extending concessional tax treatment to deferred lifetime annuities. The Government will also ensure deferred lifetime annuities receive the same concessional tax treatment as earnings for other pension products. At last year's MYEFO, the Government announced reforms to protect lost superannuation from being eroded by fees and charges. We announced lost superannuation accounts of less than $2,000 will be transferred to the ATO where those accounts will be shielded from fees and could be claimed back by people at a rate of interest equivalent to CPI plus the amount of lost super. This means that rather than shrinking, people who are temporarily disconnected from their superannuation will have it grow from the time it is found. This backs up our other reforms in lost superannuation which has seen a significant reduction in the pool of lost superannuation and a significant amount of money into the billions of dollars being reconnected with the people who have earned the money. It is appropriate, as universal superannuation grows from 9 to 12 per cent, the threshold of that constitutes superannuation grows with it. So specifically it will mean from the account balance threshold will go to $2,500 in 30 June 2015 and $3,000 from 30 June 2016. It means a 20-year-old who has lost touch with their $3,000 inactive in superannuation will not have it eaten by fees. In fact if they are reconnected to it with the ATO and we're making it a lot easier for people to find it as the numbers indicate, they will be able to reclaim $3,394 from the ATO over 5 years.

This is common sense reform, it continues the Government's commitment to putting downward pressure on superannuation fees and charges. In conclusion, these reforms that the Treasurer and I on behalf of the Government are announcing today are consistent with the great tradition of the Hawke and Keating Government's nation-changing reforms to Australia's national retirement savings. We are proposing for once and for all to move reforms to look beyond the budget cycle, reforms which are consistent, prospective, stable, focused on superannuation and the great goal of people's retirement. This will continue our unbeaten legacy as the only party who in the parliament of Australia consistently votes to nurture and grow our world-class retirement savings system. Happy to take questions with the Treasurer.

JOURNALIST:

First of all, just to clarify, the Treasury did that paper which was released a couple of months ago which showed that the great weight of concessions was much higher for high income groups, do these changes address all of those changes and you would be looking at the treatment of capital gains tax and self-managed funds, is that still a live issue or you think this deals with it?

TREASURER:

Well I'll throw to Bill on some of the detail. What we are doing here is taking a long-term approach to, if you like, make the concessions sustainable. That is by clipping them at the top for those who have the highest account balances and the higher incomes. They are still getting very generous tax treatment, but less generous than they were getting before. Why have we taken that approach? Because the system's got a long way to go and it's going to mature in the years ahead. So the real benefit of this is not across the Budget cycle. You may have been here on Wednesday when I made the point that we were approaching this task not from the point of view of the forward estimates from the Budget, but from the longer term. So what we are doing is making superannuation more sustainable over the longer term by pulling back on some of the various concessions, very generous concessions, which go to people who have got millions of dollars in their super accounts. The system wasn't created for that. Bill

SHORTEN:

I think the Treasurer's sort of covered the thrust of what you wanted to hear, Laura. But in the specific, the principles which govern our system go towards some basic points, don't they. They should be stable, you don't want to change the goalposts, you don't want to make retrospective changes. On the other hand it should be a fair system and it should be one which focuses on getting people to a comfortable level of retirement. Most Australians do not have enough saved in super. It's a bit of a shame that Robert Menzies didn't do in the '60s what Bob Hawke did in the '80s. It's a shame that Malcolm Fraser didn't do in the 70s what Paul Keating did in the 90s. It's a bit of a shame John Howard didn't do what Julia Gillard and Wayne Swan did when we lifted super from 9 to 12 [ per cent] but the history is what it is. What that means is not enough Australians have enough in retirement. Now, the former Treasurer Costello abolished the reasonable benefits limit. There had always been reasonable benefits in the system, in other words you could get a tax concession to get you to a certain point and after that you pay your full marginal rate because it's income. Our research shows us that if Howard-Costello hadn't, because they were cashed up with massive tax revenues and looking for a way to hand it out to people, if they hadn't abolished the reasonable benefits limit it would have been about $1.7 million today.

