TREASURER:
I am pleased to be here with the Minister for Revenue and Financial Services, my team mate in these endeavours when it comes to superannuation and today we demonstrate once again that the Turnbull Government is getting on with governing. Since the election, we have been working as a team to implement the budget we delivered in May. This week we took major steps forward. With more than a quarter of the $40 billion in Budget improvement measures, we will be passing through the Parliament this week, including the omnibus bill as we've already discussed on earlier occasions. Implementing our changes to superannuation that we announced in the Budget to make tax concessions more fit for purpose has also been a key focus of the Minister and I in recent months since the election. The purpose of these tax concessions is as outlined by David Murray and that is to provide income in retirement to substitute or supplement the aged pension. That's what they're supposed to do. In addition to achieving that purpose, the Budget measures we announced in May contributed in net terms to dealing with the job of budget repair to the tune of approximately $3 billion. Now, over the past few months, we have been engaging with our colleagues, our Coalition colleagues, on all of these measures. We have been listening to them as they have been listening to their communities and to their constituents. These discussions have confirmed other important things.
Firstly, they have absolutely confirmed, once again, the collective commitment of the Coalition, of the Turnbull Government and all its members to the job of Budget repair to arrest the debt that we inherited from the previous Labor Government. But it also confirmed their commitment, as ours, to make our superannuation system, the tax concessions for superannuation, fairer, more flexible and more sustainable. That is why today the change to the policy we announced today are as follows to ensure it meets those objectives, the objectives of the fitness for purpose for superannuation tax concessions and also the purpose of contributing to budget repair at least the same level and indeed it's able to achieve more.
The measures are as follows, to replace the lifetime non-concessional cap with an annual cap of $100,000 with a 3-year bring forward, limited to those who have a balance of $1.6 million. The cost of reversing the other measure and introducing that measure is $400 million to the budget. In addition to pay for this, we will be reversing the abolition of the work test measures for those aged 65 to 74 and that means the existing arrangements for those who are aged over 65 will continue. That is a saving of $180 million. We will also defer commencement of the catch up concessional contributions by one year to 1 July 2018, which provides a saving over the Budget and forward estimates of $400 million. That provides a net improvement to the budget from what we announced today of $180 million over the forward estimates and some $670 million over the medium term.
These measures are about continuing to ensure that superannuation tax concessions are not being used as a tax incentivised estate planning vehicle, but it also ensures that Australians are supported to maximise their retirement balances in the pension phase of superannuation where they access tax-free earnings. That's the balance that they draw on to provide their retirement income, which is the focus of these measures. This means better targeted, more effective measures to support those with greater flexibility to maximise that balance up to the $1.6 million cap. These measures make the superannuation system even fairer, even more flexible and even more sustainable.
These measures remove any remaining impediment or barrier for the Government's Budget superannuation package to now receive bipartisan support in this Parliament. This morning I've spoken to the Shadow Treasurer, Mr Bowen, and outlined these measures to him and offered him and his team a full briefing from officials to be fully informed of these changes. Legislation for all measures will be introduced by the end of the year. It is complex legislation, that process, as you know, has already begun and the usual exposure draft process will be followed for that purpose.
Kelly?
MINISTER O’DWYER:
As the Treasurer has outlined the Government has gone through an extensive consultation process. We've spoken with industry stakeholders and have been very, very clear. They've been very clear it's important to retain the flexibility measures that were announced in the Budget. It's very important that we make sure that we can continue to provide catch up contributions for those people who might have been out of the work force because they are caring for an elderly parent or because they might have had a child or had parental responsibilities. There can be a myriad of reasons why people can't take full advantage of their concessional contribution cap and we say to them that we are backing them, we are saying to them that we want you to be able to take full advantage of your concessional contributions to build up your retirement and we do that through our concessional contributions catch up for those people who have got balances of less than $500,000. This is a very important measure and it is one that we have kept. We also think it's critically important, and industry stakeholders have told us this as well, that we have a level playing field for those people who would like to concessionally contribute to their superannuation, to build up their balances in retirement.
We have the ridiculous position today where somebody who works for a small business that doesn't offer salary sacrificing cannot take advantage of their full concessional contribution. Somebody who is part-employed on a salary and who also might have their own business, and again, cannot take full advantage of their concessional contribution. These are critical flexibility measures that mean that we level the playing field so that everyone in Australia who wants to be able to contribute to their super, who wants to be able to increase their retirement balance, who wants to be able to have the best possible retirement, can in fact do so.
