TREASURER:
Good afternoon, tomorrow afternoon I will be introducing three bills, the Superannuation (Objective) Bill, the Fair and Sustainable Superannuation Bill and the Excess Transfer Balance Tax Bill relating to superannuation. We are doing that tomorrow afternoon. These Bills summarise the Government's changes to make superannuation fairer more sustainable and more flexible for all Australians. These are the measures that we outlined in the Budget earlier this year and that we took to the election, in a very upfront and very honest and very transparent way. Over the course of the period of time that has elapsed since the Budget, people have expressed their views on that package. While, overwhelmingly, the package has been supported, to the extent that changes were necessary to that package of the election, we have worked with our Government team to ensure that we introduced changes to those measures that now form the complete package that we are bringing into the Parliament tomorrow. These bills were approved by the party room earlier today, which will enable their introduction for tomorrow.
These bills introduce greater flexibility, fairer arrangements and importantly more sustainable arrangements. When we outlined our changes to superannuation earlier this year, it was actually about making a better superannuation system. By contrast, our opponents see superannuation as just a tax lemon to squeeze. That's not our view. We are trying to make a fairer, more sustainable superannuation system and one that is fairer and Kelly will go into more detail about those issues in a moment. But it is important to stress that we took this package in the most honest and upfront way to the Australian people, setting out where the revenue would come from and how that revenue was going to be reinvested - half of that revenue back into a more fairer and more flexible system that actually improves superannuation for all Australians, and brought it into a sustainable position, so it'll be there not just for today but well into the future. It was a comprehensive process. Since the election exposure draft legislation has been released in a series of tranches since September and we've had over 150 submissions in response to that consultation, and received very good feedback, technical feedback, on the construction of these Bills.
And in a number of cases you'll see in the Bill, we've improved the transition measures to provide more time for transition in particular cases, extending some of those interim timeframes for people to make the adjustments when it all comes into place next year.
And so, we have found this process to be a very useful one. A very engaging one. A very consultative one. And at the end of the day, this package of measures reflects what we took to the election in a very upfront way with the Australian people.
Now, by contrast, I note that the Labor Party today has outlined their proposals in relation to this package. And what I draw your attention to is back in April of 2015 Bill Shorten said this, in relation to superannuation, on 22 April 2015, he said:
"We believe these changes are all - all - that are needed to ensure sustainability at the very top end of our superannuation system. If we are elected, these are the final and the only changes Labor will make to the tax treatment of superannuation". That was in April of 2015. Just a week or so before the federal election.”
Over the course of the 26th to the 27 June of this year, the Shadow Treasurer said:
"We are committed to raising the same amount of money as the Government in relation to their superannuation changes.”
Jim Chalmers said:
"People will know by the time we go into the polling booth where we stand on superannuation. We still think those poorly targeted concessions need to be targeted so people will know where we stand and where we stand when they go to vote."
On six occasions the Labor Shadow Treasurer said that Labor were promising to raise no more money than what was in their superannuation package, than what was in the Government's package. But what we learnt today, was Labor had a secret supertax and that's what they've announced today. A billion-dollar-plus super tax held in secret by the Labor Party which they have only announced today.
They lied about superannuation at the last election. That is clear by the announcements they have made today. They lied about Medicare. They lied about border protection. The Labor Party, at the last election, were serial liars and we see this played out on a day-to-day basis in the Parliament today. They cannot be taken on their word when it comes to these issues. By contrast, we went upfront with the Australian people on superannuation. We believed the system need to be improved - made fairer, made more flexible, made more sustainable. We set out the changes in what was, what some if not all of this room would agree, were a brave set of changes to put forward by a Coalition Government going into an election in a Budget that preceded that election.
But we knew that if we wanted to implement changes as significant as this we had to be upfront with the Australian people. So we were. We outlined it. There was some pushback, there was consultation after the election and the package will go into the Parliament today pretty as much as was put to the Parliament in the Budget that I handed down in May.
So the Coalition can hold its head high when it comes to how we've dealt with the Australian people on superannuation. The Labor Party lied with their secret super tax, which they've announced that today, and they seek to pass that off to the Australian people as some sort of afterthought. Conjuring up what they talk about on fiscal repair.
This is the Opposition that took a $16.5 billion deterioration in the deficit to the last election as a cornerstone of their economic plan for the nation. So we won't take lectures from the Labor Party when it comes to fiscal responsibility. This plan is sustainable. It's fiscally responsible. And it addresses the real issues in superannuation. The Australian people had a clear eye view of it before the last election, and it's now time to introduce it to the Parliament. Kelly.
