Andrew Bragg (NSW, Liberal Party) Share this | Hansard source

I rise to make some remarks in relation to Senator Gallagher's answers during question time today. The current government made a number of promises before the election about not wanting to touch super. Several statements were made on the record. Further to that, statements were made about not wanting to touch franking credits. This week we've seen legislation introduced to change franking credits, to destroy the franking system, and a new policy to introduce a new tax on super. All of these ideas may have been developed in the treasury department. The government are facilitating these ideas because they are not wanting to restrain spending, which is what they should be doing. They're spending $45 billion on off-balance-sheet items, which is fuelling inflation. And we've seen another interest rate rise today, thanks to the Labor Party. The government could also be looking to bank their gains from commodity price increases, but rather than do that they've decided to introduce this new tax.

So far, the government have had two policies on super. The first policy has been to funnel more money to the unions and the second policy has been to put in place a new tax. If they're not locking it up and taxing it, they're locking it up and shipping it off to the union. Those are the two policies the Labor government has on super. In relation to this particular taxation measure, it introduces a very novel, very strange concept of unrealised gains. If you're a company, you don't pay tax on revenue and you don't pay tax on sales; you pay tax on profit. You deduct your expenses from your revenue and that is your profit, and you pay tax on that profit. The same thing goes for the super funds today. They pay tax on earnings, which recognises that it's very hard to pay a tax if you haven't actually got some money in your hand to pay the taxman. But the government want to pursue this very strange idea of unrealised gains, which will result in superannuants having to sell lumpy assets in their funds in order to pay the taxman. That is a foreign concept in Australian taxation law. It remains to be seen how that will happen.

Perhaps the most important point, though, is the judgement call not to index this measure. For the party that say super is their favourite thing, this is the thing that is going to wreck the system, because why would anyone want to put money into a system for 30 or 40 years when they know there's going to be a great big tax at the end of it? If you are 30 years old, you are going to be in the cohort that will have the greatest tax disincentive because of the time value of money. If the measure is not indexed, why on earth would people put money into a super scheme? If I wanted to wreck the system—and I personally think it's a very bad system because it doesn't work very well for workers or for the taxpayer—I would do what the Labor government is doing, which is to not index the scheme. Increasingly, Australians will look at other ways of saving for retirement.

One of the great differences between us in this chamber is that we believe in the individual. We believe that Australians are smart enough to make their own judgements. The Labor Party believe in paternalism, and they think people are too stupid to save for themselves, so they have introduced—

Government se nators interjecting—