JASON MORRISON:
Afternoon Senator.
ARTHUR SINODINOS:
Hello Jason, great to be with you again
JASON MORRISON:
Thank you, well let’s start. Who gets touched by this, who will pay more tax out of this?
ARTHUR SINODINOS:
Look, the first point I wanted to make is that, we’re not actually raising taxes in the sense of making new decisions on tax. The $10 billion you referred to was 18 measures that were left over from the previous Government that we were saying would proceed, including the increased taxes on smokes that you alluded to. So…
JASON MORRISON:
But whichever, I mean you could say no and we won’t have any of those, so I mean they’re tax we’re putting on.
ARTHUR SINODINOS:
That’s why this package was a bit of a balance, because we looked at other areas and there were 3 major measures. For example where we said we didn’t want them to proceed and I can go through those, including around superannuation, self-education expenses, the FBT on cars, which was a big issue before the election. And then there are others where we’re proceeding with amendments so there’s about a $3 billion of a hit we’re taking on the bottom line to actually reduce tax below where Labor would have had it if they had come back into Government and legislated these measures. Now that may not be comfort to everybody, but I do want to put this in context. We’re prepared to take a hit on revenue in order to give people relief, particularly in areas where we think the impact of undertaking those measures was either going to increase red tape, increase complexity or have bad policy outcomes.
JASON MORRISON:
Ok I take that, but let’s talk about where people are going to pay and, you know, please understand most people know that you’ve inherited a mess and your job is to unscramble it and there’s a couple of ways you can do it, though I don’t think we expected that one of the ways would be more taxation. And I think about, not that Government seems to broadly have much sympathy for them but the poor cigarette smoker. I don’t smoke, but I know plenty of people that do and we just keep hitting them and hitting them and hitting them. Prices of cigarettes going up again 1st December.
ARTHUR SINODINOS:
Sure and I understand that, but that’s why these are difficult choices. And Tony Abbott made that point before the election that we’d make some decisions that maybe people would not be happy about, but that’s why we’re in Government. We’re trying to balance various considerations, we’ve got a Commission of Audit that’s going to look at government services more generally and do exactly what you mentioned before Jason, which is thoroughly go through government services, cut back the waste, cut back unnecessary spending, cut back duplication, including between Commonwealth and State Governments. So there’ll be a very thorough process on the spending side and that’s going to take time, that doesn’t report in full until the Budget, which is next May.
In the meantime, there were all these measures out there, about 92 measures, which had to be addressed in one form or another, because they were creating uncertainty in the community, because the legislation had not been enacted, which meant that there were tax payers out there who didn’t know whether to obey the law or not. And one of the things we’ve done today is give people certainty around that by saying, if you were obeying the law as you thought it was going to be as a result of these measures being past, don’t worry, you are not going to be liable – if you’ve assessed on that basis, we’re not going to penalise you. In cases where you’ve acted according to the law as you thought it was going to be, and you’ve in-effect paid more tax than you needed to pay, we will refund the tax.
JASON MORRISON:
Alright, now the FBT, which has been well documented on cars, tax on investment earnings above $100,000 on superannuation accounts…
ARTHUR SINODINOS:
The Treasury told us that that proposal was too complex, too costly to implement and the super funds would have to institute new systems. It was going to cost some superfunds up to $10 million to implement new systems, and that cost would have been passed onto the members of the funds, and reduce their retirement incomes.
JASON MORRISON:
And it’s arguable that just because someone earns well, whether they should have to pay an extra special tax just on top of that.
ARTHUR SINODINOS:
But on that Jason, there’d be people who would hit that over $100,000 earnings in a particular year, because they might have sold a property or done something, right? And that was going to create a situation where they were liable one year and not the next year and you had all this volatility. We don’t want that sort of uncertainty.
JASON MORRISON:
On this self-education expenses, just clear up for us, what are the self-education expenses and the deductions now that will be allowed.
ARTHUR SINODINOS:
Well what we’ve done now is take away the cap that Labor instituted, which said that you couldn’t incur more than $2000 on the amount people could deduct as self-education expenses including training and educational courses, textbooks and other accreditation expenses. Because people were telling us and most of these people are below - about 80% of the claims over $2000 come from people earning less than $80,000 per annum. Now these are the sort of Australians who are listening to your program, who are wanting to improve themselves, they’re wanting to become knowledge workers, they want to be a part of the new, more innovative economy, they want to increase their incomes, they want to pay more income tax by having higher incomes and we were deterring them, but putting this cap on. So that cap had to go.