MINISTER O'DWYER:
As the Treasurer said, Labor has lied about superannuation - they have had more positions than the karma sutra - but the one thing that has been absolutely consistent in Labor's position has been that the Labor Party want to tax Australians even more when it comes to their retirement savings. More than that, they want to reduce their ability to have more flexibility to save for their retirement. We learnt today from the Shadow Minister responsible for superannuation, Katy Gallagher, we learnt today that there is another package on superannuation that Labor has got in its back pocket. We have it confirmed, by the Leader of the Opposition Bill Shorten, in his press conference today, that there is more to come on superannuation. So we cannot even trust them today that this will be their final superannuation package.
What is most problematic, though, about Labor's position is that they seek to attack those Australians who are aspirational and who are trying their very, very best to save for their retirement so they can be self-reliant. They have criticised the Government on levelling the playing field, particularly for those people who are self-employed. We are giving around 800,000 Australians the opportunity to be on a level playing field, so that they can save for their retirement. So that they have the ability to save for concessional contributions, whether they are employed by a small business or whether in fact they are a small business person themselves and also have a part-income through their wage or salary in some other area. We believe it is important that every Australian should have the ability to maximise their concessional contributions.
But worse than that, Labor have actually said they will scrap the catch-up contributions for Australians. Australian who have a balance in their superannuation of less than $500,000. Now, this is a real worry for those people who might take some time out of the workforce, might come back in, and want the opportunity to be able to catch up. This includes women who take time out of the workforce because they are caring for a young infant. It includes people who have taken time out of the workforce because they are caring for an early relative, or a parent. In fact, it includes anybody who has got lumpy income where from one year to the other they might have a better year or a worse year. We want to help them. We want to help those Australians to be able to save for their retirement. And we are doing this through a catch-up contribution measure. So that from 1 July 2018 they will be able to, on a rolling five-year basis, take full advantage of their concessional contributions and where they have an unused portion of that contribution, they can roll it over into the next year on that five-year rolling basis. We believe it's important to give people flexibility and to provide them with the incentives to save, which is, again, why we have also made it much better for those Australians who are actually trying to help their low-income spouse to be able to save for their retirement.
We have increased the income threshold there for that particular person to be able to receive a tax offset if they're putting money into their low-income earning spouse's superannuation. We've lifted it from $13,800 to just under $40,000. And this is before you even look at the low-income superannuation tax offset, which will help more than 3.1 million Australians to make sure that they're not worse off as a result of them being lower income earners and paying higher superannuation taxes. So we have crafted a superannuation package that is fair, that is sustainable and that is flexible. And we are re-investing in the superannuation system because, unlike Labor, we don't see it as a honey pot. We don't see it as simply another pot to raid. We believe it's important that all Australians should be able to save for their retirement and have a good retirement future.
TREASURER:
Thank you. We are happy to take questions. If you want to raise questions about the other matters today, particularly on the backpackers issue, we're happy to, but why don't we deal with super first?
QUESTION:
[Inaudible]
TREASURER:
No, not necessarily but that's entirely a matter for how Labor chooses to deal with this. I would hope that they would not be playing politics with this. The reason we are introducing it this week gives the Senate ample time to refer it off to a committee now and for that to be considered over the next fortnight, and for the matter to be considered in the final sitting week this year. So there is ample scope, given the actions we are taking, by bringing it in this week, for that to be considered in good time. As I said, there has already been pretty substantive consultations in September of this year on these measures and there's been a lot of input to that process, and I think that's all been very useful. So there's time to get it done. We certainly would like to see it get it done. I know that the superannuation industry would like to see this matter settled so they can get on with the job of getting ready for the new arrangements in the middle of next year, as I know superannuants would like to see a line ruled, the new system brought in and we get on with it. This timing allows for that.
QUESTION:
Have you started discussions with the crossbench?
TREASURER:
Well discussions have been going on for some time in this issue. Remember, Labor only raised one concern with this package and that was on the issue of the lifetime non-concessional cap. That was the only issue. If you go back to the Budget-in-reply, that was the matter that was raised by the Leader of the Opposition and that matter has been totally dealt with. So, all I can assume, from this latest announcement, is that Labor, once again, is choosing to play politics with a very serious issue, not addressing the substance. That's one interpretation. The other one is they are just continuing to raise up taxes because they cannot commit to control spending. But it is a combination of both.
QUESTION:
Chris Bowen has said he doesn't even expect you to accept these amendments. Will you bother talking to the crossbench?
