SUBJECTS: Tax reforms, Tony Abbott's ideological opposition to superannuation.
CHRIS BOWEN:
Well, yesterday we saw announced the biggest reforms to Australia's superannuation system in 20 years. These are important reforms; reforms which will add around $100,000 to the retirement of someone in the workforce today who's 30; reforms which in total will add half a trillion dollars to the retirement pool in Australia by 2035.
Each of the reforms we announced yesterday are important in their own right. The superannuation guarantee is very important in boosting the retirement incomes of Australians, helping people put money aside for their retirement. We're doing that over time, gradually, so that business can adjust and so that those increases can be built into wage negotiations.
The rebate for low income earners is very important: three-and-a-half million Australians who don't get any tax concessions for saving through superannuation; giving low income earners a fair go, helping them save for their retirement.
And importantly, the changes to our catch up concessions for people over 50 are important, particularly often for women who had to leave the workforce during their working life, worked a period of part time while they were raising their kids, but then find when they turn 50 that they don't have enough money in their retirement account, in their superannuation balance, to fund them during their retirement, giving them tax concessions to be able to catch up.
And also the reforms to enable older workers to continue to receive the superannuation guarantee, something that many people have raised with us. All these important reforms.
Now, I note that Mr Abbott, in his normal fashion, came out immediately and opposed these reforms. This is unsurprising. The Liberal Party, and Mr Abbott in particular, are against superannuation. They were against the creation of the national superannuation scheme in 1991, 1992. They opposed it all the way. And in his book Battlelines, Mr Abbott calls for the tax concessions for superannuation to be stripped away. He opposes tax concessions for superannuation. He would put a great big tax on the retirement incomes of Australians.
We have a different view. We think it's important in a population that's ageing, in a population which cares about the future, to put money aside for superannuation, to put money aside for retirement incomes. This is a plan for the future. Mr Abbott, as usual, is still stuck in the past.
More than happy to take some questions.
JOURNALIST:
Minister, you put your own great big tax on the mining giants, though, and in the first hour of trade on the stock market the stocks are down up to six per cent. So while you may be putting aside superannuation for some Australians, others are having theirs wiped out in blue chip stocks.
BOWEN:
Well, this is a sustainable tax plan for the mining industry. This is a tax plan which all the experts say will expand exploration and will expand mining. That's the expert advice, the expert modelling that's been done. This is a plan which gives Australians a fair share of the super profits – I mean, the Australian minerals, minerals in the Australian ground, belong to all Australians – gives all Australians a fair share but it also puts mining on a more sustainable footing when it comes to taxation, enables the encouragement of exploration by mining companies.
And also, of course, it's got to be seen in context of our corporate tax reductions. Two percentage points, equivalent to six per cent of the corporate tax take being reduced over these couple of years. So this is important, sustainable tax reform.
JOURNALIST:
Small business says it's going to struggle to pay more. I mean, how do you expect them to cope with the superannuation rise, especially if they're not companies and they're not benefiting from the company tax cut?
BOWEN:
Well, the first point is that the small businesses that are companies will benefit from the company tax reduction. Other small businesses will of course benefit from the very significant improvement to the depreciation allowances that we announced yesterday: $5,000 upfront depreciation and the simplification of depreciation, which will make a real difference to cash flow for all small businesses, whether they're incorporated or not.
We've allowed a very long lead time. When the superannuation guarantee was introduced in 1991, 1992, we heard the same sorts of things from the Liberal Party and from others, that this would drive businesses out of business, it would increase unemployment, that wage costs would go up. None of those things happened then, and this is being phased in even more gradually than the original introduction of the superannuation guarantee to enable plenty of time for small business and all businesses to negotiate with their employees, with their unions, and talk about how this impacts on wages outcomes and to build it into negotiations. We've done that very deliberately.
JOURNALIST:
Why didn't you then just cut payroll tax as well to give small businesses a bit more footing to roll out a superannuation change like this?
BOWEN:
Well, because we've taken the decision to reduce corporate tax which does affect small businesses, and to very substantially free up the depreciation allowances. Payroll tax is of course a state tax. We've dealt with Commonwealth taxes as they apply to small business.
JOURNALIST:
Why didn't the Government adopt Ken Henry's recommendations on super?
BOWEN:
Well, for several reasons. Firstly, we do not believe retirement incomes in Australia provide people with a comfortable enough retirement and there are many people who support the Government in that decision. Secondly, when we looked closely at the recommendations in the independent tax review, we felt that they would add complexity, particularly in the tax changes to high income earners and middle income earners, and that people, even at the middle income scale, would lose take home pay, and also that the earnings tax changes, the earning tax reductions, would very significantly favour those on very high incomes with very high superannuation balances.
We've adopted a fair and sustainable way of improving the retirement incomes of Australians through the suite of measures that I referred to before.
JOURNALIST:
Minister, former Treasury head John Stone came out this morning and said, 'Well, it really is just a tax targeting the mining companies. If it were to be a tax on super profits, why not target all sectors, not just the resources?
BOWEN:
Well, he's former Treasury head; he's also a former National Party Senator, which I think speaks a lot about where he's coming from and he has many radical and extreme views on many things. But this is a sustainable tax plan which gives Australians a fair chunk, a fair go, and gives Australians a fair take of super profits. Now, all Australians own the minerals in the ground of Australia and all Australians deserve to get their fair share of super profits being made by mining companies and by others in relation to the mining boom. We will also reduce tax on mining companies in the lean times, in the hard times, and when come mines might become unviable because of royalties taxes, they will remain viable because of the tax changes we announced yesterday.
JOURNALIST:
So just to be clear in regards to Ken Henry's recommendation on super, are you saying that the Government's plan, the one you've announced, is fairer than what Ken Henry's talking about?
BOWEN:
I'm saying our plan delivers real equity, real efficiency and a real boost to retirement incomes for Australians, and on balance, having weighed up all the options, that's the plan we adopted.
JOURNALIST:
And if employees are trading away wage rises in order for higher super, how is that better for workers?
BOWEN:
Well, I think everybody recognises that the changes to superannuation introduced by the previous Labor Government in the 1990s which were negotiated through wage outcomes have given Australians a much more comfortable retirement. Putting money aside and letting the investment returns build them up over time means that many fewer Australians have to rely on the age pension and have a more comfortable retirement. And the changes we've announced yesterday boost that even further and give Australia, I think, when these reforms are complete, the world's best retirement income system.
JOURNALIST:
The Federal Opposition says that the super plan is a $20 billion tax on business. What do you say to that?
BOWEN:
Well, these are the people who of course opposed superannuation all the way when it was introduced, opposed it at every possible vote in the Parliament. And Tony Abbott, the leader of the Liberal Party, is ideologically opposed to superannuation. He's ideologically opposed to ordinary, working Australians having a better, more comfortable retirement income. He made that very clear in his book when he called for tax concessions for superannuation to be stripped away. Now, the sort of scare campaign we're seeing from the Opposition today is the same scare campaign they ran 20 years ago against the introduction of the superannuation guarantee. The leopard has not changed its spots.
Any other questions? No? Thanks very much.