Interview with Patricia Karvelas, RN Breakfast, ABC

PATRICIA KARVELAS:

The taxation system is a complex beast and sitting within that structure is superannuation tax concessions. The price tag is huge, estimated to cost more than 25 billion dollars a year and growing. While the government is working to enshrine a definition for superannuation, the Treasurer has flagged a potential crackdown on those super tax breaks. The Treasurer Jim Chalmers joins me this morning, Treasurer, welcome back to Breakfast.

JIM CHALMERS:

Thanks, Patricia, good morning.

KARVELAS:

You say that we are on track to spend more on super tax concessions than the aged pension by 2050? Are you softening all of us up to changes to super in the Budget in May?

CHALMERS:

Not necessarily Patricia, I just think it's part of a broader assessment of where our superannuation system is at, and how we lock down the objective of super so that we can provide more certainty and security around its purpose. As part of that I acknowledged earlier in the week, as you just have in your introduction, that these concessions in the superannuation system, they're not cheap, I don't think it's especially controversial to acknowledge that. And when you believe in superannuation and its capacity to deliver a dignified retirement for people, then you need to make sure that these kinds of tax concessions are sustainable and affordable into the future. And I don't think it should be beyond any government really, of either political persuasion to acknowledge that.

KARVELAS:

Okay, acknowledging it is one thing, changing it is another. You said before the election 'we've said about superannuation, that we would maintain the system. Australians shouldn't expect major changes to superannuation, if the government changes hands.' So, what's changed?

CHALMERS:

I don't think what we're talking about now, this morning, or what I was talking about earlier in the week, should be especially controversial, or an especially big shift. As I said, we want to lock down the objective, and we acknowledge in doing that, that we want to make it all sustainable. We haven't taken any decisions, but we can't ignore the cost of these tax concessions with all of the other pressures which are on the Budget. We've got this big national advantage when it comes to super. We need to make sure it's sustainable, we need to make sure we can afford the various concessions into the future. As you rightly pointed out, it costs almost as much as the aged pension to provide. And it shouldn't be beyond us to say, this is one of the pressures on the Budget at a time when now we inherited a trillion dollars of debt, we've got all of these medium-term pressures on the Budget intensifying rather than easing. And so one of the things that we acknowledge, that I've acknowledged this week, is that some of these tax concessions are expensive. I think that's self-evident.

KARVELAS:

No it is self-evident, which is why in 2019, Labor took a policy to the election that you'd lost, which was to change them. At the last election, you didn't do the same thing, because you were rather bruised by the 2019 experience. So why change your tune now? You knew they were big. You knew these concessions were huge, and you knew we had huge debt.

CHALMERS:

We said at the election that our priority on tax reform is multinational taxes, and that remains the case, and our priority in superannuation is nailing down this objective, and that's the case as well. I think if we're going to talk about the history, Patricia, we need to remember that the last government that increased taxes on superannuation was a Liberal government, a government in which Peter Dutton was sitting around the Cabinet table signing off on these changes in 2016-17. So the reason I make that point, is because I do genuinely believe that governments of either political persuasion, should acknowledge the various costs and pressures on the Budget at a time when we've got a lot of debt, when we need to fund decent aged care and decent health care and decent national security. At a time like that, we need to acknowledge where some of these pressures lie. We haven't changed our view, we haven't taken any decisions, but we should be up for a national conversation about the future of some of these concessions which cost the Budget a lot of money.

KARVELAS:

I think that we have to have the conversation, but my question is, will there be changes in the May Budget, or do you think you need to go get a mandate for change at the next election?

CHALMERS:

As I keep saying, we haven't changed our view, we haven't taken any decisions.

KARVELAS:

That's a technical answer, with respect.

CHALMERS:

I don't think it is. I don't think it is. It's a factual reflection of where we're at, Patricia.

KARVELAS:

Would we see some changes to superannuation rather than just warnings about its growth?

CHALMERS:

Again, we haven't decided to do that. We haven't changed our position on that.

KARVELAS:

Do you think you should change your position?

CHALMERS:

We haven't determined that.

KARVELAS:

But what do you think, as Treasurer?

CHALMERS:

I will tell you what I think, I gave a longish speech about this on Monday where I said the priority in super - it is and should be nailing down the objective. For too long the lack of an agreed objective has meant that our predecessors could mess with superannuation when it came to all kinds of ideological pursuits. We want to take that out of the system. Ideally, we want to get some kind of broad agreement amongst the industry and in the community more broadly about what super is for, so that we can build from that. And as part of that speech I pointed out what is a fact, which is that the cost of superannuation tax concessions will overtake the cost of the pension. That's a fact. I was asked later on, what does sustainable mean? And I pointed out, as I pointed out to you this morning, that when you believe in super and there's an important role for these tax concessions, you need to make sure that you can afford them against all of the other pressures on the Budget.

