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

Interview with Kieran Gilbert

Sky News

SUBJECTS: Superannuation Reforms

JOURNALIST:

Wayne Swan thanks for your time, first of all can we clarify just how many people will be affected by these changes? What sort of assets do people need before they come under the scrutiny of these changes?

TREASURER:

Less than 20,000, with superannuation savings of around 2 million and an income which comes from that based on a 5 per cent return of $100,000. It is a tax on future earnings of the assets in the retirement phase.

JOURNALIST:

It is all prospective?

TREASURER:

Yes, absolutely.

JOURNALIST:

It is not retrospective at all?

TREASURER:

Absolutely not.

JOURNALIST:

Let's clarify in as simple terms as possible, people can earn up to $100,000 tax free before the 15 per cent rate kicks in?

TREASURER:

This is earnings in the retirement phase, and that's the income stream that's come from the asset in the retirement phase. There is a 15 per cent tax in the accumulation phase, this is a tax which kicks in after $100,000 of earnings.

JOURNALIST:

You've made the comparisons in the documents released here with the age pension – it's about $6,000 more generous – the tax free concession that people receive on those $2 million in funds. Were you tempted to go further than you what you've gone?

TREASURER:

Well there are still very generous concessions, and the fact is superannuation is the best investment in town. But we thought it was appropriate to scale back these concessions, so we've outlined those changes today. What they will do is kick in over a long period of time. This is about changes which will strengthen system for the long term.

JOURNALIST:

What do you say to the argument that those wealthy Australians, the 20,000 or so will now be tempted to move their funds, their investments elsewhere, and you won't get the revenue that you projected?

TREASURER:

I believe we will. Because superannuation is still very much tax preferred. As I said, the best investment in town and it remains the best investment in town.

JOURNALIST:

There was a phone hook-up last night by the Cabinet to tick this off. Has this all been rushed because of the damaging speculation that has been going on?

TREASURER:

Not at all. The fact is we have been consulting extensively on this measure. In fact we started the process following the Tax Forum back in 2011. Minister Shorten had a meeting of the superannuation roundtable on Wednesday of this week. We have been working our way through this issue. It has been a matter of a lot of public comment. We see a lot of vested interests out there having their say and a lot of people thinking about their superannuation. We are along way down the track of resolving all of these issues. We had a Cabinet meeting last night and we thought it was best to announce today and we have.

JOURNALIST:

But it's not a snap announcement, knee-jerk to the pressure?

TREASURER:

We have been working in this area, and it has been well known. Now there has been all sorts of fevered media speculation. People seeking to make people worried about their future. The fact is I've have been out there doing the responsible thing, in a methodical way, consulting with industry and we brought that to conclusion in Cabinet last night.

JOURNALIST:

Is this it now? There won't be any further announcement in the Budget relating to super?

TREASURER:

No further announcements in the Budget.

JOURNALIST:

Ok, now the Custodians. What is this about? Is it about stopping future governments from tinkering with the system you have put in place? And who are you thinking of putting on this Council?

TREASURER:

Well we are really proud of our system of national superannuation. It is the envy of the world and other countries, both developed and developing, wish that they 20 years ago took the steps that the Keating Government took to establish national superannuation. We are very proud of it. We want to strengthen it for the future. We need to build it up, particularly given the ageing of our population. That plays an important economic role in our economy as well. But we want to build it all up and we think one way of elevating it, of giving it more independence, of giving it more certainty, is to set up this body called the Custodians of Superannuation, where we would have senior representatives from industry, but also the regulators. They would report to Parliament on proposed changes that may be brought forward by future governments.

JOURNALIST:

But what kind of people are you talking about?

TREASURER:

We do genuinely want to consult with industry, but obviously you would probably have the head of APRA, you might have the head of ASIC for example. Then you might have some form of industry representation determined following consultation. What we want to do is we want to preserve the importance of this very special policy for Australia to make sure people have faith in the future, in its certainty and deliverability.

JOURNALIST:

So what elements will be legislated by the election?

TREASURER:

We've already got an election program before the Parliament. We don't have that many more weeks to go. We've already got some superannuation measures coming to the Parliament in the next couple of weeks. And we will take these proposals to the people at the election.

JOURNALIST:

What do you say to suggestions that this is another broken promise, when it comes to the treatment of the lump sums over 60?

TREASURER:

In fact we have kept our promise. There is no tax on withdrawals. None whatsoever. So we have kept that promise. What we have done is we have enhanced the system by taking the superannuation guarantee from 9-12 [per cent]. A fundamental reinforcement of the very foundations of the superannuation system. We have boosted the superannuation savings of the lowest paid Australians, 3.6 million getting a considerable benefit which Mr Abbott and the Liberals want to rip away. There has been a lot of discussion about class war. The only class war being waged here is being waged by the Liberal Party against Australians on low incomes on their superannuation.

JOURNALIST:

What do you say to suggestions that it seems a bit lighter than some of the reports that have been out there leading into this and that you have been spooked?

TREASURER:

I completely and utterly reject that sort of speculation. The fact is we have been engaged in a long term reform and consultation. That is well known. It did become a matter of public debate in recent weeks for a whole variety of reasons. But we were along way down the track of our decision making process and we brought it to a logical conclusion today.

JOURNALIST:

Could you have done it a bit better?

TREASURER:

I think when it comes superannuation we handled it very, very well. We are building the system up. I mean there is a whole lost decade where the Liberals did nothing in the area of superannuation, except to put in place a whole lot of concessions at the top which is not necessarily affordable, and we are dealing with the consequences of that in this package. We've put in place the vital reform that has been required for well over a decade, which is increasing the guarantee from 9 to 12 [per cent]. So people get adequacy in their retirements.

JOURNALIST:

One final question, this is something that I get phone calls and emails about from viewers relating to politicians' super; the defined benefits scheme. This will apply to that. You said it is going to prospective, so it won't be retrospective even for MPs in Parliament?

TREASURER:

No it's going to apply to us as we go forward. The measures that we have announced today impacts on me, and it will impact on others on defined benefits schemes. Also the measure we put in last year impacts on me. They all impact on those of us who are on the defined benefit scheme.

JOURNALIST:

Treasurer Swan, thank you.

TREASURER:

Thank you.