Sarah Ferguson:
Treasurer, welcome to 7.30.
Jim Chalmers:
Thanks very much, Sarah.
Ferguson:
Now, for months, you argued that the changes you proposed to the super tax system were a fair and reasonable way of addressing wealth inequality. What convinced you to drop those arguments?
Chalmers:
We’ve been listening to feedback for more than 2 years now, and we found another way to deliver the same objectives. And our objective here is a fairer superannuation system from top to bottom, and that’s what these changes represent.
Ferguson:
But at the same time, you’ve been arguing for a different, clearly, a very different way of doing this for some time. Are we talking here about a purely political decision taken by the Prime Minister to avoid a backlash that would make him less popular?
Chalmers:
No, this is about trying to find the best way through. We know that this has been a controversial policy, a contentious policy ever since we announced it more than 2 years ago. This is a government which takes feedback seriously, it works through issues, in a methodical and a considered way. Certainly, that’s the approach I take as Treasurer, that’s the approach that the government takes to these sorts of difficult issues. And what matters here is the outcome and the outcome here is a better outcome for people on low incomes and better targeted superannuation tax concessions for people with millions of dollars in super.
Ferguson:
But at the same time, I just want to understand the politics of this. In terms of the pure politics, have you been rolled by the Prime Minister?
Chalmers:
No, of course not. I mean, we agreed these changes that I then recommended to the Expenditure Review Committee on Friday afternoon, and then to the Cabinet colleagues this morning. The Cabinet and the ERC agreed to these changes. They are practical, they are pragmatic, they come after a long period of consultation. They come after us taking feedback on this policy seriously and they don’t compromise our objectives, which is making the superannuation system stronger and fairer and more sustainable.
Ferguson:
Has the Prime Minister become too protective of middle‑class welfare in the same way that John Howard was?
Chalmers:
I wouldn’t describe it like that at all. This is a difficult change. This is a change which will raise billions of dollars partly to pay for the main new element today, which is an increase in the low income superannuation tax offset, but also to make the system fairer and to make it stronger and more sustainable into the future.
Let me put it this way, Sarah. As a Labor Treasurer, we take our responsibilities to the superannuation system very seriously. We are custodians of a really important Labor creation from Paul Keating onwards.
And one of our responsibilities is to do what we can to make it more sustainable, to do the difficult things as well as the popular things, to make sure that superannuation plays a meaningful role in delivering a decent retirement for more people. And that’s what today’s really all about.
Ferguson:
How influential was Paul Keating’s campaign against you and your proposed changes to super?
Chalmers:
I might be wrong about this, Sarah , but I think from memory that today’s statement from Paul Keating, I think, was the first thing that he had said publicly about these changes over the last couple of years –
Ferguson:
Yes, but he said an awful lot privately, hasn’t he? To you and to the Prime Minister and to other members of the government, about these changes being, the previous version of these changes being heavily misguided?
Chalmers:
I don’t pretend that Paul didn’t have strong views. And I – as someone who respects Paul Keating a great deal and speaks to him regularly – I take his feedback and his views very seriously, of course I do, given his seminal role in compulsory superannuation. And I’ve been speaking to him for a really long time, not just about this, but a whole range of policy issues, including last week, as I finalised this package to take to the Expenditure Review Committee. I probably spoke to him half a dozen times in the second half of last week alone.
And the statement that he released today accurately captures his private view that it’s really important we make these tax concessions more sustainable, it’s really important that we take the sorts of difficult, necessary steps to safeguard the system into the future, and that’s what we’re doing.
Ferguson:
These changes introduce a new threshold for people with balances over $10 million, who’ll now pay 40 per cent. The average balance you said today for people in this group is $19 million, why should they get tax concessions at all?
Chalmers:
There are important reasons why tax is concessional in the superannuation system, but we’ve got to make sure that the budget can afford them. That those tax concessions are sustainable. And so for people with over $10 million in super, the tax becomes a bit higher at that threshold, at $3 million to $10 million it becomes 30 per cent. Again, these are just responsible pragmatic changes which reflect our responsibility, which we take seriously, to make sure that we can pay for the superannuation system into the future. There are good reasons why tax is concessional in super. There are not good reasons why it has been that concessional for people who might have $100 or $200 million in super, and that’s why the change.
Ferguson:
I just note that you’re not saying exactly why you’ve changed your mind, but let me ask you another question. These changes mean that you forego more than $4 billion in revenue. How will you make up for that loss?
Chalmers:
First of all, Sarah, I don’t accept the point you made on the way through there. We’ve made it clear that we’ve listened to feedback, we’ve taken that seriously, we’ve found another way to deliver on the same objectives. That’s why we’ve changed the package and why I announced it within a couple of hours of Cabinet agreeing it today, and so just on that point. When it comes to the revenue, this will raise a substantial amount of revenue for the budget. And yes, you accurately point out that it will raise a little bit less or a bit less than what the original package did, that is true.
But in 2028–29, the best way to make the comparison is the old model would have raised a bit over $2.5 billion, this will raise a bit over $2 billion. That’s still a substantial way to make the superannuation system more sustainable.
And it’s also how we pay for what I think is one of the most important changes that we’re announcing today, which is to boost that low income super tax offset. That’s how we ensure that low income earners get a better super balance when they retire and the changes that we’re announcing today, including that new $10 million threshold will help pay for that.
Ferguson:
The Greens economic spokesman Nick McKim says the changes are a gift to the super rich. Do you have reason for confidence that they will support the changes?
Chalmers:
First of all, I don’t see it that way. I mean, we’re talking about increasing –
Ferguson:
You don’t but they do.
Chalmers:
No, I understand, but we’re talking about increasing taxes on the highest balances in the superannuation system. So I contest Nick’s point, I respect his right to put that view forward, but I don’t agree with it. When it comes to the Greens, they’ve been constructive throughout, but we don’t take anyone’s support for granted in the Senate. We know that the leader, Larissa Waters, who I spoke to earlier today, and we know Nick McKim, the Treasury spokesman, they’ll take it to their party room.
And they’ll have views about it. We’re respectful about that. We hope to secure their support for these important changes because they do make tax concessions at the top end of super more sustainable. They do help to fund a better outcome for people on low incomes and I would have thought that both of those outcomes and objectives would be things that the Greens can sign up to.
Ferguson:
Treasurer thank you very much indeed for joining us.
Chalmers:
Appreciate it Sarah, thank you.