SKY PM AGENDA
MONDAY, 26 OCTOBER 2015
SUBJECT/S: Women's superannuation
DAVID SPEERS: Joining us now, Labor superannuation spokesman, Shadow Minister for Financial Services and Super, Jim Chalmers. Thank you very much for joining us and what do you think should now be done to tackle this gender inequality when it comes to superannuation?
JIM CHALMERS, SHADOW MINISTER FOR FINANCIAL SERVICES AND SUPERANNUATION: Well, before we get on to what additional things we might be able to do to address this fairly substantial problem we need to understand where we are right now. And it’s not good enough that women when they retire have on average about $85,000 less in their retirement balance than men. There is recognition now, which is a good thing, that that is a problem. But unfortunately what the Government has done so far as you alluded to in your introduction is to make the situation worse. So when they abolished the low income superannuation contribution, and they have frozen the superannuation guarantee, that will actually make things much harder for women in the superannuation system. So it will make the problem much worse; they will be part of the problem and not part of the solution.
SPEERS: Alright, so what is the solution now? Is it to bring back the low income superannuation contribution, and kick start the increase in the superannuation guarantee?
CHALMERS: Those are definitely two options which are worth exploring. We have said all along and we have good cred and a good record looking after people on low and middle incomes in the superannuation system. So those are two options, you could reinstate them. We will have more to say on those two policy areas as we get closer to the election. But beyond that …
SPEERS: When will that be? Because the Shadow Treasurer Chris Bowen flagged I think it was back in May when you announced another part of your superannuation policy that you would have more to say on this front. Now the Government is moving on this front as well. Isn't now the time to get something out before the Government does?
CHALMERS: Look, the Government is talking about it. I don't think you could describe what Scott Morrison did today as moving on the issue or anything concrete.
SPEERS: They are heading in that direction I think that is pretty clear?
CHALMERS: They have flagged it as an issue, which is a welcome development. We have been talking about it for some time now. So yes, that is a welcome development. Beyond the issues around the Low Income Super Contribution and the superannuation guarantee freeze, there are a range of other measures you can have a look at. We have got Jenny McAllister, who is my colleague in the Senate, leading a Senate inquiry so we get the best ideas from about around the country on how to go about it. Some of them have been flagged in the media already, whether it be the issue around the concessional caps, whether it be things like paying superannuation with paid parental leave, a whole range of other issues that we have been working on for some time. We will do a bit more work and we will have something to say in the coming months.
SPEERS: In the coming months? Well let me ask you this – the Low Income Super Contribution was meant to be funded by the mining tax, that didn't raise a lot of money, it was scrapped by this Government. Is that something you would revisit as well to pay for whatever you want to do here?
CHALMERS: We have been very clear about the mining tax as you know, whether it is comments by Gary Gray or Chris Bowen or Andrew Leigh or Bill Shorten or others, we have said that we won't be going back to that mining tax. But that doesn't mean that the country can't afford to give people on modest incomes or to give women a fairer go in the superannuation system. You look at the priorities that the Government has got: they are defending this situation where the wealthiest 10 per cent of people in the superannuation system get 38 per cent of the tax concessions. That is not good enough. So whether you are in Government or Opposition, you have a look at the entire budget, you work out what your priorities are and you fund them.
SPEERS: Let's look at those tax concessions more generally that you talk about. Labor has already announced earlier this year as I indicate that it wants to tax the income stream in retirement of the wealthiest Australians, those earning an income stream of $75,000 or more. Scott Morrison is suggesting that is not the way to go, you need to have some stability around those retirement savings but we saw today Deloitte Access Economics suggesting taxing more on the way in during the working life, where wealthier Australians would put in more or pay more tax as they contribute to superannuation. What is wrong with that approach? Why does Labor believe it is best to tax the wealthy Australians in the retirement phase?
CHALMERS: You have accurately described our policy in the retirement phase but something that is not well understood or sufficiently recognised is that part of our policy is for the wealthiest earners, people who earn more than $250,000 a year. We do have a proposal on the table as part of our superannuation tax plan which would see people who earn over $250,000 pay a different level of tax, pay more tax, through which is called the Higher Income Superannuation Charge. It is currently set at $300,000; we are proposing to bring that down to $250,000. So we do have as part of our policy some new arrangements for taxing on the way in as well.
SPEERS: And that would be at 30 per cent tax rate for everyone earning 30 per cent on their super on everyone earning $250,000 or more?
CHALMERS: Correct, yep.
SPEERS: Alright, so what Chris Richardson at Deloitte Access is talking about I think is a 15 per cent discount on your marginal tax rate so that would be a slighter higher tax rate than 30 per cent wouldn't it? That would be around 34 per cent?
CHALMERS: It could be, it would be higher than 30. The proposal that Chris Richardson and the people at Deloitte put out is a version of what Ken Henry proposed during the tax review around 2010. There are a whole range of other considerations that come into play with that model, take home pay, all kinds of things that we don't have hours and hours to get into. But it is an alternative model to what we are proposing. I think what we have said is we recognise that the system is unfair. Superannuation is unfair as it stands. We have got a concrete, considered, costed policy on the table. If the Government wants to come to the party and come up with one, whether it's based on Deloitte's work or something else, we will obviously listen to that. We think we have got a superior plan for superannuation and tax which makes the system fairer and makes what is already a terrific superannuation system even better.
SPEERS: I am just wondering if you can go further though than what you have already announced here because what Chris Richardson is talking about would raise $6 billion. It wouldn't only mean for those earning $250,000 or more that they pay a bit more tax but for those on the second top tax rate, they would be paying more as well when they are contributing to super and there we are talking about more middle income earners. Is that something Labor is willing to look at?
CHALMERS: Look, we want to participate in the conversation in a constructive way. But we did look at those options obviously when we were coming up with our own policy. We think the way we are going about it is a superior way than the other alternatives. But if Deloitte or the Government or anyone else wants to put alternative models on the table, of course we will be part of that discussion.
SPEERS: And I want to ask you finally about capital gains tax, because again Deloitte Access is talking about winding back the discount on capital gains tax. It is a 50 per cent discount right now making it a third, 33.3 per cent, again that would raise an estimated $2 billion. Is that something in Labor’s thinking as well?
CHALMERS: Well, as Chris Bowen has said before, whether it is capital gains or negative gearing, those changes aren't right at the top of our priority list but we are prepared, again, to be part of a constructive discussion about changing those arrangements. We see them as hand in hand really; negative gearing and the capital gains discount. So, if we have this big national conversation around tax and negative gearing is part of it, capital gains is part of it, we will participate in that in a constructive way as well. We haven't ruled it out but it's not at the top of our to-do list.
SPEERS: Do you the share the view that Kelly O'Dwyer, the new Assistant Treasurer expressed yesterday that it is not just the rich who take advantage of negative gearing and capital gains discount?
CHALMERS: Overwhelmingly people with more resources take advantage of negative gearing. There is a particular statistical trick that Kelly and others use to make it seem like that's not the case but all the credible research points to the fact that big investors with multiple homes are the ones that do the best out of negative gearing. That is not necessarily, good on them in one sense, but if you have a tight budget and you are looking for ways to reform the tax system so it is more efficient and fairer than it is worth looking at negative gearing.
SPEERS: Shadow Minister for Superannuation and Financial Services, Dr Jim Chalmers, thank you very much for joining us this afternoon.
CHALMERS: Thanks David.