DAVID SPEERS:
Thank you for joining me this afternoon. I want to talk to you about your superannuation reforms and what you are doing to win over some of the critics on this but first I have got to ask you about Sam Dastyari. Bill Shorten says he is just a junior Senator, he has offered an apology, we should all move on and focus on donations reform. What do you think here about the explanation we have heard from Senator Dastyari today?
TREASURER:
Shanghai Sam must go. It’s that simple. We already have a clear statement from his own mouth confessing to what he has done. The facts are not in dispute here. Sam Dastyari needs to walk to the pavilion and if he doesn’t walk to the pavilion then frankly Bill Shorten has to make sure he does that. Now, if Bill Shorten cannot pass this test again then it shows that he is clearly happy to accept the lowest of possible standards here and that he won’t stand up to Sam Dastyari because he won’t stand up to the factional bosses that are basically behind his position as leader of the federal Parliamentary Labor party. So, that is what is at stake here. It is very clear it is a cut and dry case out of the mouth of Shanghai Sam himself and that is why he must walk. There is another important point here David, what made Sam Dastyari think that he could pick up the phone to this donor and expect him to pay his debt? Was this the first person he called? Why did he have such a high expectation that somehow he could just ring someone and say “oh by the way I have got this debt, can you pick it up for me mate.” That suggests a relationship here which is quite significant and when you tie that in with the other statements that he now cannot recall I mean it is honestly beyond explanation, beyond defence and it is time he goes.
SPEERS:
You are a former state Liberal Party Director in New South Wales, you know the system well, how important are foreign donations? I know this is a slightly different broader issue but this debate is now running about whether we should ban foreign donations. What is your insider’s view on whether they really are necessary?
TREASURER:
Let’s be clear first of all that what has gone on with Sam Dastyari has nothing to do with that. This is Sam Dastyari by his own confession picking up the phone and getting on to someone and saying can you pay my debt. And it is not the first time that he has done that either by the way. He did it on behalf of the Labor party when he made sure that the legal bills for Craig Thomson were paid. So, there is a fair bit of form here. So, this isn’t about foreign donations. This is about Sam Dastyari’s woeful judgment when it comes to these issues. On the broader issue of donations well, they’re matters for the joint standing committee on electoral maters and they are legitimate debates that can be had. But we are just not going to buy this line from the Labor party which says, “oh this is all about donations reform”. No, it’s about Shanghai Sam and he has got to go.
SPEERS:
Alright, let’s turn to superannuation. Now, you have released today more information, more data to back up your case and we know that some of your critics and amongst them are people from your own Party Room. We read that Tony Abbott had a bit of a crack at you the other day in a closed door meeting. What is the significance of the data you have put out today? Why is this important for us to know about?
TREASURER:
Well, this is information that colleagues actually encouraged me to share with the Australian public that I was presenting to colleagues and also to crossbenchers too over the last month or so. What it shows is what is called the distribution analysis, who is impacted by the changes we are making. What it shows is where we set the caps, whether it was the $1.6 million transfer balance cap or the $500,000 lifetime non-concessional cap or the $25,000 concessional caps. These were all set way above, way above, what was the overwhelming practice of Australian superannuants. For example one in four people make after tax contributions to their superannuation and those who are 65 plus they have an average contribution in the top income decile of around $280,000. So, that means there is a fair bit of headroom between $280,000 and $500,000 and that the average contribution for those who have already eclipsed that lifetime contributions cap is around $720,000. So, what we are saying here is that these are very targeted at those who have already had a very handy use of existing concessions to get themselves into a position through their own efforts, through earning and doing well over life, to get themselves in a solid position in their retirement and the caps as we imposed do not impact on 96 per cent of Australians.
SPEERS:
Ok, my reading of the data that you have put out shows that 4 per cent of Australians or Australian superannuants are going to be adversely affected. That to my maths works out around 640,000 people that are potentially going to be worse off. Have I got that right?
TREASURER:
No this is a percentage of superannuants David. So, 96 per cent is of superannuants – around 16 million Australian. So, it is not as a proportion of all Australians which is obviously a much higher number…
SPEERS:
Four per cent of superannuants which is 16 million works out at about 640,000 people that are going to be adversely affected.
TREASURER:
Yes, I was just making sure that what we are doing is the percentages here and what was the denominator. Anyway continue.
SPEERS:
Alright, so that figure is right. It seems to be a bit higher than what you indicated during the election campaign – 640,000 people worse off.
