Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Hansard source

It is important, Senator. This is quite complex. Senator Boswell, if you are referring to the changes contained in the budget brought about by this government in terms of changing the definition of income to include salary sacrifice into super, I can help you with that. If you are referring to the measure which is at the centre of a public debate about which the Treasurer and the Minister for Families, Housing, Community Services and Indigenous Affairs, Ms Macklin, held a press conference today, that is a 2006-07 budget measure, which is the one that is impacting on people working in the not-for-profit sector.

In terms of this government’s measure this year, it is a change to the definition of income, which will now include any salary sacrifice into super. It closes what we regard as a loophole. Our budget measure affects only income salary sacrificed into superannuation. In relation to income salary sacrificed into superannuation, if individuals have income sufficient that they can afford to sacrifice some of their salary into a super fund and lock it away until their retirement, then it seems to us only fair that they not receive additional welfare benefits as well. As the Australian newspaper’s editorial put it this morning:

There is a strong argument that this is exactly as it should be. A decision on whether someone has the capacity to properly provide for children should include all income.

This measure was also reported by the Daily Telegraph last month, on 30 May. The column said, ‘These changes will result in a fairer welfare system.’ Our budget is designed to make income tests for various tax and transfer programs fairer and better targeted to those in need of government assistance. Around 2.2 million families with 4.3 million children receive family tax benefits. Therefore, approximately 3½ per cent of families receiving family tax benefit payments will be affected by the changes to salary sacrifice into superannuation. This also brings the treatment of salary sacrifice into superannuation into line with the rules that already exist for pensioners and the rules that already exist for the self-employed. The self-employed are already under this regime. This brings the rest of the population into that same system. It also ensures that parents cannot reduce or avoid their child support obligations by voluntarily salary sacrificing part of their remuneration into superannuation. It is making sure we test their real income. It is not the purpose of the social security system to provide further incentives, over and above those provided by the tax system, to make voluntary contributions to superannuation.

Those are the changes that are contained in this budget. I think they affect about 3½ per cent of the families who are on family tax benefits. It is part of an overhaul of the welfare system to make it fairer and brings it into line with the arrangements that currently apply for pensioners and the self-employed. These measures were announced in the Rudd Labor government’s budget some six weeks ago, and all the details are in the budget papers.

As I said, this is different from the issue that is at the heart of a public debate at the moment, which relates to the previous Howard government’s 2006-07 budget changes, which will come into effect on 1 July this year. (Time expired)