TREASURER:

Which is approximate to where we are on the principle measure here. Do you want to deal with the capital gains issue as well?

SHORTEN:

Yes, I will. So that point is the reasonable benefit system was clunky. We think with ATO working with industry, our system is less clunky. But what we also recognise is that once you've got to a certain level of annual income through your earnings in the fund you are comfortable. Good luck to you if you can go further than that and you can achieve that and the Government's still helping you a bit. Everyone still gets the concessions up to that point. But our priority is on the people who haven't got to that point which is, I have to say, the vast bulk of Australians.

JOURNALIST:

Have you actually modelled the extent to which it reduces the concessions available at that top end so there is more equitable and also, the point about capital gains?

TREASURER:

I'll give you some rough figures. What you will be looking at through the first measure here and the one that we had in last year's Budget would be about $10 billion over 10 years. And that's why I say it kicks in over time, and you've got to do that in superannuation. This is a long-term policy initiative and for the reasons that we're talking about of setting up the custodians, for the reasons that people plan a long way ahead, all of your changes have to be bought in gradually. For example, the increase in 9 to 12 [per cent] is coming in relatively slowly. You've got to do this because people do take decisions about the future and they have expectations. So in the case of capital gains there has been a grandfathering provision put in there and I will just throw to Bill on that.

SHORTEN:

So we haven't specifically targeted SMFSs, we accept that whilst we think it was an anomaly to provide an open ended concession, we formed the view that we're better off giving people notice now for the future that the very top end of concessions is not sustainable and that's why it's prospective, that's why we're grandfathering it. But the scare campaign which says some of our SMFSs are in for a particular targeting are not right, not borne out by today. Not borne out by today. Not right.

TREASURER:

And not on the table. I mean, there's been a lot of speculation over the last few weeks and much of it, in fact almost all of it, has been incorrect.

JOURNALIST:

Treasurer, are you guaranteeing that there won't be any further changes in the Budget?

TREASURER:

What we're saying is that we've been through a pretty comprehensive consultation. You might recall going right back to the Tax Forum that we established a superannuation roundtable, there was a lot of discussion at that forum about concessions. The Minister has been consulting with industry for a pretty long period of time now, and of course he had a round table on Wednesday. That was useful because we concluded following that our decisions with a Cabinet meeting last night and in terms of superannuation overall this is aimed not so much at the Budget but at the longer term, but we've concluded by and large our decision making process in this area. We're establishing now the custodians of the superannuation system. We think that is one way to shine a light on the need for certainty and consistency for the long term, giving them the power to report to Parliament on any particular proposal a government of the future may bring forward and guide the public debate about those proposals.

JOURNALIST:

Is there nothing else for the Budget, this is it?

TREASURER:

We have by and large concluded our discussions in this area but as I said in this room on Wednesday, our principal focus here has been for the longer term. Yes, there's a relatively modest short-term saving here over the forward estimates but our focus always has been, because of the very nature of superannuation, the longer term.

SHORTEN:

May I just unpack that. We shouldn't underestimate that the Government here is changing the rules of debate on superannuation. What we are saying today is that we are going to work on a charter above politics, ideally bipartisan approach because superannuation should not only just be the play thing of an annual budget cycle but it shouldn't be a subject upon which some to gain political power spook the confidence in what is a very good system. By putting the Charter on the table, and we'll work on that, we've respected industry elders, people from all walks of life, people from all political persuasions. What we are endeavouring to do is to semi devolve the political decision making in superannuation so that when changes are proposed by the Government of the day, a group of trusted independent people look at it from a regulatory background and an industry background and give their view to the Parliament. This is a distinct change to the way superannuation policy has been debated. See, our opponents are saying we won't make any detrimental changes. Well of course detrimental is in the eye of the beholder. If I'm one of 3.5 million people plus who earn less than $37,000 I think it's detrimental if Labor takes the 15 per cent tax off that I'm paying and the Liberals want me to pay 15 per cent tax on my super. Now any reasonable dictionary would say that's detrimental to 3.7 million people but not the dictionary that our opponents read, clearly. But what we want to do is move the debate and in the light of us indicating positive changes it is time for the Opposition to drop their proposition to put a tax on 3.6 million people, 60 per cent of whom are women. We are now endeavouring for the first time, this is a new development, to move superannuation off the political budget football field into a better place.