KARVELAS:

You've got key crossbenchers open to backing changes including David Pocock, Senator Tammy Tyrrell from the Jacqui Lambie Network, expressing interest in changes to superannuation - is now the time rather than kicking the can down the road then?

CHALMERS:

Well, I haven't had a discussion with all of those senators, honestly.

KARVELAS:

It looks like a really friendly Senate on these issues.

CHALMERS:

It doesn't always look like that [laughs]. I haven't had the conversation with any of those senators. But obviously, we engage with them in a respectful and meaningful way whenever we can, but I haven't engaged with them on this because the government hasn't changed its position. All we've done is acknowledge as part of a broader push to lock down super and make sure it serves the interests of retirees, we've said that these things cost the Budget a fair bit of money. That's as far as it's gone.

KARVELAS:

There is quite a lot of costs coming your way to be honest, I just want to ask one more question about the super stuff. One proposal being floated this morning by the Grattan Institute is removing tax concessions for super balances above 2 million dollars, effectively capping the size of super funds. That would, they say, affect about 80,000 fairly well-off people, is that the kind of reform that is achievable?

CHALMERS:

Well, it depends on your definition of achievable. Obviously, I'm aware of those Grattan Institute proposals, they've been engaged in the national debate about superannuation for some time. And if you think about that example, I've got a slightly different one - if you think about the average balance in super is about 150 grand, I think. But for less than one per cent of people in the system, they've got balances higher than 3 million dollars. The average amongst that group is 5.8 million dollars, and they have access to a whole bunch of tax concessions. And I think the point that Grattan has made repeatedly over a period of time, and others, and the point that we're making is we've got to work out where we get the most value for money when it comes to some of these tax concessions. We haven't come to a view on a proposal.

KARVELAS:

But can we afford to wait until after the election?

CHALMERS:

It depends how all the other things shake out in the Budget. I suspect what we'll get a lot of interest in today, for example, is the Fair Work Commission decision on aged care wages. We'll have to find room for that in the Budget, we’ll have to find room to strengthen Medicare, we’ll have to find room to fund our national security. And so one of the things I've tried to do and being on your show is a great opportunity to do it - I value it, cherish it - one of the things I've tried to do since I've been Treasurer, is not to try and kind of pretend away some of the pressures on the Budget. And this is one of them, what we're talking about today is one of them, there's no point ignoring that. And we should be able to have a national conversation about it. Grattan’s feeding into that and that's a good thing.

KARVELAS:

Anthony Albanese will flag additional investment in Australia's military capability during his speech today. You're the Treasurer, you just mentioned the wages decision, there's this one too, how much will it cost Treasurer?

CHALMERS:

This will be one of the things that we will have to make room for in the Budget and cost up for the Budget. I think the Prime Minister's got an opportunity to give a really important speech today. And the speech is about our partnerships, it's about our sovereign capability, it's about this big industrial economic opportunity we have in defence industries as well. But it's broader than that, and one of the reasons why I'd encourage your listeners to tune in when Anthony’s at the National Press Club later today, is he's talking about national security but he's talking about security in a much broader sense as well, including economic security, and in uncertain times. We've got a lot of challenges not just to our national security, but to our economic security as well. I think one of the defining features of his Government is trying to introduce an element of security and stability and reliability, and that's what his speech is about.

KARVELAS:

Just on another issue, ASIO director Mike Burgess says he was directly pressured by senior figures to ease up on espionage operations in his speech last night, and also saying that came from business leaders as well as others. How concerned are you by that?

CHALMERS:

I do think that is concerning. We're very lucky to have someone of the calibre of Mike Burgess, who provides these threat assessments every year for the last few years. And I think it's a really important way of explaining to people the complexities and the challenges and the changing security environment that our agencies like ASIO confront. And what Mike has said, and the view that we share, and Minister Clare O'Neil and others have been talking about this, is that foreign interference and espionage is a big threat to our national security. And ASIO works around the clock, to try and protect Australians from it. It's deliberately designed to undermine our democracy and our values, and it shouldn't be tolerated by the government or its agencies, and it's not tolerated. And I think the point that Mike was making about that specific issue you raised, is that we can't let these things slide when our national interests are at stake. That's ASIO’s view, it's Mike Burgess’ view and it's the government's view as well.

KARVELAS:

Treasurer, thanks for your time this morning

CHALMERS:

Thanks Patricia.