MONDAY, 11 JANUARY 2016
SUBJECTS: Superannuation tax reform; Government’s Ideological Crusade on Super; Capital Gains Tax Reform.
JIM CHALMERS, SHADOW MINISTER FOR FINANCIAL SERVICES AND SUPERANNUATION: Thanks very much everyone for coming out today. I hope 2016 is treating you kindly. I'll just say a few things about the front page of the Financial Review and then, obviously, happy to take your questions.
The new research which is published today shows that while our superannuation system is the envy of the world, it's not perfect. The incentives aren't quite right and we need to find ways to make it fairer. Superannuation is supposed to be all about providing decent retirement incomes for Australian workers, not encouraging people to amass enormous inheritances. From day one, superannuation has been all about taking pressure of the aged pension system, not about encouraging people to amass those huge balances to pass on to subsequent generations.
The problem that we've got is that the tax incentives in the super system are skewed towards those who need them least. As it stands, 38 per cent of the benefits of the tax concessions in super flow to the wealthiest ten per cent of people in the system. That's a problem. That's what makes superannuation less fair than it might otherwise be and that's one of the reasons why we get this accumulation of big balances -- people taking advantage of the tax system to put together big inheritances to pass on.
Now, Labor has been ahead of the game on this for some time now. We've had a policy out there for the best part of a year to make superannuation tax concessions fairer. We would encourage the Government, given this new research which shows that Labor is on the right track with our policy when it comes to superannuation earnings at the very top end, to pick up on Labor's policy and to implement it so that the problems identified in the new research released today are addressed.
Unfortunately at the same time as Labor is on the right track when it comes to the unfair tax concessions in the superannuation system, we've got a minister - Minister Kelly O'Dwyer - who doesn't have a clue about how the system is currently constituted. She said late last year that it's not true that people are amassing big balances. She said it's not possible for people to accumulate millions of dollars in balances. Independent research from the Association of Superannuation Funds of Australia shows that something like a hundred thousand Australians have more than two million dollars in super and 475 Australians have more than ten million dollars in super, and they're the main beneficiaries of these unfair tax concessions.
More broadly, this Government is pursuing what is a misguided ideological crusade to weaken the super system which they've never believed in. On the Labor side, on our side, my colleagues and I are interested in what's best for fund members, what's best for workers, what's best for retirees. If the Government genuinely wanted to improve the superannuation system, they'd focus instead on the tax concessions, they'd focus on the gender gap, they'd focus on inadequacy at the low end and they'd focus on this big and growing problem with non-compliance from employers when it comes to their obligations to employees in the super system.
Instead what the Turnbull Government’s doing is they're abolishing the Low Income Superannuation Contribution, they're freezing the increases to the superannuation guarantee and they're weakening the penalties for employers who do the wrong thing. The sum total of all of their efforts will be to make superannuation weaker in this country, not stronger, to make the current imperfections in the system worse, not better.
JOURNALIST: Jim Chalmers, why is it such a problem to offer Australian workers and others informed choice of superannuation funds that they put their savings into?
CHALMERS: We've said since the Government responded to the Murray Inquiry into the financial system that we're up for a proper conversation about giving Australian workers more options when it comes to choosing their own superannuation funds.
What the Government's desperate to do is to try and conflate two different issues. One issue when it comes to those people who only have one choice, if they want to exercise that choice, we're up for giving them more options in the super system. We've said that from day one and we've said that repeatedly.
It's a very different issue that Kelly O'Dwyer and her colleagues are trying to conflate - this issue around default super funds which is just code on her part for removing the safeguards which ensure that for those workers who do not exercise a choice in the superannuation system that their interests are put first.
Our priority is to make sure that workers' interests are put first in the superannuation system. So many Australians do not exercise their choice when it comes to super. We want to make sure that there are safeguards and filters in place to make sure that whatever super fund they end up with is the best for them and not necessarily just the best for their employer.
So there are two very different issues at play here. When it comes to options, we're up for a conversation. When it comes to removing those safeguards, those filters, for Australian workers, we're far more skeptical.
JOURNALIST: The Australia Institute says the Government ought to levy Capital Gains Tax on the sales of family homes over two million dollars. It says that would be worth three billion to the budget a year. Has that idea got merit?
CHALMERS: I've seen those reports, Tim, and obviously we welcome all the inputs into the tax debate. But from Labor's point of view, we have no interest in a change of that nature. We have no interest in changing the tax arrangement as it applies to ownership of the family home. But as always we read those types of contributions with interest and we welcome a discussion about tax in this country.
Our priorities, as you know, are superannuation tax reform and also ensuring that multinational companies operating in Australia pay their fair share. We had just before Christmas the Australian Tax Office reveal that hundreds of companies that operate here and make hundreds of millions of dollars aren't paying a cent in tax. We think that the Government's priorities are horribly wrong when they ignore that and focus on other things like jacking up the GST and making everything more expensive in our economy, which won't boost jobs, won't boost growth, it'll just make it harder for Australian families to make ends meet.
So I think when it comes to tax reform, whether it's that contribution that you mentioned, whether it's our priority on multinational tax, the super tax concessions, or the Government's priority to jack up the GST, I think everyone's position is pretty clear. And I think this year, being an election year, these matters will be front and centre as we make our case to the Australian people.
JOURNALIST: Capital Gains Tax exemptions don't help the poor one bit. They do help Australia's wealthy. Isn't it a reasonable approach to tax reform to do something to sting wealthy Australians that wouldn't touch middle or poorer Australians?
CHALMERS: Tax Reform should be all about fairness. That's why we are making our priorities those two that I mentioned - multinational tax reform and tax reform so that the tax concessions at the high end of superannuation aren't unfairly skewed towards those that need it the least.
We've said that's our priority for some time now, some months. We've got a policy out there, that's the policy we'll take to the election. All these other ideas are welcome and worthy of a discussion, but we've said what we want to do. We'll take that to the election and we think we'll be able to make a good, strong case for the changes we have already announced.