ANDREW CLENNELL:
The Treasurer, in India for the G20 meeting of Finance Ministers and Central Bank Governors is travelling with Philip Lowe. We started on the superannuation debate, and I asked him whether higher taxes for people with more than three million dollars in their superannuation funds are on the table.
JIM CHALMERS:
As we've said, Andrew, for the best part of a week now, we're not proposing major changes to superannuation. We haven't taken any decisions. But I think it is important to focus the nation's mind on the sustainability or otherwise, of some of the tax concessions that apply to very big balances in the superannuation system. Now we want superannuation to be concessional when it comes to a tax point of view. But I think it's important that we investigate and look at and consult on whether or not we can make some of these tax concessions more sustainable. We believe in superannuation, we want to lock down its objective, which is where this conversation began. And if there are ways to make it more affordable and more sustainable into the future, I think any responsible government should look at that.
CLENNELL:
When you talk about more sustainable, if there were to be a concession taken off or a tax put on, however you want to phrase it, would it be on the income people are deriving from these funds with a lot of money in them all, or on contributions or on withdrawals?
CHALMERS:
Again, Andrew, I don't mean to kind of shut down that line of questioning but again, we haven't taken a decision. We haven't put a proposal on the table. We are identifying what I think is a substantial problem in the budget. A lot of people have been critical over the course of the last few days about the discussion that's happening. It's welcome discussion, I think, about the future of superannuation. People who recognise that there are a lot of pressures on the budget, we did inherit a trillion dollars in debt. And this is a government that takes some of these big challenges in our economy and in our society seriously. But I'm not going to go through the ins and outs of various proposals that have been put by the Grattan Institute or others. As I said at the outset, we haven't taken any decisions. I think this is a welcome conversation. You know and I know - we've known each other for a while now - that I think it's important that we engage people. And this is a big pressure on the Commonwealth Budget at a time when we've got to fund the cost of servicing all of this debt. We've got to fund the NDIS and aged care in hospitals, and defence, and so we should be capable of a conversation that says we're not proposing major changes to superannuation. We haven't taken any decisions yet but this is an area of concern to us.
CLENNELL:
If you did make changes, could it take some of the heat out of them if they were grandfathered? For example, a lot of us have had super for a long time, a long career - I'm not saying three million dollars would affect me at all, it certainly wouldn't - but if it was just from now on in, as opposed to those who've put aside money in good faith?
CHALMERS:
Clearly, that's one of the things that gets put to us from time to time, when we think about superannuation and the sustainability of these tax concessions. I don't intend to kind of go through the various ins and outs of what people propose to us for all the reasons that I've just been through. But it's important to remember that governments of both political persuasion have made changes of this type. The last government to jack up taxes on superannuation was a Liberal government with Peter Dutton around the Cabinet table in 2016. I don't remember all of the hyperventilating from the usual suspects when a Liberal government did it. It shouldn't be beyond a responsible government of either political persuasion to consider these sorts of things. Again, haven't taken a decision, again, haven't put a proposal on the table. But I do welcome the fact that the nation more broadly is grappling with some of the things that the government is grappling with, which is how do we make the budget more responsible? How do we fund some of the pressures on the budget, some of the things that we want to fund, particularly when it comes to the provision of health care and aged care and disability care and all of those important things. And how do we make room for that in the context of a budget which is in structural deficit, and in the context of a trillion dollars of inherited debt and deficits as far as the eye can see. I think the nation understands that there are no easy decisions when it comes to dealing with this debt and dealing with these deficits and funding some of the structural pressures on the budget. What I've tried to do since I've become the Treasurer, is to be upfront about those challenges. It will be similar during the course of the week when I release the Tax Expenditure Statement, it will be similar when we see the National Accounts come out for the December quarter on Wednesday. What I try to do is to be upfront with people to give them a sense of the sorts of issues that the government is grappling with, and that's what we're doing here.
CLENNELL:
Are you looking at, and you can be brief with this, but are you looking at a cap on how much people can have in a superannuation fund?