As the Treasurer has mentioned, the non-concessional cap is now an annual cap from 1 July 2017, that is the date that it will apply from and as the Treasurer has also mentioned, there is absolutely no impediment now for Labor agreeing to our refined package of reforms.
TREASURER:
I may be able to pre-empt the first question, or one of them. These measures, obviously, have gone through Cabinet, ERC and were supported by acclimation today in the Party Room.
QUESTION:
Treasurer, Minister, on the $100,000 non-concessional contribution, once you hit $1.6 million in your retirement account can you still put in non-concessional contributions into an accumulation fund?
TREASURER:
No.
QUESTION:
So no more, period?
TREASURER:
$1.6 is the cap upon which you can make, on your balance, upon which you can make after tax or non-concessional contributions and that is indexed in the same way as the transfer balance cap.
QUESTION:
[Inaudible]
TREASURER:
That's it.
MINISTER O’DWYER:
But you can continue to make concessional contributions. You can continue to do that. Absolutely and for those people who are small business people, the same rules that currently apply today will continue to apply going forward. So, they have the ability to put additional moneys into their superannuation up to $1.4 million into their superannuation in recognition of the fact that small business people often don't contribute to their superannuation until they sell their business or the assets of their business and that gives them the opportunity to have a strong retirement balance.
QUESTION:
Treasurer, what's your expectation of how this will fare in the Senate now that you've modified the package and you've opened the way for talks with Labor? Do you expect them to clear these through the Senate?
TREASURER:
Well, Labor has no excuse whatsoever not to immediately, I would say, subject to their normal process, support this. It removes every impediment that Labor mentioned but I must say, what drove our process on this, talking to our colleagues who were talking to their constituents and their communities and us listening to them and working this through. What this has demonstrated is a Government that can deal with tough issues in the 45th Parliament. To work through these issues in a very sober process, a very adult process, come to a conclusion and be able to solve the problem. The Australian people have elected us to get on with governing and to deal with issues and to deal with those in a constructive way and that is what we have done as a team in this Government – from the backbench all the way to the Prime Minister.
QUESTION:
In retrospect was the lifetime cap a little bit too elegant? Was that a mistake to go with the retrospective start date, in retrospect?
TREASURER:
Well, we don't accept that proposition. The reason we have made this change is because it makes it even fairer, even more sustainable and even more flexible. It addresses the issues that have been raised and it makes sure the entire package delivers on the budget repair task. So I will leave the commentary and character assessments to others and we, as always, the Turnbull Government goes to work every day, gets the job done every day, works through the issues in this Parliament as people expect it to. Michelle.
QUESTION:
Did you get a reaction from Mr Bowen?
TREASURER:
I will leave that to him. I commend Mr Bowen this week, I commend Chris on the work he did on the omnibus bill this week. I think it is clear that there are people in Labor, as Chris has demonstrated, we can work with to come to arrangements like this. It's really up to whether Mr Shorten is. That's really what it's about. He's demonstrating a greater commitment to Opposition than he is to progress but there are members in his own team who I think are trying to go a better way.
QUESTION:
Treasurer, you, the PM, other senior Government figures have insisted that the same-sex marriage plebiscite…
TREASURER:
Why don't we start on superannuation and we can deal with that later.
QUESTION:
The Prime Minister described the changes outlined in the Budget as ironclad. They have now been changed. Do you accept that ironclad promise was wrong?
TREASURER:
What I accept is that when you're in Government, you have to solve problems, you have to work issues and you have to get to conclusions and that's what we've done today. But importantly, what we took to the Australian people was to make superannuation fairer, more flexible, to improve its integrity and to make it more sustainable and make sure it contributes to the budget task. And we've done all of that. What we've done today is not just to take a hard issue and drop it and make taxpayers pay for the difference. No. We have applied a discipline to ourselves in working through this issue fiscally, which I think should be a model to others. If people want to deal with issues, and there are other issues we have to deal with as a government, the same rules will apply. We will make sure what we do washes its face.
QUESTION:
What about that ironclad claim –
TREASURER:
No I think I covered that off, next question.
QUESTION:
By removing the backdating on this provision on that package though, do you concede it was retrospective?
TREASURER:
No, I don't.
QUESTION:
The 65 to 74 harmonisation change which gives you, dropping it gives you a big cash benefit. Four weeks ago you and the Minister said it was, when Labor proposed getting rid of it, you said that would be bad for older workers. Are you going to revisit that?