JOURNALIST:

So will you be putting the legislation for these measures in Budget week –

TREASURER:

We will certainly be taking these proposals to the election. We will be proceeding with our normal legislative program.

JOURNALIST:

Does that mean you will be putting it in Parliament before the Parliament rises?

TREASURER:

We've got a legislative program, we've only got a few weeks, we're going to take these proposals to the election. I can't necessarily commit to have all of this in legislation for the Parliament, but I'll certainly be going to the election [with them].

SHORTEN:

But in this specific proposition, trying to reform excess contributions tax, you don't need a committee to tell you that's got to be done.

TREASURER:

And you also know that when we put the guarantee in the Parliament the Liberal Party voted against it. The 9 to 12 [per cent] increase, the fundamental reinforcement of the foundations of the system was voted against in the Parliament by the Liberals.

JOURNALIST:

The Treasury figures show that the top five per cent of income earners get about 20 per cent of the tax break. Can you talk about why you chose not to structure these changes today around income levels, for instance, going below $300,000 which might have addressed some of the fairness concerns that some people have expressed?

SHORTEN:

It's sometimes important to have a bit of a sense of humour but is this the Financial Review saying why aren't we taxing people more?

JOURNALIST:

It's the Australian asking a question, it's only a question.

SHORTEN:

I know it's a question but, you know, OK. It is a question. We believe that the changes we announced last year, which puts the 30 per cent concessional tax on people over $300,000, that's what we said. We're not into goalpost shifting. What we've said is that, and there will be cries of outrage from, you know, certain in Australia saying oh my goodness, if I've got $3 million in my account and on an average 5 per cent return and I'm getting $150,000 earnings that's not comfortable enough and I should still pay no tax. Well I get that. But I think in the heart of hearts it didn't matter if you're a captain of industry, a person in the street or an expert on superannuation, we all know that having open-ended concessions, where if you've got as much money as you can to put into superannuation for its earnings in retirement you pay no tax; it's day of reckoning.

TREASURER:

In a policy sense there's only one war here, and that's Tony Abbott's war against 3.6 million low-income earning Australians and their superannuation.

JOURNALIST:

How much of this will actually be law by the time of the election?

TREASURER:

Well we've got proposals from last year's Budget going through the Parliament in the next session and we will do what we can do with these proposals but they'll be going to the election.

JOURNALIST:

The $900,000 is that going to be built into the Budget?

TREASURER:

It's an announced proposal. Any Government intention to legislate an initiative becomes part of our forward initiatives process -

SHORTEN:

Let's go through those ideas, Paul.

TREASURER:

There's nothing different in this process that applies with any other proposal we announce. We've got an existing legislative framework, part of that is superannuation, part of that is the bill from last year's Budget, but we will be most certainly taking these proposals to the election.

SHORTEN:

Let's put Paul's question into context about what we will do in the remaining weeks before an election. But these propositions, fixing up excess contributions tax. The Liberals would have rocks in their heads to say no to that. Lifting concessional caps of people over 60, even though they have no policy on it, they now have a chance to copy our policy. You don't need to have some inquiry into the system in 2015, talk to 160,000 people over 60 who would be in a position to put an extra 10,000 from $25,000 to $35,000. The Libs should come out and say that's a good idea. They shouldn't be jealous that they don't have this idea, they shouldn't just say well, you know, we're not interested in whatever Labor has to say, they're good ideas. The idea that we cap in a fairly modest way open-ended concessions, you know, we're making a hard decision, the Liberals should be saying well, OK, they're making that decision, we should be grateful.

