Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Hansard source

In relation to those latter questions, no, I do not accept that. And I also do not accept that the policy the government has put forward in the budget to make tax concessions for superannuation fairer, more sustainable and more fit for purpose is more stringent than Labor's when it comes to the $1.6 million cap. What I would do in the first instance is refer the honourable senator to Labor's own policy document released in, I think, April 2015, where their case study actually pointed to the fact that the $75,000 earnings cap that you refer to actually would apply, by their modelling, to balances of $1.5 million or more.

There are a range of other features that make our approach better. Firstly, earnings in savings of up to $1.6 million would continue to be completely tax free. In relation to earnings from savings above $1.6 million, there would be a concessional tax of 15 per cent applied. That $1.6 million threshold is indexed; the $75,000 is not. You are able, under our policy, to actually retain your earnings and save in your income-tax-free account—under Labor you are not—which means that you are actually able to grow that pie.

Furthermore, under Labor's approach, the unindexed $75,000 earnings amount would attract a 15 per cent tax. In years where you have a 10 per cent return, which actually has happened in years gone by, balances of $750,000 and above would actually be captured by that, whereas under our policy it is absolutely impossible for that to happen. We provide much more certainty to people.

On a more general point, the structural challenge we have is that a growing proportion of income generated in Australia is completely income tax free. That is not sustainable. It means that other Australians have to pay more tax in order to pay for the services provided by government. (Time expired)