Bill Shorten (Maribyrnong, Australian Labor Party, Minister for Financial Services and Superannuation) Share this | Hansard source

A bit of coverage on superannuation is important, member for Dunkley.

Mr Billson interjecting—

He does not need protection; he could take all three of you on. The 2012-13 budget delivers on the government's commitment to return the budget to surplus from surpluses growing over the forward estimates. But, as well as returning to surplus, this budget spreads the benefits of the resources boom to help families on low and middle incomes with the cost of living. The return to surplus is the right decision for the Australian economy because it sustains confidence in Australia's public finances and it strengthens the government's balance sheets to support Australia's capacity to respond to future adverse economic shocks. Return to surplus is appropriate for an economy expected to grow above trend, and it allows monetary policy to return to surplus ahead of any major advanced economy.

Many other advanced economies are dealing with the very difficult issue of an ageing population and how to make sure that there is enough money for all people who reach 65 to retire. That is why we had some measures in our budget which improve the superannuation prospects of Australians. Unlike the coalition, who consistently vote against increases to superannuation, we on the Labor side believe in boosting Australian's superannuation. We also believe super should be concessionally taxed, and we are making the system fairer for millions of low-income earners by removing the compulsory tax on compulsory superannuation contributions from 1 July 2012. It was also clear to us that a small number of people on very high incomes are getting a better tax deal out of superannuation than millions of Australians on average incomes, because most compulsory superannuation contributions are taxed at a flat rate of 15 per cent, regardless of the person's income. This is why we are making the system fairer by reducing the higher tax concession that the very high-income earners receive on their concessional contributions. Indeed, in this budget we announced that we would take steps to more closely align the tax concession for very high-income earners with the concession received by average-income earners. The government took this step because it is not fair, nor is it good economic policy, to give 128,000 Australians a 30 per cent tax break, excluding the Medicare levy, on their superannuation contributions. We are better targeting the tax concessions for superannuation by reducing the significant concession which very high-income earners receive on their contributions. This reform will affect only people whose income is more than $300,000, which is approximately 1.2 per cent of people contributing to superannuation in 2012-13. We are reducing the tax concession which wealthy taxpayers receive on their contributions from 30 to 15 per cent, so it is more in line with the concession received by people with average earnings. This reform builds on our low-income superannuation contribution, which will make concessions on contributions fairer for about 3.6 million low-paid workers in 2012-13. The low income superannuation tax abolition—that is, getting rid of the 15 per cent tax paid on superannuation by people who earn less than $37,000 a year—will also support, in particular, women. Of the 3.6 million Australians who earn less than $37,000 a year, approximately 2.1 million are women, thus ensuring that they have more money for their retirement, when it is well known that women find it more difficult to save money for their retirement when they have to step in and out of the workforce.

In addition, in 2012-13 and 2013-14, all individuals will be subject to the general concessional cap and will be able to make concessional superannuation contributions of up to $25,000 per year. We are deferring the start date of the higher cap by two years, from 1 July 2012 to 1 July 2014, in light of comments made by industry about the difficulty in administering the higher cap before the new start date. During consultation, the superannuation industry raised concerns in relation to the cost and complexity involved in administering the balance limit and the difficulty some individuals may face in determining whether they are eligible for the higher cap. Deferring the start date will significantly help resolve these issues. It will allow implementation to occur at the same time super funds are making more changes to their systems to report more information to the ATO as part of the SuperStream reforms. In addition, individuals will be able to more easily determine whether they are eligible for the higher cap when the ATO provides access to comprehensive account balance information from early 2014. The Labor government is the only party in federal politics that is interested in improving superannuation for all Australians. (Time expired)

See this speech in context