MINISTER O’DWYER:
So we are very committed to that measure and we would have liked to have delivered that in this particular package. And at a future point where the budget position is different, we would like to be able to make that change. We are still very committed to it. But because, as the Treasurer has already expressed, we need this package to be able to wash its face, we need to be able to apply the same budget rules to our package that we would apply to other packages that our colleagues would bring forward. We need to have that discipline and we have demonstrated that discipline by making some difficult choices.
QUESTION:
$6.3 billion in savings earlier in the week, and I think it’s a net $3 billion saving, how much do you think this should give us with the credit ratings agencies?
TREASURER:
I think what we're demonstrating this week, Phil, is we can get things done in the 45th Parliament, which is what we were elected to do. Many were observing, commentating, that this wouldn't be possible, that this Parliament wouldn't work. It’s still a long way to run, but I think the early runs on the board, by the Government, whether it's on savings, on revenue measures, the tobacco excise bill is also going through the Senate. So that means just those two measures alone is over $11 billion in Budget improvement measures. I mean this is just shy of $6 billion in revenue measures. There's obviously expenditure measures that relate to that, so it's a net improvement of over $3 billion as well. Out of a total agenda of some $40 billion in Budget improvement measures we're well over a quarter in just these few sitting weeks. I think that tells a strong story about how the Government is working to get this job done. What ratings agencies do is up to them. There are other issues that we talk about with ratings agencies like current account deficits and things of that nature and external balances. We'll have all of those terribly interesting discussions but it's important that they can see that we are really committed to this task of arresting the debt. We inherited a Labor curse of debt and we have to deal with that and I think the Australian people will support us in that task so long as we just keep working hard.
QUESTION:
How flexible will you be with the tax package?
TREASURER:
We're dealing with superannuation.
QUESTION:
People concerned about the stability of the budget will be applauding this if you get it through – it looks like you will. Can you understand, though, why most people would think that $100,000 a year out of after-tax income is an extraordinarily high amount to enable someone to contribute to super out of their own pocket? Almost no-one could do that. You’ve got this through, but is the limit a little high?
TREASURER:
Well, Peter, I'm not an enemy of aspiration by Australians. I'm no enemy of aspiration by Australians and what we've said is that we have established a transfer balance cap of $1.6 million in this package which we announced on budget night. You know, as well as I do, that only about 1% of people get to that, even under the generous concessions that have particularly been in place since 2007. And we want Australians to be able to feel they can get to that amount if they are in a position to do so and not unreasonably restrain them from doing so. And what we've announced today, and we believe the previous measure also gave them that opportunity, but this measure does it, we think now, in an improved way so they can get to that level. But $1.6 million is the means testing on when you can access those types of contribution and we think that is reasonable. Because let's not forget with an ageing population, and the way that the concessions were previously structured, it was leading to the creation of very significant balances. And when you could have $180,000 a year with three year bring forwards and you could keep rolling it in three years after three years after three years, we had balances in this country on superannuation in excess of $5, $10, $50 million, $100 million. That is the product of a previous set of arrangements. That will have a legacy to it, understandably. But at the same time what we've said here is you can make those after-tax contributions but once you hit $1.6, that's great. I think there are many great achievements in life – raising your children, paying off your home and providing for yourself in your retirement. They are a trifecta of Australian dreams that we believe in.
QUESTION:
You’ve said you can deal with tough issues in the parliament, just how flexible are you prepared to be on getting your corporate tax plan through Parliament?
TREASURER:
We believe strongly in our enterprise tax plan because we know that you need to do things in this country to support and drive investment, private investment. And when you look around the world, and Kelly and I have been in the forums, both Kelly in the US and myself the G20 and I will be going to another one of those in the next month, it is a global challenge of driving investment. When you've got the situation where an investor thinks it's frankly a safer idea to give the German Government your money for 10 years and get nothing back and pay them for the privilege, there's something going wrong with attracting private investment and that's what we have to address. The enterprise tax plan is designed to address that and that's why we believe it's important. It’ll drive investment, particularly in the non-mining sector, which is critical to our economic success. And that's why we have put it up, that's why we took it to an election, an election that we won and I introduced that bill in full into the Parliament and we remain committed to that. But saying that, it's the 45th Parliament, so we'll work with the Parliament to maximise everything we can achieve in this Parliament, and where I can get 100 per cent of 100 per cent, I will go for 100 per cent of 100 per cent but 100 per cent of nothing is not the sort of pragmatic approach that I think the Australian people expect of this government.
