Thursday, 15 September 2016
Questions without Notice
My question is to the Minister representing the Prime Minister, Senator Brandis. On 3 June 2016, the Prime Minister said that the government's superannuation policy as set out in the budget was 'absolutely ironclad'. Can the minister confirm that, as a result of the division and the disunity within the coalition party room, the Prime Minister has been forced to abandon significant elements of his ironclad superannuation policy?
I should emphasise that in no significant respect do the enhancements affect the design features of the arrangements announced during the election. They make no difference to the fiscal outcome of the package and, as Senator Cormann says, they constitute improvements to the arrangements already announced. Thank you, Senator Gallagher, for giving me the opportunity to explain them to the Senate.
First of all, the $500,000 lifetime non-concessional cap will be replaced by a new measure to reduce the existing annual non-concessional contributions cap from $180,000 per year to $100,000 per year. Individuals aged under 65 will continue to be able to bring forward three years worth of non-concessional contributions in recognition of the fact that such contributions are often made in lump sums. The overwhelming bulk of such larger contributions are typically less than $200,000. Individuals with a superannuation balance of more than $1.6 million will no longer be eligible to make non-concessional after-tax contributions, from 1 July 2017. This limit will be tied and indexed to the transfer balance cap.
The second enhancement or improvement to the policy is this: in order to fully offset the cost of reverting to a reduced annual non-concessional cap, the government will now not proceed with the harmonisation of contribution rules for those aged 65— (Time expired)
I refer to George Christensen, MP, who says:
The doing away of the $500,000 non-concessional life time cap goes even further that than I would have thought. I would have been happy with a $1 million non-concessional cap. Doing away with it is one step better.
Is the Prime Minister so desperate to placate his backbench that he has gone even further than the backbench wanted?
Honourable senators interjecting—
Well, Senator Gallagher, Mr Christensen did make a contribution to the debate—yes, he did—and it was a very welcome contribution. The government heeded what Mr Christensen had to say, just as it heeded the views of other contributors to the discussion. As a result of that discussion, we actually have an improved superannuation package.
Can I deal with the other features of that package. The government will now not proceed with the harmonisation of contribution rules for those aged 65 to 74. And, finally, the commencement date of the proposed catch-up concessional superannuation contributions will be deferred to 1 July 2018. Each of these three measures is an improvement to the existing package.
Minister, both the Treasurer and the Prime Minister have claimed budget repair as the Turnbull government's greatest moral challenge. Why is the government adopting a superannuation policy that leaves the budget $1 billion worse off over the forward estimates compared to the superannuation proposal put forward by the Leader of the Opposition?
Senator Gallagher, it is not merely the Turnbull government's moral imperative; it is Australia's moral imperative, and, therefore, it is your moral imperative as well. But, unfortunately, Senator Gallagher, those on your side of the aisle have actually banked the savings that were announced in the superannuation package, yet you continue to attack it politically. As I said yesterday, Senator Gallagher, you are only able to play political games. When it comes to serious policy design, serious policy discussion, you are just not up to it. We expect that the Australian Labor Party will vote for these measures when they come before the Senate. We expect that they will vote for these measures before they come to the Senate. The government is proud of the fact that it took these measures to an election, and it is equally proud of the fact that it has now enhanced them further.
My question is to the Minister for Finance, representing the Treasurer, Senator Cormann. Can the minister explain how important it is that Australia's superannuation system be made fairer, more flexible and more sustainable?
I thank Senator Williams for that question. It is of course very important that we make our superannuation system fairer, more flexible and more sustainable. We did take a very comprehensive package of reforms to the last election, designed to ensure that superannuation tax concessions are fairer, more sustainable and fit for purpose. Of course, the purpose of the superannuation tax concessions is to encourage Australians to save, to generate an income in retirement to replace or supplement the age pension.