CHALMERS:
Clearly, that's one of the ideas that's been put to us. We've seen the Grattan Institute and others put forward ideas like that. I think any responsible government considers those kinds of suggestions in good faith. We try and recognise that not every good idea comes out of Canberra or comes out of the Federal Government. We try and be inclusive, we try and listen to people when they put forward ideas, including on the objective of super, including what the industry has said about some kind of cap on balances, including what some of the think tanks have said. We listen respectfully, we engage in a meaningful way. And that's one of the things that has been put to us, and what we've tried to do over the course of the last few days, is to say that these are the sorts of policy questions that we need to grapple with.
CLENNELL:
But it seems like, am I reading too much into the three million dollars here? Because you mention the three million figure a lot. Could it be two million, could it be five million? What's your thinking in relation to this?
CHALMERS:
The reason why people are focused on that three million dollar figure is because of the example that I gave, which is less than a per cent of people have got more than three million dollars in their superannuation. Good on them if they do, but less than one per cent of people have that. The average balance is almost six million dollars for the people who've got more than three. And so we need to grapple with whether or not in the course and in the context of a budget in structural deficit, how we can continue to make the tax concessions meaningful and generous in superannuation but recognise that that might not be the most bang for buck we can get for some of these concessions. And so that's why people are focused on that number. As I've said a couple of times now, we haven't firmed up a proposal in that regard. We haven't come to a decision about any of these sorts of things. But that's a good example, for people to focus the mind on some of these big balances, which are attracting incredibly concessional tax arrangements. We do need to work out whether that's the best use of taxpayers money.
CLENNELL:
And you were quite careful, I think, you're the one who said no major changes to superannuation if you hit office. I had a look back and Wayne Swan made similar comments, your former boss, that you are now making about the top one and two per cent of superannuation funds, and the tax concessions in 2013. So has this been on your mind for some years, doing something about this?
CHALMERS:
No, it's not something that I've been contemplating for a long time. I think it's an obvious pressure on the budget. And I think everybody's recognised that for a long time, but it's not something that I've been working on for a long time. And the reason I made that comment about major changes, is because we want to leave the fundamentals of superannuation in place, we want the superannuation guarantee to go to 12 per cent. We want to nail down some stability around the objective, we want to make sure that we adhere to the best interest test for people so they get great returns on their investment, great retirements, dignified, decent, adequate retirements, all of those fundamentals. Nobody's proposing to make any changes to those. The sorts of things which are being proposed to us and that we are grappling with, are entirely similar to the changes that the Liberal government made in the course of their last term in office. And I don't think that's especially controversial.
CLENNELL:
I understand that and appreciate that. But wouldn't you say, apart from, rather than the tax concessions necessarily robbing the budget, what they did and what you're looking at, is in effect a new tax, or do you disagree with that assessment of it or description of it?
CHALMERS:
I think your description of what the Liberal government did when they raised five billion dollars in superannuation taxes in 2016, and a description of what's being proposed to us, and has been grappled with in the public conversation the last few days, is a tweak to the arrangements at a certain level. Put something in place in that respect, this is the sort of thing that we're grappling with. The fundamentals of super - we built the thing, we care about it, we want to invest in it - we want to make sure that it delivers a decent retirement for people. So the fundamentals won't change, the tax concessionality will still be there. But we do need to consider whether we can afford the degree of tax concessionality for people who've got very big balances.
CLENNELL:
Alright, well I assume you've seen these comments from John Howard. He says this is a first chapter of changes to super, and he says it's unsettling for middle Australia. What do you say to that?
CHALMERS:
The first thing is the first chapter happened in 2016 under his Liberal Party. I'm not interested in a war of words with John Howard. John Howard is someone who I respect and I think he deserves better than to be wheeled out to prop up Angus Taylor's dodgy arguments or to shore up Peter Dutton's failing leadership. He deserves better than that. If John Howard thinks this is some kind of unnecessary attack then I didn't hear him making the same arguments in 2016. And if he thinks that people should be able to raid their super for housing, he had almost 12 years in office to make that shown. They wheel out John Howard from time to time, to try and shore up Peter Dutton with this kind of nuclear negativity - he votes against more social housing for women fleeing domestic violence, he votes against manufacturing jobs. We have low expectations of him and John Howard deserves better than to be wheeled out to make these dodgy arguments.
