SUBJECTS: Superannuation industry response to the Government's Tax reforms, Joe Hockey gaffe on the cost of the increase in the Super Guarantee to the Budget, Nielsen poll, Resources Super Profits Tax, Australia as a financial services hub.
CHRIS BOWEN:
Well, this morning Australia's peak superannuation groups joined forces to call on the Federal Opposition to support the Government's superannuation initiatives announced last weekend. The peak superannuation groups recognise the benefits for the long term incomes of Australians in their retirement of the changes announced by the Government. They also recognise the long term economic benefits – the benefits for nation-building infrastructure; the benefits for increasing the pool of savings that Australia has at its disposal – as being an important and visionary economic reform.
So the Opposition have a chance to support the Government's superannuation changes. They can also support the funding of those superannuation changes through the Resource Rent Super Profits Tax.
Now, I noticed yesterday Mr Hockey claimed that the increase in the superannuation guarantee would not cost the Government. This shows his fundamental lack of understanding of economics. It shows that he's not fit to be the Treasurer of this nation. As the package we announced showed, there is a cost to the Government of the superannuation changes, including the increase in the superannuation guarantee. Superannuation in Australia attracts tax concessions. When you increase the superannuation guarantee, the cost of those tax concessions goes up. The cost of our package over the forward estimates is $2.4 billion. The cost of the increase in the superannuation guarantee beyond the forward estimates is, of course, significant and it would be fiscally irresponsible to commit to that without the funding mechanism of the Resource Super Profits Tax.
So Mr Hockey needs to correct his error of yesterday. Mr Abbott and Mr Hockey need to correct their error in opposing the Government's reforms to improve the retirement incomes of working Australians.
Happy to take some questions.
JOURNALIST:
Are there any similar macro-economic benefits from lower taxes on savings accounts?
BOWEN:
Well, we've indicated, of course, that we are interested in boosting long term national savings and we are examining some of the recommendations of the independent tax report, and we'll be making further announcements in due course. No doubt there'll be various commentary about the impacts that that might have when those announcements are made.
JOURNALIST:
Hasn't the Government held the superannuation guarantee increase hostage to the Resource Rent Tax?
BOWEN:
Well, you need to be fiscally responsible and when you're making a commitment which will cost a significant amount of money, both over the forward estimates and beyond, you need to be able to pay for it. You need to be able to fund it – it would be irresponsible not to do that – and that's what we've done.
JOURNALIST:
How keen would you be to fight an election where you're arguing for an SG increase plus the changes to financial commissions and such, which the Opposition seems to have opposed as well?
BOWEN:
Well, the Opposition just doesn't seem to get the importance of superannuation and financial services for Australia. They don't seem to get that it's necessary to bring in more transparency to the remuneration of financial advisers, which will have also a fundamental positive benefit for the retirement incomes of Australians.
In their rush to avoid offending some financial planners, the Opposition appears to have put the interest of Australian consumers and investors last, just as they've done in opposing the changes to superannuation and the superannuation guarantee. I'm more than happy to argue that with Mr Abbott and Mr Hockey at the election or in any other context.
JOURNALIST:
Doesn't this increase to the superannuation guarantee represent a broken promise to business?
BOWEN:
No, we said we wouldn't be increasing the superannuation guarantee during this term. We've indicated that now we're going to the election with a policy of increasing the superannuation guarantee into the future.
JOURNALIST:
How worried are you about today's Nielsen poll?
BOWEN:
Well, look, as we've all said, the polls go up and down. Governments, when they make difficult decisions, can expect some political downside to that. We're not going to comment on the details of any particular poll other than to say – I've said and colleagues have said for a long time – that the next election will continue to be hard fought and that the prospect of Mr Abbott becoming Prime Minister, will all the risks that entails, is a real one.
But we will be fighting this election vigorously and we expect it to be a tough, close fought election.
JOURNALIST:
Are you surprised that people think Tony Abbott's more trustworthy than Kevin Rudd, though?
BOWEN:
Well, I'm not going to comment on the specifics of any particular poll. We will be arguing our case vigorously and we expect a tough election, as most elections in Australian history are.
JOURNALIST:
How significant is tomorrow's Budget in arresting the Government's poll slide?
BOWEN:
Well, we don't frame Budgets with a view to opinion polls. We frame Budgets with a view to the national interest. It will be a significant Budget in promoting the national interest. It will be a significant Budget in terms of ensuring that the way that Australia got through the global financial crisis, in such a way that is better than so many other nations around the world, is built upon into the future. That's our focus.
JOURNALIST:
How are you going to sell your Super Profits Tax when you've already had the Mining Council up today with a website accusing you of all sorts of things in breaking promises and crimping superannuation returns in the long term?
BOWEN:
Well, we expected the mining lobby to be vigorous in their campaigning. We weren't surprised and aren't surprised by that, but we have a fundamentally good and solid case to make.
And I would draw your attention to some of the comments made by those peak superannuation groups this morning about the impact of share market movements on somebody with an average superannuation balance of, say, $50,000 and how much that means, and I think that peak superannuation group pointed to the figure of $57. Compare that to the increase in the superannuation from our changes for somebody who's 30 on average weekly earnings today of $108,000, or for somebody who's 18 entering the workforce today of $200,000. Very substantial improvements to the retirement incomes of Australians and we're more than happy to argue that with anybody as well.
JOURNALIST:
Given the poll trend for Labor in recent weeks, what are you expecting today's caucus meeting to be like?
BOWEN:
I expect today's caucus meeting to be focused on how the Government can improve the national interest and can govern in the national interest, as most caucus meetings are.
JOURNALIST:
Are some MPs and Senators beginning to get nervous?
BOWEN:
MPs and Senators should always be focused on meeting the needs of their constituents, and I know that on our side of the fence they are, and that they don't take any election for granted.
JOURNALIST:
Mr Bowen, what's the Government's vision for Australia becoming a financial services hub?
BOWEN:
Well, I've said several times, as the Treasurer's said, as the Prime Minister has said, that we need to do better in the export of financial services. We commissioned the Johnson Report; the Johnson Report's a very good one. We'll be responding to the Johnson Report in the not-too-distant future and we'll be laying out policy in that respect. But financial services is important for growing the future of the nation and again, our superannuation changes, which would add half a trillion dollars to our funds under management over the next 25 years, are important in ensuring that we have those skills as a financial services centre in and for Asia.
JOURNALIST:
[inaudible]
BOWEN:
Sorry? I had two questions at once.
JOURNALIST:
A financial services super profits tax. Would there ever be a case for one?
BOWEN:
No, we've made it very clear that the resources industry, based on resources which are owned by all Australians, is a case which needs special treatment in tax. But we would not contemplate that sort of arrangement for financial services or any other sector.