TREASURER:
Well, it is four per cent pf superannuants and in particular when it comes to the $1.6 million transfer balance cap and in particular the $500,000 lifetime cap that figure is less than 100,000 because it is very rare for people to actually get themselves into a position in their retirement where they actually have $1.6 million in their superannuation account. What that shows is with the most generous superannuation tax concessions that we have ever seen in this country only one per cent of people are getting to that limit. What these tax concessions are about is helping the vast majority of Australians to get themselves into the largest balance they can have within reason and to ensure that they are not dependent on a pension or a part pension in their retirement and that the can supplement their income in their retirement. That is what these changes enable us to do. The other thing we have taken through these changes David are important reforms to make superannuation more flexible. So, take for example, if you are a contractor but you also have a wage as well, you may be a fiery and you are working as a plumber, you might have a home based business and you might work in an office as well. Currently you cannot access your concessional contribution deductions for the income you get through working as a contractor your home base business or working as a carpenter if you have another wage. Now, we are changing that. We are also changing the fact that you can make contributions regardless of whether you are working or not up to the age of 75. We are saying you can bring forward five years of concessional contributions if you’d had a major disruption obviously to your ability to earn. Now, that might be because you went and studied, it might that you are a carer, it might mean that you had children.
SPEERS:
And I know Labor isn’t supporting some of these measures, I know. Let me just ask you this…
TREASURER:
Labor isn’t supporting any of those ideas.
SPEERS:
No they’re not. But on superannuation is this all locked in now or are you still negotiating this? In particular can you guarantee that what you took to the election is what you will deliver?
TREASURER:
Well, what we will release tomorrow is an Exposure Draft on the measures I just talked about. Those pro-flexibility measures and that Exposure Draft Legislation will go out and that will go out for comment. The other thing that has come back from colleagues and obviously which I agree strongly with is the need to ensure we remain absolutely committed to the Budget repair job which this package delivers. Now, we will continue to work through some of the most contentious items that have been part of this discussion David but what we won’t walk away from is our commitment to arresting the debt and delivering on the Budget repair job which this package is built on.
SPEERS:
And I appreciate that but I just want to nail this down, that $500,000 cap on after tax contributions – is that $500,000 in the Exposure Draft you are releasing tomorrow?
TREASURER:
No, it’s not. What we are releasing is the first tranche tomorrow and that deals with the issues like the contractors income that I mentioned, the bring forwards of the caps for concessional contributions for people with disrupted work patterns, the issues around the low income…
SPEERS:
Ok, so you are still negotiating on the $500,000 cap?
TREASURER:
Well, we are continuing to work on those other issues David but what is important is we will keep the targeting on those where it is currently targeted and we will ensure that we are meeting the real problem. Right now there are 4.3 working age Australians for everyone aged over 65. In the future there will only just be 2.1 and that is why we have to change these tax concessions because it became unaffordable over time. Where you have more people going into the non-working aged areas with large balances which attract very low rates of tax and they have to be supported by fewer people who are going to have to pay higher rates of tax in the future unless we make these changes.
SPEERS:
Just quickly and finally, on the Competition Law reforms you put out exposure draft legislation on this yesterday. This, amongst other things, includes the proposed effects test where a big business does something that has the effect of reducing competition they can be in breach of the law rather than having to prove they actually have the intent of reducing competition. Labor say, they oppose this, they say for example the standard pricing that Coles and Woolies do across the country, you pay $1 for a litre of milk in Sydney and Melbourne just as you do out in the bush, that will go and you will end up paying, I think Andrew Leigh said up to $11 a litre in some parts of the country…
TREASURER:
That is ridiculous.
SPEERS:
Is it going to affect things like that standardised pricing that the big supermarket giants do?
TREASURER:
Labor just don’t understand these changes and it actually exposes their hypocrisy like their criticisms in the banks. This will level the playing field for small and medium sized businesses right across the economy and what the test is is substantially lessening competition. This isn’t about injuring one competitor, this is about the customer and it means that our markets are as competitive as possible. There will be an effects test, it will strengthen the arm of the ACCC to pursue these matters and I find it absolutely galling that the Labor party has the temerity to stand up there and say they are standing up for the battler when it comes to the banks when they are doing nothing of the sort because they are actually walking away from all of the practical things that we are doing to support people who might have issues whether it is with banks or whether it is retailers or whether it is anyone else. We are actually putting in place the legal reforms which will strengthen the arm of the battler in these situations and Labor is opposing it which shows that their position on the Royal Commission is just frankly a political stunt where Bill Shorten is cynically using the real hurt that Australians feel to promote his own political advantage while the Government is just getting on with the job of introducing this legislation. Last week we introduced legislation to lower income tax rates for people on average ordinary real time earnings, going into next year tax cuts for small business. We are just getting on with the job, David.
SPEERS:
Treasurer, Scott Morrison, I am glad the technology has held up to allow us to do this this afternoon. Thank you very much for joining us. I appreciate your time.
TREASURER:
Thanks David.