Government's Superannuation Mess

June 01, 2016


SUBJECT/S: Government’s Superannuation Mess

JIM CHALMERS MP, SHADOW MINISTER FOR FINANCIAL SERVICES AND SUPERANNUATION: There are serious revelations today that members of the Government do not support the Government's Budget and do not support the Government's superannuation changes. This takes disunity and dysfunction in the Liberal Party over economic policy to new lows. This is a serious test for Malcolm Turnbull: how much will the changes cost, what will those changes be, and will he come clean before the election?  This is yet another example of the Liberal Party leading Malcolm Turnbull, not Malcolm Turnbull leading the Liberal Party.

The Budget today is in tatters. We know from what the members of the Liberal Party are saying, that they intend to oppose the Government's own Budget if they win the election, it is quite an extraordinary thing. It used to take Joe Hockey's Budgets a couple of months before they fell over; Scott Morrison's Budget can't even last from May into June. The wheels are falling off the Government's Budget before it's even rounded the first bend.   All around them, the Government's economic strategy, the Budget, key parts of that economic plan are in tatters.

This is what happens when you make big, drastic changes to superannuation without care and without consideration. And what this means is for vast swathes of middle Australia, they are losing confidence in the Government's ability to manage the economy, the Government's ability to make changes to superannuation which are carefully thought out and carefully considered. This means that people do have cause to be concerned about their retirement incomes. No wonder that people are starting to seriously question whether the Government can handle superannuation and handle the economy. Not just in the Liberal Party Room or in the Liberal Party branches but right throughout middle Australia.

JOURNALIST: Do you understand what the Government has done with the transition-to-retirement changes and should the Government abandon those changes?

CHALMERS: Well the Government has had an awful time trying to explain those transition-to-retirement changes. What transition-to-retirement pensions do is people of a certain age, between fifty-five and sixty-four, often salary-sacrifice into their super to get the concessional tax treatment and then on the way out they pay no tax on that same amount of money. The Liberal Party, whether it's Julie Bishop or Kelly O'Dwyer today, have been unable to explain or defend the changes that they are making.

We've said all along that we won't rush to make the same mistake that the Government has made. We won't rush to judgement on these changes. We are considering them, we are carefully consulting people right around the country about the impact of those changes and the other changes to superannuation. I see Kelly O'Dwyer has finally conceded today, as we have said all along, that the changes to the transition-to-retirement aspects of the Budget, aspects of those superannuation tax concessions, do impact on people right up and down the income stream and not just a few people at the top. That has concerned us since the beginning, but we will announce our final position, on the ten different measures that the Government has dropped on the table on the eve of an election, closer to the election.

JOURNALIST: The Productivity Commission says some people using the transition-to-retirement measures to minimise their tax. Does something have to be done to prevent the system being misused?

CHALMERS: There have been serious concerns raised about this part of the superannuation system, not just by the Government but by others around the country, including key stakeholders. There's a difference of opinion about how many people these changes will impact between the Productivity Commission, which said about 115,000, to some of the stakeholders, who say the number is closer to half a million Australians impacted. We said all along that we are concerned that while the Government claims that these changes only impact high income earners, we think that the impact is felt right throughout middle Australia, up and down the income levels in this country. Kelly O'Dwyer has finally conceded that today after the Treasurer and herself have spent some weeks denying that simple fact.

JOURNALIST: Is it possible to make changes that are aimed at the preventing the rorting and making the system fairer without leaving anyone worse off?

CHALMERS: Well we've said all along that we want to tackle the poorly-targeted nature of some of the superannuation tax concessions. We put our policy on the table more than a year ago. It will be fifteen months between the announcement of our policy and the election and we gave people plenty of time to consider our changes to make superannuation fairer. We've said all along that changes do need to be made, but they need to be made in a certain way. They need to be careful and considered, they need to be done with some consultation with the superannuation sector, but also with the people who will be impacted. Our concern with the Government's measures is that they dropped them on the table on the eve of an election. They're unable to defend or explain those changes, and now we hear today that not even Government members support the Government's superannuation changes. The Budget will be unable to survive an election if Malcolm Turnbull wins. That's why we say the Budget is in tatters. The wheels have fallen off this Budget before it's rounded the first bend.

JOURNALIST: Labor's superannuation policy targets high-income earners. Should you re-think your policy?

CHALMERS: No, we've said all along that the unfairness in the superannuation system is at the top end. Something like forty per cent of the tax concessions in our superannuation system benefit the top ten per cent, the wealthiest ten per cent in the system. We said that's unfair when you've got serious budget constraints, including a tripling of the deficit under this Government over the last two years. You do need to look for where you can make responsible savings. We put our changes on the table more than a year ago to tweak and improve the superannuation tax concessions in the system to make them fairer. Inevitably that will mean that some people at the top end will be worse off. But you've got to work out where you can make the changes that can make the superannuation system better and fairer. That's what we've done. The Government has attempted that at the very last minute. They've made big, drastic changes with very little thought and very little consultation and that's why we're seeing this absolute shambles from the Government when it comes to super.