TREASURER:
If the Opposition, and I have had a very preliminary discussion with the Shadow Treasurer on these issues, but they have their processes to do it through and to be able to finalise it. I would hope that they would enable a package that we took to the Australian people and were upfront about to be able to now be passed. If they were to seek to frustrate that because they wanted to force amendments that, actually, was a complete breaking of the promise they took to the last election, then I think that would just be inconceivable. I think if there is any credibility left to their position on this issue, it would go up like a puff of smoke.
QUESTION:
Mr Morrison, you were talking a moment ago on section 18C...
TREASURER:
Can we stay on super and backpackers, and things like that first. Then I am happy to cover other issues.
QUESTION:
On super, we often get reader feedback with concerns on defined benefit schemes. I know your stated position is that whatever will be applied to most superannuant savers will be applied to the defined benefits scheme.
TREASURER:
Correct.
QUESTION:
Is that in the bill now?
TREASURER:
Yes, it is. It's an absolute commensurate treatment. As you know, they're not exactly apples and apples, they're very different schemes. What has been done - Kelly might want to add to this - is to ensure that the way the rules have been applied to define benefit schemes mirror the tax impacts of what is occurring in the accumulation schemes. If anything, based on – and there'll be a separate fact sheet on this going out – if anything the defined benefit schemes are actually, depending on your longevity potentially disadvantaged.
MINISTER O'DWYER:
We believe - we believe - David, in response to your question, that it is very, very important to have commensurate treatment between accumulation schemes and defined benefit schemes. We should note that most defined benefit schemes have in fact been shut down. When it comes to parliamentarians, the majority of parliamentarians in this place now no longer are part of a defined benefit arrangement...
TREASURER:
Certainly not these two.
MINISTER O'DWYER:
Certainly not us. So we are affected like everybody else. But what I would say to you is when Labor mucked around with superannuation, let's not forget they made ad hoc change after ad hoc change during their time in Government, Wayne Swan also promised as Treasurer that he would apply commensurate treatment but did not do it. Did not do it. In this legislation we are bringing forward we are being true to our word. We are applying commensurate treatment. We think that's important for people's confidence in the superannuation system, that everybody should be treated in the same manner and have the same opportunities.
TREASURER:
And when people do their comparisons, they need to, as far as possible, compare like with like. And so a retirement income stream is just not the earnings of the retirement income stream. It's actually the capital drawdown as well over the lifetime of your retirement, remembering that superannuation is there not to be a capital asset to be preserved, to be passed on like the family home, it's there to be drawn down on to live off and that's why generous tax advantages are provided to superannuation. So when you look at the commensurate income put forward for defined benefit schemes, then that includes a substantive component which is like capital drawdown on the estimated capital balance of the $1.6 and then you have your earnings on top and similar earnings projections have been applied in both schemes when you look at these to ensure that it's commensurate treatment. Some of the analysis I've seen on this issue I don't think really is comparing things like with like, which is unfortunate because our commitment on this is solid. It's the same deal.
QUESTION:
Treasurer if I'm a Swedish backpacker, what tax rate am I going to be paying if I'm here for a year starting from 1 January? I've got an option of 32, 19, 10.5.
TREASURER:
Well you've got to ask Joel Fitzgibbon. You've got to ask Joel Fitzgibbon because the rate we're offering is 19 cents. If Joel Fitzgibbon and the Labor Party continue on the wrecking way they are on this issue, then they'll be paying 32.5. On the common law position at the moment, it's 32.5 and if these bills are not passed, then what they'll be paying is 32.5. Now we've put forward a very sensible, compromise package which dealt with the issues of the matters that were raised in the 2015-16 budget and we've arrived at a position which says that the superannuation component of their payments will be 95 percent tax because superannuation contributions are designed to support Australians in their retirement incomes, not the Swedes. Secondly, what we've ensured is that program will have a rate of taxation at 19 cents in the dollar, which on purchasing power parity and similar wages, puts them in exactly the same position as they would be in New Zealand and Canada and the UK. So they are in the same dollar in the pocket position and that detailed modelling of those outcomes was presented to the opposition as it was to all those who are involved.