QUESTION:
I had a question on Budget savings more generally. This week we saw cuts to family tax benefit supplements for households earning $80,000 or more. Now we're seeing, you know, as Peter's pointed out, $100,000 cap which is still pretty generous to very wealthy Australians. There's been a ferocious response to the superannuation changes from relatively wealthy Australians. Has that ferocious response surprised you? Do you think it's a little out of whack with the real debate about the budget deficit given that families on $80,000 a year are losing family tax benefits?
TREASURER:
You make comments to that effect about the job of repair. When I was Social Services Minister I introduced the change to the assets test. We also sought changes in everything from family tax benefits to other measures. In this case, we're dealing with tax concession changes. Now there's an important difference here. A tax concession is not a welfare payment. A tax concession is saying that you will get to keep more of the money you earned. So there's a big difference between that and a government payment. Government payments are provided, where they're necessary, to support people with the welfare safety net that we all believe in. But a welfare payment is not the same as a tax concession. Where people have the ability to look after themselves and put themselves into a position to support themselves, then this system, I think, fairly provides that opportunity. All we're doing here is allowing people to make contributions into their superannuation up to achieving a limit of $1.6 million.
MINISTER O’DWYER:
And the follow up point that I would make in relation to that is that those very wealthy Australians that you describe have got in excess of that amount in their superannuation retirement accounts.
TREASURER:
And in other accounts too, outside of super.
MINISTER O’DWYER:
They won't be able to, from 1 July 2017, be able to continue to put in after-tax contributions into their superannuation accounts to boost that even further. So we believe that these measures are properly targeted for those people who are aspirational, who would like to be able to reach the transfer balance cap of $1.6 million and it will apply to those people who want to get there.
TREASURER:
We've got time for one more I think, or two. You've been very patient.
QUESTION:
A policy question and a non-budget question. Given the savings you've achieved this week, are the child care reforms close, given how much money you've been able to save this week and also a question to both of you, Pauline Hanson told the Senate last night that Australia is in danger of being swamped by Muslims. Is Australia in danger of being swamped by Muslims?
TREASURER:
Let me deal with the second one first. My record on these issues, I think people are very well aware of, and my engagement with the Islamic community in Australia and I will just let my record speak for itself on those issues without making commentary on other members. On the other issue that you raise about child care, well, those savings are still not in place yet to enable that package to proceed. What I hope people have seen from what we've announced today is that we haven't paid for the changes to the superannuation package by going to some other area of government expenditure and making savings there to pay for a concession over here. What we've done is we've made this wash its face within itself. Now, what we always said on the child care arrangements, which as you know, I developed when I was social services minister, was that to pay for that we were going to take a reform of family payments in one area. So money that was going to families in the form of supplements, which had out lived the purpose of that payment and we were going to redirect those public funds into providing more affordable child care. I would say that would be increasing the public return on those payments and those resources. So that remains the policy. And so that's why we will continue to work, albeit now with the cross-bench in the Senate, and I've had many discussions with the cross-bench senators to further pursue those changes.
MINISTER O’DWYER:
So to answer your question, with the greatest respect to Ms Hanson, I would politely disagree with her assessment.
QUESTION:
You, the PM and others have insisted the same-sex plebiscite policy can't be changed because it was an election commitment. Leading up to the election, the super package was ironclad, that was not going to change, that was unequivocal. Why the double standard?
TREASURER:
I don't accept the premise of your question. What we have done today is deliver on the commitment we made before the election on superannuation. We have delivered in full –
QUESTION:
The policy is exactly the same.
TREASURER:
The policy objective has been achieved by this measure today. I know the point you're trying to make but I think the analogy fails. The Government went to the election and pledged to the Australian people that we were going to let them decide this issue. Now on the Government, there are different views. Kelly and I have different views on this.
MINISTER O’DWYER:
Yes.
TREASURER:
And we respect each other's views entirely and we trust the judgement of the Australian people. We don't think the arguments that have been made particularly by the Leader of the Opposition, who basically, remember, lost the election and did not get a mandate at the election for the position that he is seeking to prosecute in this Parliament. He did not get a mandate for that. The plebiscite, as we know from published polls, is more than majority supported with the Australian people. So let's let them decide. Let them decide and let's get on with it. The only person once again standing in the way of making progress on an issue is Bill Shorten and today he's not even here. Thank you.
MINISTER O’DWYER:
Thank you.