That was a $6 billion package, and the conversation that has been taking place in recent weeks and months has focused on less than 10 per cent of that package. Five hundred and fifty million dollars was the expected revenue from the introduction of the non-concessional $500,000 lifetime cap. We have listened to the feedback from the community and in particular we have listened to the feedback from our Liberal and National Party members and senators, and we have done after the election what we said we would do before the election: we have consulted on the very substantial package of reform. But I would say to you again: we as a government have made a judgement on flexibly making improvements that make our reforms even better, having taken on board legitimate and genuine feedback. The changes that we are announcing today, that the Leader of the Government in the Senate has gone through for you today, impact on less than 10 per cent of the overall reform package that we announced at budget time.
Let me also say that this question by Senator Williams and the supplementary questions that I expect will be coming will give me the opportunity to dismiss the absolute falsehoods and misleading statements that are at the basis of the questions that we were asked by Senator Gallagher. You do not have to take every question that your tactics committee gives you, Senator Gallagher. That is just my gentle advice to you.
Our overall superannuation tax reform package has got a number of very important features to it which improve flexibility. One of the very important features—and I know that it is something that has been raised with us at various times by Senator Leyonhjelm as well—relates to providing access to concessional contributions to people under age 75 to claim a tax deduction for personal superannuation contributions, irrespective of their employment arrangements. That is very important, in particular to contractors and small business people. This will assist around 800,000 people, particularly benefiting those who are self-employed, partially wage and salary earners—for example, contractors. We also, in order to pay for the changes today, had to defer the implementation of the so-called catch-up provision to 1 July 2018. We are enabling, in particular, women and other carers with disrupted work patterns to make additional contribution to make up for the lost opportunity in the past. (Time expired)
I am very pleased that Senator Williams asked me that question, because it enables me to absolutely dismiss and dispel the erroneous assertions made by Senator Gallagher in her questions and the false interjections by Senator Conroy. The government's changes announced today to make superannuation fairer, more flexible and more sustainable will achieve an additional $180 million budget improvement over the forward estimates, which will assist in budget repair. Over 10 years the changes will improve the budget bottom line by a further $670 million. So, far from deteriorating the budget bottom line, this is actually improving the budget bottom line by more. These changes are of course part of the government's overall plan to repair the budget, and what we are announcing today comes on top of the $6.3 billion worth of savings that we have been able to successfully land—and I thank the Labor Party again for their cooperation on this—through this parliament this week. (Time expired)
My question is to the Minister representing the Prime Minister, Senator Brandis. I refer to today's announcement of changes to the government's superannuation policy first announced in the May budget and then taken to the election. I also refer to the Prime Minister, who, after the coalition government was returned with a reduced majority, said, 'All of our policies that we took to the election we will deliver.' Given the Prime Minister has already walked away from this commitment, will the minister please advise how many of his other election policies he will allow his conservative backbench to hold hostage?
Senator McAllister, that is substantially the same question that your colleague Senator Gallagher asked, and the answer will be the same. We announced a superannuation package in the budget. We took it to an election. We mean to introduce that policy, and we have today announced three enhancements to that policy which make it an even stronger policy than the policy that was announced in the budget and endorsed by the people at the election. These enhancements will be welcomed by all superannuants, I am sure. We make no apology for improving our policy.
We believe that these improvements to the superannuation policy will be beneficial for the entire policies. They will be beneficial in particular for the superannuants. It is a matter of public record that a number of self-funded retirees and superannuants expressed concerns about aspects of the policy, which is why we have enhanced the policy. Those superannuants, in particular, will welcome those changes.
In light of the Prime Minister's capitulation on his 'ironclad' superannuation policy, isn't the Prime Minister's actual position that only the policies approved by Mr Abbott, Senator Abetz and Mr Christensen will actually be delivered?
Senator McAllister, honestly and truly, there you go again. For you, it is all about insider political games and political manoeuvring. Here we are, Senator McAllister, announcing three significant improvements to the superannuation package announced in the budget and endorsed by the people at the election, which will improve the package for many, many superannuants who have expressed concerns about aspects of it, and you do not want to even have a discussion about the policy merits. All you want to do is make cheap political points about what happens in the coalition party room. We have a discussion and we listen to all of our colleagues. Senator McAllister, here is a question for you: will the Australian Labor Party support this package with these changes?