JASON MORRISON:
And so what’s now the limit? Or is there no limit?
ARTHUR SINODINOS:
No, no, as long as it’s legitimate and it’s not being abused for private purposes, it’ll be OK. We’ll keep an eye on it to make sure that you don’t get some smarties who try and use this to fund overseas cruises or anything like that, that won’t happen. As Assistant Treasurer I look after the Tax Office, we’re going to keep a very close eye on this.
JASON MORRISON:
OK now let me talk to you about something else, which is in the form of tax, the Government, the previous Government put this in place and I’ve not heard noises as to suggest you won’t stop this. It used to be 3 years before the Government grabbed hold of money, sorry 7 years before Government grabbed a hold of money in bank accounts, now it’s 3 years, and accordingly you’re touching superannuation funds and dormant bank accounts, which I don’t think it would necessarily be a shock to too many people to have bank accounts put aside for a few years to pay for things. Is that going to stop? Are you going to stop that? I mean, it’s looked upon as theft.
ARTHUR SINODINOS:
The lost accounts? The superannuation…
JASON MORRISON:
I don’t think they’re lost accounts, they’re untouched accounts.
ARTHUR SINODINOS:
Well look, with that, we’re proceeding with a measure that Labor had instituted, but the bottom line is this, you don’t lose the money you can claim it at any time.
JASON MORRISON:
Well yeah and it takes 3 months, I know practically what’s involved and it takes about 3 months to get back.
ARTHUR SINODINOS:
Yep, yeah, but look, if there’s an easier or better way to do that let me know and we can sort…
JASON MORRISON:
Well I’ll give it to you, I mean it’s 3, it used to be 7 years it’s now 3 years, put it back to 7 years.
ARTHUR SINODINOS:
We’ll take this offline and I can get my office to follow up with you.
JASON MORRISON:
Yeah, but look I don’t think this would be the first time you’ve heard about this, because I hear from Members of Parliament that they’re being knocked over with complaints about this. People that have been having small amounts of money in the scheme of the running of the Government, but big amounts of money in their lives, like people who have put aside thousands of dollars for medical, for holidays, to pay for school fees and things like that, that have suddenly disappeared and have now been claimed by the Government.
ARTHUR SINODINOS:
The particular measure we were taking about today was the one about lost members superannuation accounts.
JASON MORRISON:
Yeah. Well that’s another and more complicated thing, because I mean as you’d appreciate, superannuation is about money that is meant to be left and meant to sit there.
ARTHUR SINODINOS:
Yes but these were lost accounts, but my point was, ultimately you can claim the money back and get it, that’s not an issue, but on the other one, look I’ll follow up with you separately on that.
JASON MORRISON:
Yeah if you could because this will not be a shock…
ARTHUR SINODINOS:
So you’ve been getting a lot of questions on that?
JASON MORRISON:
A heap, a heap of people in all different walks of life, that are finding that money, that they’ve, I mean for example the Government’s clocked up about $740 million. I mean when I say the Government, I’m talking about the previous Government, but it doesn’t matter, Government is Government, when Government takes money from people’s back accounts, that’s just wrong.
ARTHUR SINODINOS:
But this is why your point at the beginning of the program in the intro was absolutely right. If you want lower tax, you’ve got to have lower spending so you don’t have to go in for all these sorts of revenue grabs, ad hoc revenue grabs that the previous Government use to be specialists in, OK? And what we’re trying to say, have a Commission of Audit, go thoroughly through the Government’s books on the spending side and create a basis for lower, sustainable tax.
JASON MORRISON:
Yeah, I mean, it’s sounding like this is first you’ve heard of this, surely not.
ARTHUR SINODINOS:
Look, I’ll follow it up further, but I was focused on the measure that we’d announced in relation or reaffirmed today in relation to lost superannuation accounts.
JASON MORRISON
Well look, can I point you to it? I mean you know the rule, because everyone sort of knows the rule that the Government thinks it’s eligible to take money from people’s accounts that they think are dormant, it used to be 7 years and now it’s 3 years.
ARTHUR SINODINOS:
I understand …
JASON MORRISON:
And it’s just wrong and I’m telling you, you know if you want to sit on hold for 10 minutes I’ll flick the switch and people will be ringing in from all walks of life that it’s happened to and it’s just wrong. I know you’ve got to get it back from the big black hole that we’re in, but that’s not the way to do it.
ARTHUR SINODINOS:
I take your point, I’ll follow up further will you.
JASON MORRISON:
Ok, appreciate you coming on, thank you.
ARTHUR SINODINOS:
Thanks mate.