CLENNELL:
Alright, well he also said Wayne Swan, Greg Combet, Nicola Roxon, being heads of these super funds operate like a house of lords for Labor. How can you reassure Australians that union influence in superannuation is not a factor here in the way you look at a policy defining super, it's not a problem for Australians?
CHALMERS:
The massive and deliberate misconception at the heart of their statements and at the heart of your question, respectfully, is to forget that these superannuation boards - one of the reasons why they're more successful than the other kinds of superannuation funds - is because they're governed equally by business and by employers and by employees, by businesses and by unions. That's one of those secrets to their success and when you read this rubbish in the paper or you get these questions, or the Liberals make these characteristically stupid arguments, what they forget is that these boards have people from the business community, from industry groups, from the Master Builders for example, from others. So to describe them in the way that they do and the way that you described it in your question just doesn't bear scrutiny.
CLENNELL:
Okay, you're over there in India with other ministers for this G20 summit. We've seen in the US and UK, a worse story than us in terms of inflation, and rate rise after rate rise after rate rise, not allowing it to decrease or forcing it to decrease. What have you been able to learn? Or what are your fears out of talking to them at the moment?
CHALMERS:
I think there's a path for the global economy, but it's still an incredibly narrow path with the inflation challenge on one side, and a big global downturn on the other. And so everybody here is trying to navigate that narrow and perilous path, we do have a big inflation problem in the global economy and in our own economy. Even though the peak of inflation is likely to be behind us, it will still be higher than we'd like for longer than we'd like. The big reason for that is the war in Ukraine, there are global factors there as well. But there are issues in our own supply chains and that's why relief for people doing it tough, repairing our supply chains and showing restraint in the budget, are such important components of our three part plan to get on top of this inflation challenge. I think it is an unfortunate sign of the times that even in one of - if not the best economy in the G20 - we still have extreme pressure on our people, the government is very alive to that. We feel like we have a better chance of getting to some of these global pressures when we engage in a meaningful, respectful way and that's why I'm in India doing that.
CLENNELL:
For a while now, you've been saying that you're confident the number one issue in Australia is inflation and there will be no recession in Australia, do you still hold that view?
CHALMERS:
Yeah, that's still our expectation but inflation is the defining challenge in our economy. It's the defining challenge in the global economy. We can't be complacent about that, as we walk this tightrope between getting on top of inflation, and trying to guard against a more severe downturn. There are a series of fine judgements and fine balances to strike. And the difference in the May Budget to the October Budget, is in October we had the peak of inflation in front of us, in May likely behind us. At some future point, the focus will shift from inflation to growth, but for the time being inflation is the main game. It's true of the world and it's true of us.
CLENNELL:
And I guess there's this speculation Phil Lowe might not be renewed by the government in September, the government could then turn over a new leaf. You're travelling with Phil Lowe, working with Phil Lowe, how does that play into your relationship with the Governor, how much truth is there to it?
CHALMERS:
I've got a terrific relationship with Governor Lowe. He's someone I've known for a really long time, I knew him well, even before I became the Treasurer, and I have a respectful working relationship with him. When we come to the G20, we work together to put the Australian view as would be expected of us. We will come to a view on the governorship of the Reserve Bank closer to the middle of the year, after we get the Reserve Bank review at the end of March and consider its recommendations. But the review and the appointment won't be about any one decision or set of decisions. It will be about who's best placed to take the bank forward into the future, based on what we run with from the Reserve Bank review. But that doesn't change that I have a very good, very respectful relationship with Phil Lowe, I have for a long time. He's got a difficult job to do, to get on top of this inflation without crunching our economy. He's focused on that, I'm focused on my job. And part of my job is making sure that the Reserve Bank is set up in its structures and objectives and processes do the best job it can, on behalf of the Australian people.
CLENNELL:
Treasurer Jim Chalmers, thanks so much for your time.
CHALMERS:
Thanks for your time, Andrew.