Doorstop Interview, Parliament House, Canberra

 

Yesterday the Shadow Treasurer delivered his Budget reply speech and yet the Australian people still don’t know how Labor proposes to pay for its $66 billion Budget black hole. Right now as a result of the promises that Bill Shorten and his Shadow Ministers have made so far, the Budget over the current Budget forward estimates would be $66 billion worse off. It is a Budget black hole, which keeps expanding as Labor continues to make unfunded and unaffordable spending promises. Higher spending promises, unfunded spending promises lead to higher taxes and higher debt, which will hurt jobs and growth, which will hinder our current successful transition from resource investment driven growth to broader drivers of growth in a strong, diversified and new economy.

All Labor promised yesterday was to deliver a mini Budget 100 days after the election. People across Australia shouldn’t have to wait for 100 days after the election to find out how Labor proposes to pay for its $66 billion Budget black hole. The Labor party should explain that to the Australian people now. Or is it that they are waiting for what the Greens will allow them to do after the election in the scenario where they could form a government with the Greens. Is it that Labor is waiting for their negotiations with the Greens before they finalise the Budget impact of all of their different spending promises.

The truth is, the Australian people deserve to know today. Yesterday Chris Bowen failed to explain to the Australian people how he plans, how Labor plans to pay for their unfunded spending promises. The Australian people deserve to know and the Australian people deserve to know what the Budget impact of their promises is on a year by year basis over the current forward estimates.

Happy to take questions.

QUESTION:

Minister, on your super changes. Is this going to be a troublesome election issue for you given some of your own supporters now oppose it?

MATHIAS CORMANN:

What we are doing in relation to superannuation is to ensure the system is sustainable and fair. We are working to better target the available tax concessions in superannuation and to ensure that superannuation tax settings are fit for purpose. The purpose of superannuation is to encourage people to save more, to provide an income in retirement which replaces or supplements the age pension. The purpose is not to facilitate a tax effective accumulation of unlimited amounts of wealth, which can then be passed on tax effectively as an inheritance to people’s children. What we have done in our superannuation changes is to ensure that the system is sustainable, that it is fairer. We re-invested all additional income that the changes at the high end generate into providing additional support for low and middle income earners, additional support to women to ensure that all Australians have got the appropriate opportunity to save more for their retirement and to provide an income in retirement.

QUESTION:

But it is the retrospective aspect of it that is the problem with it isn’t it?

MATHIAS CORMANN:

The changes are not retrospective. The changes are clearly prospective. If I go to the $1.6 million transfer cap for example. It limits the amount of capital, the amount of savings, that people are able to transfer into a tax free retirement income account. People are able to transfer $1.6 million worth of savings into a retirement income account where the earnings will not attract any tax. Only earnings on the back of savings in excess of $1.6 million will be taxed at the concessional rate of 15 per cent if people choose to leave that capital in the superannuation settings in the accumulation account. That is manifestly a prospective change. It is not a retrospective change. It is a change that we believe makes the system fairer. The alternative is to say that there should be no limit whatsoever in relation to the amount of money that you can put into a retirement income account where the earnings attract zero per cent tax. Just to finish on this point. Labor’s policy proposes to impose a 15 per cent tax on earnings in the retirement phase of $75,000 and above, which relates back to savings that are less most likely, less than the $1.6 million cap that the Coalition has put forward. Most likely in the range of about $1 million to $1.5 million. So our policy is actually more generous still than the policy put forward by the Labor party. It is a policy that is prospective.

QUESTION:

Are these changes locked in? Julie Bishop says there will be consultation.

MATHIAS CORMANN:

Julie Bishop says what all of us have said. That is, given that these changes that I have just talked about don’t come into effect until 1 July 2017, there will be consultation between now and then on the implementation arrangements, because our objective is to ensure that the measures are implemented in the most efficient, simplest, best possible way. There will be a level of consultation in relation to that. The laws are not due to come into effect until 1 July 2017.

QUESTION:

Will that involve any possible watering down of the provisions?

MATHIAS CORMANN:

The consultation will be focussed on making sure that the implementation and the administration of those measures is as efficient as possible. It will not involve a change of the substance of the measure, no.

QUESTION:

What about the lifetime cap on superannuation, post-tax contributions? Is that just counting from what they put into their accounts now, or is that retrospective from 2007?

MATHIAS CORMANN:

Again, the lifetime concessional cap of $500,000 is a prospective measure, because it relates to future contributions into the superannuation savings account. What it does do, because it is a lifetime cap, it takes into account to the extent we can, contributions that have been made over a lifetime. The date from which the Government has got access to adequate data is 2007. So contributions that have been made since 2007 will be taken into account. But here is the important point. Anyone who has contributed more than $500,000 in the past, will not have to remove any of those assets out of superannuation. There will be no penalty on any contributions in excess of $500,000 that have been made in the past. But moving forward from Budget night, the amount in non-concessional contributions that people can make into their superannuation account is limited to $500,000. So if you have contributed more in the past you will not be able to contribute more. But if you have contributed less in the past, you will be able to go to that $500,000 cap, which applies prospectively from Budget night onwards.

QUESTION:

He is right then isn’t he? Any law that has implications for decisions made before the law was introduced is retrospective. Is he wrong?

MATHIAS CORMANN:

Firstly, the Treasury Secretary in Senate Estimates very explicitly made the point that these changes are prospective and not retrospective. The second point I would make, if your argument was right, then any worker across Australia who in the past decided to work really hard in order to earn a higher income based on an assumption of a particular income tax rate when they hit that higher income and then the income tax rate changes prospectively in the future then somehow that is a retrospective change. Because arguably, people would not have worked as hard in the past if they had known that their tax when they got to the higher tax income bracket would be higher. If your argument was right, you could never make any changes to income tax rates ever. That is a ludicrous proposition. That is not a proposition that is sustainable in any way, shape or form.


QUESTION:

Minster, today the Daily Telegraph has given very firm endorsement of Anthony Albanese, would you personally like to see a Greens member sitting in his seat?

MATHIAS CORMANN:

I encourage all people across Australia to vote Liberal. I would encourage all people in the seat of Grayndler to support the Liberal party candidate in Grayndler.

QUESTION:

The former Deputy Prime Minister and the former leader of the Nationals says it is retrospective. Are you saying that he is ludicrous?

MATHIAS CORMANN:

He is not right. We are working to make our superannuation tax system better, fairer and more sustainable. We are working to ensure that the tax concessions available in superannuation are fit for purpose. That means that we are making adjustments to the tax treatment of the earnings for people with very high savings. Some people with very high savings don’t support that proposition. I am not necessarily surprised by that. But we have to make decisions that are in the broader public interest. We have to make decisions that are in the interest of making our superannuation tax system sustainable and fair. That is what we have done.

QUESTION:

Minister, back in the Anthony Albanese thing. You have said that’s a matter for Tony Nutt but obviously you’re accusing Labor or possibly forming a minority Government with the Greens. Doesn’t this show that you also in ... interrupted

MATHIAS CORMANN:

The Greens have said very clearly that they are up for a return to the bad old days of a Labor-Green government. People across Australia understand how bad the Labor-Green government was for the economy and for jobs. What we are saying is that if Bill Shorten had the opportunity, clearly he would go back to where Julia Gillard went and that is he would go back to forming a government with the Greens. The worst thing that could happen for our economy, the worst thing that could happen for our AAA credit rating, the worst thing that could happen in the context of our current transition in the economy would be a return to the bad old days of a Labor–Green government.

Thank you very much.

E&OE