Russell Broadbent (McMillan, Liberal Party) Share this | Link to this | Hansard source

My question is addressed to the Treasurer. Would the Treasurer outline to the House how proposed reforms to superannuation will help Australians lock in plans for their retirement years? Why is this so important for the future?

Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Link to this | Hansard source

I thank the honourable member for McMillan for his question. I can tell him that the government’s simplified superannuation scheme is to take effect on 1 July next year, and the legislation will be introduced into this House this week. We are yet to hear from the Labor Party whether it actually supports simplified superannuation. The reforms will sweep away a host of complex tax provisions. They will improve incentives to save. They will increase retirement incomes, and they will strengthen incentives for older Australians.

In the vast majority of cases, for the 90 per cent of Australians in taxed superannuation schemes, there will only be one provision of the law that applies to them—the provision that says that, after 60 years of age, there will be no tax on their end benefits, no tax on their lump sums and no tax on their pensions. For an Australian who retires after 60 and whose superannuation is in a taxed fund—which 90 per cent of Australians are in—that is the end of their taxation liabilities. As the superannuation industry itself has noted, this is the biggest reform to superannuation in its history. This makes superannuation comprehensible, and it increases incentives to save.

In addition to that, there will be a 10 per cent tax offset for those who are in untaxed funds so as to give them near equivalent treatment to the abolition of taxes for those coming out of taxed funds. There will be a halving of the pensions assets taper test, from $3 to $1.50 per fortnight, which means that, for many Australians on the pension who are currently asset tested out of the pension or out of part of a pension, they will have the opportunity to continue under a much fairer assets test.

The reforms will provide extensive benefits for the self-employed—a 100 per cent tax deduction—so that those self-employed Australians who want to put away money for their retirement will have full equivalent taxation treatment, as they would have if they were employees and they could get a full tax deduction for their contributions.

It is important that these reforms go through the House with bipartisan support. Let me explain why. If these reforms are opposed by the Labor Party then people will not have confidence to lock away money—in some cases for 20, 30 or 40 years—because of the fear that Labor could get elected at any time in the next 20, 30 or 40 years and could change the taxation system adversely against them. We need to have a clear and unequivocal statement from the Labor Party that they will not interfere with this foresight, with this far-reaching reform to superannuation, so that Australians can have confidence to save. I call upon the new Leader of the Opposition to put aside the failures of the opposition up until now, to come out and make it clear, to state in unequivocal terms that these reforms will be kept in place under any future Labor government, because Australians need the certainty to invest in their superannuation.