JOURNALIST:

Can you explain how you'd save money, $365 million by raising the concessional contributions. People are putting money into super at a lower rate than they would otherwise be paying in marginal tax rates. How do you save $365 million?

SHORTEN:

We had a proposition in the forward years that we would lift it for some up to 50. The reality is industry came back to us and said our policy that we had for some you could lift it up to $50,000 but you had to stop that at $500,000. Once your account reaches $500,000 it goes back to $25,000. We listened to industry. They said listen, Bill, we like some of the sentiment but it's too clunky. The cost of managing account balances and, you know, when they're up to $500,000 or not, was an administrative nightmare. So we've had industry people come to us; SPA, the self-managed advisers group for the self-managed funds, we've had ASFA, the Australian Superannuation Funds Association, we've had other groups say Bill, we'd rather see movement to get to $35,000 and start bringing that system in. So what it means in the short term is it's a hit to the Budget. In the long term, depending on how you calibrate it, it's a modest saving.

TREASURER:

Just one second because we can't be here all day but we're happy to do as much as we can. We'll just do a couple more on super and then I'm happy to come to other questions and I'll take yours first. So let's just finish super and then we'll go on to other stuff.

JOURNALIST:

The Industry Super Network today warned against making any changes before the election and before they there could be bipartisanship on the issue. Why now then if it's not potentially going to Parliament before the next election?

SHORTEN:

A lot of people had a lot to say but haven't seen the detail, now they've seen the detail I'd be interested to see what industry superannuation funds networks say to you in the light of this announcement. Beyond that, Australians who want to put in more than $25,000 who are over 60 they want to hear this now and we're upping the ante. Australians who are getting caught in the excess contributions system want to hear us say this now. The best thing that could happen is the Opposition say listen, there's some ideas here we can just live with because that's what the people want. The most important idea today is that Labor's recommitted to the original objectives of superannuation. We are committed to making sure there's a deep pool of national savings. We are committed to making sure that people have the opportunity not to rely just upon the aged pension. We are committed to making sure there is a long-term approach to super, not constant tinkering, the perception of constant tinkering in the short term. People want stability and certainty, this is our plan.

JOURNALIST:

Mr Swan, you've got figures from the forward estimates, do you have long-term estimates of savings?

TREASURER:

I partly answered that before and the question from Laura. I said in the new initiatives today in terms of earnings in the retirement phase and the initiative in the last Budget for those over $300,000, combined, I said, $10 billion over 10 years. And there are more and there are more, if you put bits and pieces in, but we are working our way through, but a minimum of $10 billion over 10 years.

JOURNALIST:

But you've just gone for a decade?

TREASURER:

Can I just say this about decades. It is very difficult to do absolutely reliable 10 year figures let alone to take them out over 20, 30, 40 years.

JOURNALIST:

But some measures are only kicking in 10 years on?

TREASURER:

In terms of capital gains in the significant measure absolutely and we make no apology for that because people have bought assets over the last 10, 20 years with certain expectations have to be accommodated in here and we've done that. That is fair and good tax policy. Because superannuation is a long-term proposition everything you do in it has to be very deliberate and it has to take place over time. Hence we've been criticised, for example, for the long time frame of bringing in the increase of the SG from 9 to 12 [per cent], very deliberate. It does have consequences for many other aspects of our economy. You do these things slowly, you do them surely. And that's why the proposal we're talking about today for the custodians is so important, to help with certainty in the system over time. Because as we've seen in the last month there are lots of people out there with really strong views on super and if you're near retirement age your views on super are really, really strong and there are lots of vested interests out there as well. Some who will be pushing their own barrow, and they will be seeking to achieve their sectional interest. We want to get above that, and that's why we've put in place the proposal for the custodians.

JOURNALIST:

Could I ask then, could I change topic?

TREASURER:

We'll have two more questions on super, then I'll go to the others.

