Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Hansard source

I thank the members who have contributed to this debate on Tax Laws Amendment (2009 Budget Measures No. 1) Bill 2009. These are important measures to enhance the fairness and integrity of the tax system and to ensure that the pension and retirement income system is sustainable and affordable into the future. In total, the measures in this bill provide budgetary savings of almost $5 billion over the forward estimates.

Schedule 1 better targets the general exemption for employment income earned by Australians working overseas. It reinforces the general principle that individuals who are Australian residents for tax purposes should be taxed on their worldwide income. The new rules remove some of the inequities that can currently arise between people working overseas, particularly those working in low tax countries, and people working in Australia. The rules were originally introduced to relieve double taxation. The foreign income tax offset rules will ensure that people are not subject to double taxation on their foreign employment income.

Schedules 2 and 3 provide necessary budgetary savings in light of the pension reform and address the findings of the Australia’s Future Tax System Review panel that superannuation tax concessions should be more fairly distributed. Schedule 2 temporarily reduces the government co-contribution. This will ensure that we generate budgetary savings whilst maintaining incentives for people to contribute to superannuation through a still-generous matching rate and maximum co-contribution payable. Schedule 3 reduces the amount of concessional tax treatment available for contributions to superannuation. This will provide greater equity in the superannuation system by targeting reductions in superannuation tax concessions to those with relatively more private resources and who make large concessional contributions to superannuation. On the reduction of superannuation contribution caps, some concerns have been raised that the reduction in the $50,000 cap could be greater than stated in the budget because the cap was due to be indexed. I would again emphasise that only 1.8 per cent of those making concessional contributions will be affected by this measure, as the member for Blair said, and that these are predominantly high-income earners. Indexation also remains in place for those under $50,000. These measures are necessary to fund a sustainable and affordable increase in the pension. They are difficult decisions, but absolutely fundamental to ensuring our budget is on a sustainable footing into the future. I commend the bill to the House.

Question agreed to.

Bill read a second time.

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