So what we've put forward will ensure that backpackers working in Australia will have as many dollars in their pocket after picking fruit here as they do in New Zealand, which puts us on a level playing field. They're the facts. Now what Labor has announced today will cost the budget $500 million. $500 million. Now what they're saying is they think small businesses in Australia between $2 million and $10 million should pay higher taxes, higher taxes so foreign workers in Australia can pay lower taxes. Now that is an inconceivable position for a Labor Party which says it's, and they clearly are when it comes to the building and construction industry, hard-wired into the union movement, that we would have a union sponsored party like Labor saying that no, we want to have tax cuts for foreign workers and we're going to pay for those by upping the tax on working Australians. Now that is an outrageous position. The position we've landed on is fully funded, it's offset by both the arrangements to the superannuation taxation arrangement that applies to those 417 and other visa holders, and it's also paid for by the increase in the Passenger Movement Charge. So our package is fully funded. They've gone out there with $500 million like it's confetti, in a big tax cut for foreign workers, which is going to price ultimately, Australians who are interested in going and doing those jobs, out of it.
MINISTER O'DWYER:
And if I can just add to that, this is also on the same day that Labor have come out and they've announced their latest superannuation package, which is actually going to raid the retirement savings of more Australians. And yet they actually want to tax foreign workers less and they want to stop women, who might be returning to the workforce, from being able to take full advantage of their catch-up contributions when it comes to superannuation. It is completely at odds.
TREASURER:
Let me go through the figures for you, the net income which will be taken home by a backpacker earning $13,000 in Australia during their holiday will be $10,530 under the tax arrangements which we're putting in place under this package. Under similar working arrangements, doing the same work, the take home put in your pocket result for Canada is $9,837, for New Zealand it's $10,126 and for the United Kingdom, it's $10,470. So the package we've put in ensures that backpackers working in Australia will be at least on the same wicket as if they'd chosen to go to one of the other countries. And Labor's saying no, foreign workers deserve a bigger tax cut than that and we're going to make small businesses in this countries and Australians who work for a living pay for it.
QUESTION:
Is that your final word, Mr Morrison, accept 19 per cent or it defaults back to 32.5?
TREASURER:
That's what will happen. If that Bill comes back from the Senate, then it will not be supported in the House of Representatives. And then it will go back to the Senate and then the Senate will decide what the tax rates are going to be on 1 January. And the default position is 32.5. I would have to increase the Passenger Movement Charge by a further $5 to cover off what Labor is talking about.
QUESTION:
Can I ask you on an economically related matter. You said a couple of months ago when 18C was first being kicked around it wouldn't create a single job or build a school. Now it will be referred to a committee and there will be some form of federal debate [inaudible]. Are you worried it could start intruding on your economic message?
TREASURER:
No I don't think so, I think the timetable and the process that the Cabinet endorsed last night and went through the party room today I think is a proper and effective process to work through this issue. It's not the most important issue to everyone in the country. There are far more important issues to most people in the country in terms of their job, what they earn, how much tax they're paying, what their superannuation is like, how much the house is they want to buy, all of these issues are issues that Australians are focusing on. But you've got to be able to walk and chew gum at the same time in Government and this issue, particularly in relation to Bill Leak, and when you've got a cartoonist who's being dragged around the way he has been, then the Government will seek to work through those issues methodically, effectively, and try and work to an outcome, and an outcome is what is important. So that's the process that the Prime Minister set in train, it's a very good committee that I think has carriage of this issue and it won't distract me or Kelly from a day's work as we continue walk the mid-year update and the Budget next year and won't be distracting the Government in any way, shape or form.
QUESTION:
On 18C. Gillian Triggs said this morning that there was an argument for amending 18C or maybe removing it to have a clearer law on racial vilification. Do you think that that comment shows that there is a case for amending the law?
TREASURER:
Well I think the committee will have now the opportunity to work that through and make a recommendation, which will hopefully be able to put us in the position where we can take something forward. There's no point in engaging in gesture politics on this issue. What matters is actually getting outcomes. What matters is getting outcomes fiscally, on the Budget, on the economy, on jobs, on all of these things. So there's no point parading around with gesture politics on this issue. What the Government has put in place, and what the Prime Minister has initiated here, I think very wisely, is a sober process with good parliamentarians from both sides, all sides of politics, to actually work out the practical issues that are raised. I think it would be very helpful that the more excessive parts of commentary on this debate that we can get past those and focus on the practical issues and the Members that are on there I think are very equipped to do that job.
QUESTION:
I think you have different views on same sex marriage. With the plebiscite having gone down last night, do you think that should be the end of the matter in the Liberal Party or do you think you'll revisit your policy again at the next election.
TREASURER:
I refer you to the comments of the Prime Minister, he's made his response to that. The plebiscite has been voted down in Parliament and I think it's time to let the dust settle on the issue as he has indicated. The Government has other priority matters now that we need to get on with and that's where the matter rests.
Ok thanks for your time.