JOURNALIST:

The timing of today's announcement, the rule-in rule-out plays of the Budget speculation. This is the biggest rule-in you could deliver. Presumably all this –

SHORTEN:

Sounds like more like a rule out doesn't it.

JOURNALIST:

Well it's a bit of rule-in -

TREASURER:

Can I just say it's neither and I want to make this point, and I made it in this room on Wednesday. We've been working on these proposals through a process since the Tax Forum well over a year ago, through a roundtable, and we have been talking about these matters and consulting about them. It was always going to be the case that there wasn't going to be a very significant contribution in the forward estimates, but of course, the media spin cycle, all the vested interests, all of the loud voices, they were all out there. Of course, that's produced a very heated public debate. But we were always going to put forward a package roughly around the timetable we've been working on. Yes it will have come forward a little, we had a Cabinet meeting last night and we're announcing these matters today, but there's nothing extraordinary about the process we've been engaged in, it's been around for a long time. It got rediscovered in the last couple of weeks and there's been a heated debate, and we want to be absolutely clear about where we are heading.

JOURNALIST:

Will it be enough money to fund the NDIS and/ or Gonski?

TREASURER:

Well, there's a couple of points there. The first one I think is really important and that is that as we make all sections of our Budget sustainable for the long term - and it's not just superannuation - there will be a number of other areas in the Budget that we are looking for longer term saves. And as you do that the structural saves, as they're called in the jargon, you do create room in the longer term for new policy proposals. And we've done an enormous amount of that already and we've said openly and we have said publicly that we will have to make room in our Budget for the longer term for two important structural changes that are coming.

First of all, to reform our schools through the Gonski proposals, the school improvement program, because we see that as being absolutely essential to our productivity and engaging in all of the benefits which will flow from the Asian Century, and of course when it comes to fairness, the NDIS. But the reality is this: there is no magic wand or one area of savings that will instantly change the fact that revenues have come down quite markedly, not just in this current year but over the forward estimates. No magic wand that is going to change the fact that revenues have come off dramatically because of this unique event in our economy system where nominal GDP growth for three quarters in a row has been below real GDP growth.

JOURNALIST:

Why did you not bed these changes down last year so that you could have legislated them before the election? Did you miss an opportunity to get this sorted out in a non-election year?

TREASURER:

I've just been through the fact that we have gone through an extensive period of consultation which is what you would do in an area like this. Now the question is why didn't you do something last year and announce it then. And then the criticism would have been that we didn't do the consultation. I mean fair dinkum. Let's get a sense of perspective into public policy in Australia, a realistic view about how it's made, what it means, let's get back to a fact-based debate.

SHORTEN:

It's ditto to what Wayne said. A lot of these propositions have been out there and put forward by people in the superannuation system. The new idea of this is that we're proposing a charter of superannuation, where we get a semi-independent group to review propositions by whatever government of whatever day. That's what people want to hear. What drives people crazy in superannuation is the sense of constant tinkering, the sense of changing the goalposts. What also drives people crazy is they have low account balances. In the last two and a half years we've put downward pressure on fees and funds, we've lifted super from 9 to 12 [per cent], we've abolished the tax paid by low income workers and what we're saying today is that we want to start a process of depoliticising superannuation policy so it remain a generational source of national advantage and individual comfort and what we're also saying to people today is all the scarce stuff you heard it's wrong.

JOURNALIST:

For the best part of three years we've been hearing from the Opposition were going to scrap the mining tax package. Now, you'll be aware in our newspaper we're revealing they're going to keep the onshore element to the PRRT?

TREASURER:

What a staggering backflip from the Liberal Party. They've adopted holus bolus a substantial part of the MRRT package - a resource rent tax, a super profits tax - and it's slipped out overnight they've adopted it holus bolus. This is absolutely staggering and it just shows a level of hypocrisy from the Liberal that is simply breathtaking.

SHORTEN:

What do they say; imitation is the sincerest form of flattery.